Chennai's hub for bargain deals on electronics loses its Chinese edge

Coronavirus pandemic shut down Ritchie Street for two months, and when it opened late June the country was in an anti-China mood.

Ritchie Street, India's second largest electronics market, is a favourite haunt in Chennai for bargain hunters. The narrow streets, once crowded, look forlorn as only 50 per cent of shops are open and walk-ins have reduced.

Coronavirus pandemic shut down the market for two months, and when was business was picking up late June the country was in an anti-China mood. The market gets around 60 per cent of components and finished goods from that country.

Ritchie Street, which started in 1970, is a "grey market". Transactions without a bill or warranty are common, but yet the market accounts for nearly 40 per cent of branded electronic products sold in Tamil Nadu.

Around 1,500 shops--employing about 8,000 people directly and another 10,000 indirectly--sell and repair mobile phones, computers, laptops, cameras, and other electronic gadgets. When Chinese factories closed down due to the pandemic in January, supplies stopped to half of the market. The rest of the shops had stocks lasting them two or three months.

When India shut down late March to contain the spread of the coronavirus, the market shut for two months. People worked from home, schools and colleges started online classes, shooting up demand for electronics products. Ritchie Street could not capitalise on the demand.

The state government, after hearing appeals, allowed Ritchie Street to open in April but on an odd-even basis. To ensure compliance, only half the shops open in a day. Shops with red labels on Mondays, Wednesdays and Fridays and those with green labels rest of the days, said R Chandalia, secretary of Chennai Electronics and Infotech Traders Association at Ritchie Street.

When the market opened, shops saw a spike in demand for laptops, computers and related components.

Ismail, who runs a computer hardware shop, said demand for electronics goods almost doubled and he and his compatriots asked their Chinese suppliers to increase shipments. About that time 20 Indian soldiers were killed in a clash with Chinese forces mid-June in eastern Ladakh. The shipments halted and anti-China sentiment swept across India.

“Anti-China sentiment is becoming very strong in northern markets and now it is slowly picking up in the south too,” said Chandalia. Goods from China are of good quality, cheap and consignments are timely. Alternatives to China are not lucrative mainly because of the cost, he said.

Mukesh Khubchandani, president of Chennai-based All India Electronics’ Association (AIEA), said anti-China sentiment is brewing but businesses on Ritchie Street need to wait a few months to see the actual impact.

Vinayagam, who sells mobiles and spare parts at RichieStreet, said sourcing domestically or from Vietnam, Taiwan, Japan or Europe will lead to 20-40 per cent cost increase and make the market uncompetitive. 

TVs, laptops, home theatre systems, mobiles, LED panels, lights and other products come cheap at Richie Street. It sells spare parts like capacitors, integrated circuits and cables used by manufacturing units. 

Khubchandani, who visits China once in two months, is keen on sourcing from India and other places but doubts of if products will be as cheap and good.

AIEA has asked its members to explore options apart from China but S Prabhu who sells spare parts for inverters and stabilisers, says there are no local manufacturers to supply raw materials.

"(At) end of the day, for customers price matters. The fact remains we can't bring down dependence on China overnight--it will take years and need a lot of actions and efforts, including policy changes, from the Government side,” said Prabhu.