Top electronics firms catch Coronavirus, sales to plunge in future

Viral outbreak could impact sales of electronics - online and offline

The spread of the novel coronavirus (nCoV) in China could have an impact on the sales of top electronics companies and smartphone makers such as Apple, OnePlus, and Xiaomi, especially those listed on e-commerce platforms like Amazon and Flipkart.      

                                          

Business in China was scheduled to reopen on Monday. However, reports suggest that some provinces and districts have asked companies not to resume work till March 1. 

Last year, India shipped 152.5 million units in 2019, becoming the largest smartphone market after China, according to the data from the International Data Corporation (IDC). Of this, online sales in India were 41.7 per cent, growing by 18.4 per cent from the previous year. Offline sales grew only by 1.6 per cent during the year.

E-commerce executives in India said the industry has already started to feel the pain, given a lot of manufacturing happens in China. 

“It is not just the final product that comes from China. A lot of raw material used to make electronic products also comes from there. We are feeling the heat,” said an e-commerce executive. 

Analysts and industry experts have time and again said that since most vendors make provisions for inventory due to the Chinese Lunar New Year holiday, there may not be an immediate impact. 

“The first quarter might not get affected, but new launches might see an impact,” said Upasana Joshi, associate research manager, client devices, IDC India. She added that though factories have not yet opened, there could be a “big drop in mobile phone supply if this goes on for another month. It is also too short a time frame to shift everything to another location, because almost all production of ships, camera modules, etc happens in China”.

However, your phones may not be getting more expensive anytime soon. Given the modest growth of 8 per cent in the smartphone market last year, and similar single-digit growth predicted for the current year, according to IDC estimates, Joshi said a price increase in smartphone cost might not be received well by consumers.

There is, however, likely to be a bigger impact due to non-availability of other electronic items, such as light-emitting diode chips, compressors for refrigerators and air conditioners (ACs), and television (TV) panels.

“There has been no communication from Chinese vendors about an extension on the suspension of production. But if it gets extended till end-February, production activity in India will be disrupted in March. It is worrisome because in that case supply will be hit in April. Most of the compressors for ACs are imported from China and so are for refrigerators. Also, we are heavily dependent on them for electronic components,” said Kamal Nandi, president, Consumer Electronics and Appliances Manufacturers Association and executive vice-president of Godrej Appliances.

So far, the Indian government is yet to impose any restrictions on the overall imports from China.

Arjun Bajaj, founder of Shinco India, a brand by Videotex International, said the Chinese government’s extension of the shutdown is causing uncertainty. “This, in turn, will cause a huge delay in shipments and disrupt the production plans of TV as well as mobile industries,” he added.

The nCoV has affected over 37,000 people globally and caused over 900 deaths in China so far.