UPDATE 1-France urges business to rethink supply chains as coronavirus hits Asia

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PARIS, Feb 21 (Reuters) - The coronavirus epidemic has sent a wake-up call to French manufacturers about their over-dependence on suppliers from China and Asia, France’s finance minister said on Friday, urging a deep re-evaluation of supply chains.

Finance Minister Bruno Le Maire said he had ordered a review to determine which French industries needed to rebuild an “economic and strategic independence”.

“This epidemic shows that supply problems create strategic problems in certain industries,” Le Maire told journalists after meeting industry leaders about the impact of the outbreak.

He singled out the pharmaceutical industry in particular, saying that 80% of the raw materials for active agents in some drugs are sourced from China or Asia.

Le Maire also cited the auto industry, noting that manufacturers were having trouble getting brake pedals, as well as the wine industry, for which China is France’s second-biggest market.

Despite supply-chain problems and lost Chinese tourist revenues, the outbreak is having a limited economic impact on France, which Le Maire estimated would shave 0.1 percentage points off growth this year.

He said that the government would give companies affected by the outbreak extra time to make tax payments and said big companies, especially in fashion, should be lenient with smaller suppliers struggling to meet their orders.

The government has also asked legal experts to look into the possibility that companies could use the outbreak for declaring force majeure, which removes a company’s liability for breaching a contract because of circumstances beyond its control. (Reporting by Leigh Thomas; editing by Larry King)