China's zero covid strategy could impact India's consumer durable industry

Consumer durable companies may get impacted again due to China’s zero Covid policy as a shortage of components is expected to hit markets post Diwali. 
 

While supply chain issues have been a problem since the start of the pandemic, China’s zero Covid strategy has also posed another risk for consumer durable companies.  White goods have 25-75 per cent of their components coming from China, with air-conditioners being the most dependent on them with 75 per cent.
 

Companies have stocked up on components ahead of the festive season but the shortage will still hit the market post the festive season and could impact summer production of consumer durables if China continues its zero Covid strategy.
 

This lockdown comes within a month of China lifting curbs last month as cases have witnessed a spike as the country continues to enforce its zero Covid policy.   
 

While some brands have procured enough of stock ahead of the festive season to last them a couple of months, others expect a shortfall of a month from post Diwali towards the end of November to December.
 

Another reason which has gone in the favour of consumer durable companies is that demand was not as strong last month, thus there has been inventory left in the supply chain which will help the sector tide through effortlessly through the festive season.
 

“No company is hand-to-mouth and there has been inventory in the market anyway due to weak demand last month. But, if the lockdown continues even after two weeks, there could be an impact,” Eric Braganza, president of The Consumer Electronics and Appliances Manufacturers Association (CEAMA), told Business Standard.
 

Super Plastronics, the brand licensee of Kodak, Thomson, Blaupunkt and Westinghouse in India also expects a shortfall of components to hit it post Diwali.
 

He explained that a container goes to three or four ports which has made it increasingly difficult as there are guidelines to be followed at each port. Marwah also said that some stock-keeping units will not be available post Diwali at least till the end of November or early December.
 

Godrej Appliances is also fully covered for the festive season. "Availability of stocks depends on how demand pans out post the festive season and if these lockdowns sustain,"  said Kamal Nandi, business head and executive vice-president, Godrej Appliances.  

Dixon Technologies (India) however said that it will not be impacted by the lockdown at least for the next 10-12 weeks as it has stocked up enough to tide over the supply chain issues which have been emerging due to the lockdowns in China.
 

“Beyond the next 10-12 weeks, we will have to see the impact of the lockdown. But for now, we have enough stock to tide over for the next 10-12 weeks," Atul Lall, MD at Dixon Technologies said.