Coronavirus Epidemic: Loss for China,Opportunity for India and Southeast Asian countries

Global home dcor retailers import many of their products especially ceramic and wicker items from China and the Coronavirus outbreak has become a cause of concern for them.
Coronavirus Epidemic: Loss for China,Opportunity for India and Southeast Asian countries

The threat of novel respiratory virus COVID-19 looms large and experts from across the globe have warned that the virus outbreak is most likely toend only by April. The deadly virus which is highly contagious has already claimed over 1,770 lives and caused over 71,000 infections. Over the years, China has established itself as the major provider of goods and raw materials for global brands right from electronics, automobile, furniture to fashion.Hence, this is a trying time for both importers and exporters.

Global home décor retailers import many of their products especially ceramic and wicker items from China and the Coronavirus outbreak has become a cause of concern for them. As most of the retailers stock their inventories for upto 2-3 months, the impact on the customers currently is insignificant but normalcy needs to resume soon in China to prevent this situation from becoming the cause of a global economic crisis.

The retailers are in the process of chalking out a revised supply chain strategy for global markets and are turning to India, Bangladesh and other Southeast Asian countries such as Vietnam, Cambodia and Thailand for sourcing products in an attempt to minimize the impact of the outbreak on businesses and livelihoods. However, the impact cannot be nullified because the countries that companies are relying on alternatively are also not completely independent and rely on China for many of their raw materials.

Benefit to emerging markets

Global companies are now working together to diversify the sources of supply. One of the biggest furniture fairs -China International Furniture Fair dated for March 18-21 has been postponed for an indefinite period and The China International Furniture Machinery & Furniture Raw Materials Fair scheduled for March 28-31, is also expected to get delayed. Even the Malaysian International Furniture Fair 2020 scheduled for March 6-9 has now been pushed to June 30 – July 3, so this year is going to be challenging for the furniture industry.

If the delay is only by a month, the impact on the sector will be fairly marginal but if the situation prolongs, then definitely retailers will feel the heat in terms of the latest designs and struggle to source stock for the next season. Biggest challenge before the retailers now is the uncertainty.

India is currently at a vantage point and stands a good chance of reviving its ‘Make in India’ programme to become an attractive manufacturing hub, provided the Indian government relaxes some of its trade policies to benefit the indigenous market. According to market reports, the number of queries to Indian manufacturers has considerably increased especially in labour-intensive products such as wicker and ceramic products and textiles. Another industry likely to be benefitted is vitrified tiles and wooden furniture.

China exports furniture worth around $54 billion and the huge setback this year will serve as an opportunity for the other manufacturing markets. This can be a blessing in disguise for the South Asian furniture manufacturers and exporters and have an opportunity here to raise their share in the global furniture market.

Firstly, due to the US-China trade war and now the outbreak, many foreign buyers have moved their orders out from China to South-East Asian countries including India. Most US and European home décor retailers have started sourcing goods from outside Chinaand APAC should see this as a great opportunity and enhance the position of the region as an alternate manufacturing hub to the global retailers.

The article has been penned down by Adel Sajan, Director of Danube Group

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