There is nothing marketers hate more than uncertainty. Right now, that is all there is. Uncertainty about the severity and duration of the coronavirus outbreak; uncertainty about how long the inventory will last; uncertainty about when the orders placed on China will arrive; uncertainty about when the disrupted supply chain will be restored to normalcy; uncertainty about when the footfall to the retail counters will become normal; and above all the uncertainty about how long all this uncertainty will last!
This is a very serious situation. Not just in China. The industry continues to be under a grim situation as the larger part of the components used for ACE goods comes from China. The value-addition in electronics manufacturing in India varies from 8 percent in EMS to approximately 50 percent in component manufacturing. Also, all the goods, which fall under Quality Control Orders, have taken a hit as the BIS inspectors are not able to visit China or any other overseas country for conducting factory visits and issue certification, which in turn is hampering the production lines in India.
No doubt, some factories have resumed partial production in China. And MeitY has taken up with the Ministry of Civil Aviation to arrange air cargo facility to lift consignments from China to India, as the sea route will further delay production. And so far, the TV manufacturers have held back the price increase planned, resulting from a major shortage of raw materials along with a sharp increase in open-cell panel prices. Ditto for ACs, coolers, and refrigerators, as most compressors are imported from China.
Business is in an unprecedented situation. And yet…while the neighbors as Singapore and South Korea grapple with the virus outbreak, can India convert this into an opportunity and move toward a relocation of production away from China? Can we replace China as the next global manufacturing hub? A right set of policies and near-term supply chain diversification would perhaps be the two necessary conditions to achieve this. Jim Rogers, chairman of Rogers Holdings, in a recent interview with a leading financial daily, expressed that he finds India an attractive investment destination in the wake of the recent turmoil in the global financial markets.
Uncertainty breeds fear, and fear breeds panic, but it is the bold one who emerges the winner!