Coronavirus is making businesses to suffer. With major manufacturing factories in China are shut, countries like India are most affected. According to estimates, India imports over 14 percent of goods and products from China. The major blow is for the smartphone assembling units in India, where the printed circuit boards and other items are imported. Xiaomi becomes the first casualty with the company hiking the price of Redmi Note 8 by Rs 500 because of the Coronavirus outbreak.
According to reports, over 60000 people were affected by the deadly virus and the economy has taken a massive hit. The predictions indicate that China’s GDP will also come down to 4 percent in 2020. The retail car sales fell down to 22 percent and are expected to touch 30 percent in February.
The companies are preparing for the worst-case scenario. You should note that India is highly dependant on China for various products and raw materials. Moreover, the pharmaceutical sector is also facing a huge crisis due to the scarcity of raw materials being sourced from China.
In terms of economic activity, the Coronavirus had an abnormal impact. The e-commerce companies are facing problems to ship out the products to the customers. The International courier services like UPS, FedEx, USPS also stopped flight services including deliveries.
The Hubei province is facing continuous shut down for more than three weeks and is expected to extend further till the end of March. It’s not tenable for companies to ask their employees to risk their lives. As of now, the employees are being asked to work from home.
If the shutdown continues in China, then companies like Xiaomi, Realme, Oppo, and Vivo will face the elimination of the stocks. The current sales are based on the stocks arrived until December and January. With the drastic reduction in the procurement of raw materials, PCBs and other accessories, companies will face acute difficulty.
The e-commerce companies like Gearbest, Banggood, Aliexpress, and others are currently not shipping orders outside China. The Aliexpress is worst affected since the location of the sellers is unknown. The items shipped from Wuhan are at great risk of carrying the virus.
The current disruption in China will not only affect investment but also the supply chain system. The health care system in India will suffer because of the disruption. According to CMIE, India is the third-largest export market after the US and UAE. The exporters in China will have to face a huge crisis if the Coronavirus outbreak is not resolved by March. It will be a deadly Q1 2020 if the Coronavirus continues to scare people and business establishment.
The shortage of raw materials as part of the Coronavirus will lead to a temporary price rise. The recent increase of Xiaomi Redmi Note 8 is attributed to this phenomenon. We expect more companies to follow the same suit and will most likely hike the prices if the situation persists.
