Updated: 2 days ago
Life has become like a horror movie nowadays, it’s like a very bad nightmare, No one expected to face such kind of viral ghost villain in their daily life. The world's Biggest social and economic lock-down means all educational hubs, factories, gyms, hotels, offices, markets, restaurants, shops, and worship places are under lock-down, In the past 3 months, all public and commercial transports were closed and construction work halted. We have been separated from our daily routines and locked in our own apartments.
The experts say, coronavirus crisis will be the biggest financial crisis of all time, It will penetrate much deeper than the 2007-2009 global financial crisis. which results in high unemployment, business closures, food crises, and give rise to more criminal activities.
The United Nations Conference held on Trade and Development (UNCTAD), the UN's trade and development agency said, the world economy will go into recession this year. the slowdown in the global economy caused by the coronavirus outbreak is likely to cost at least $1 trillion in 2020 alone. As per the report of UNCTAD, it is expected about $2 trillion to $3 trillion financial falls will be faced by developing countries in the coming next two years, in terms of reduced growth measured in GDP.
Most of the big companies are treading safely looking for the most cost-effective ways to deliver their products and services to the customers. It may be obvious to cut marketing spends, labor costs, and many other expenses but that’s only a short-term strategy that will create long-term consequences.
Every business is co-related with every other business-like, to understand the impact of covid-19 on the lighting industry we need to understand the impact of this viral infection on the construction business, interior and architects, raw material suppliers(china), and transportation business as well.
Today China is the biggest supplier of Lighting and components suppliers throughout the world, so let’s understand the situation of Chinese companies first.
Impact of coronavirus on Chinese manufacturers and suppliers
As per the industry survey conducted by LED-inside, the surveyed LED companies are expecting about 30 to 50% of production drop compared to the last year.
LED chip production will be less impacted by the lockdown or delay production because most of the suppliers are holding a good amount of stock. Most of the manufacturers still have LED chips in stock from last year's supplies.
Whereas other lighting fixture manufacture will hit on a large scale due to lock-down and unavailability of migrant laborers. Lighting-based factories are mostly located in Guangdong and Jiangxi, this area does not have local manpower, labor from all over china shifted to work there. Most of the decorative and architectural lighting fixtures-based companies do not hold inventories. So, if migrated labor does not resume their work then the condition of permanent factory shut-down may occur.
In another survey done by LED's Magazine, A group of people was asked some questions based on those it is found that 40% of people analyzed that the production rate will be decreased in the coming future, 10% says their production will be increased compared to the last year, whereas 30% says there will be no effect on their business and rest are uncertain.
The biggest source of generating international sales by Chinese companies are exhibitions and trade fares. During the event of viral infections over two dozen trade fairs and industry conferences in China and overseas have been either canceled or postponed due to a ban on international travel and fear among their customers.
The events affected due to corona viral spread are LED China 2020 Shenzhen and the concurrent Entertainment Design Expo 2020, The biannual big event in the lighting industry, Commercial Integration China 2020 Shenzhen, Light + Building, Digital Signage China 2020 Shenzhen, MWC, Sign China 2020 Shenzhen and Retail China 2020.
Impact of coronavirus on Chinese Logistics companies
If China will able to survive the impact of coronavirus then the biggest challenge china will face managing the delivery of its products to its customers. As viral infection started in china and then transmitted globally so, the world is blaming China for the spread of this infection to other countries. Even Though china is spreading the news about “Zero Infection in China” but still there are many theories that prove how good is china to hide its original facts.
Most of the countries have already banned Chinese shipments and flights, due to which thousands of tons of material are buried into containers as Hundreds of ships are waiting for permission at the dockyard to unload their material.
Only three-fifths of China’s trucks are in a working state due to lack of labor, roadblocks, quarantines, and factory closings. Transportation warehouses are overflowed with finished goods and raw materials that cannot be moved due to a lack of trucks. This results in many manufacturing units are not in a working state as components are not reaching them.
Those companies which are having the proper amount of raw material are also not producing at full capacity because of a lack of tucking facilities for the movement of finished goods. As shipping consignments are not moving due to covid-19 so shipping companies are canceling orders for those who can move their products through trucks sources said.
Air cargo operations are also been affected due to covid-19. The movement of flights in and out of China has been restricted by almost all countries for safety purposes, due to which freight forwarders are not allowing to take any shipment orders.
Material stock condition in the Indian market
Due to the Chinese New Year, more than 50 percent of the factories in China were closed during the period of December and January 2019. Also, coronavirus attacked during this period so, most of the companies and factories in China continued to remain closed. Due to public health emergency, the government started to quarantines people to control the spread of coronavirus.
Factories in India were prepared for the usual Chinese New Year shutdown and purchase a stock of material for around 1-3 months only. But due to Coronavirus, China has taken some extraordinary steps to extend the Lunar New Year holiday which was not predicted by any of the importers from India. During the Chinese New Year shutdown, factories in India were at their peak which results in most of the stock was consumed by the market due to high demand. Consumption of stock can also be predicted by a hike in price due to the shortage of imported goods in the Indian market. In the lighting Industry crystals are considered as an essential raw material, their prices were almost double during the end days of the Chinese New Year shutdown.
India imports majorly electronics, lighting components, engineering goods, Medical items, and chemicals from China on large scale. If the requirement of such products will not be fulfilled from China then importers from India will have to scroll for the alternate source of suppliers. China exports around 14% of total export to India only, however experts considering this situation a benefit for the Indian economy, as the stock was majorly consumed by the market so, the majority of suppliers are now only dependent on Indian manufacturers. This dependency will not only strengthen the Indian economy but also increase the employment rate in India. A report also says that Indian manufacturers or exporters have seen growth in interests of import from the western market. Not only other reports also said that some of the big companies shifting their manufacturing units from china to the Indian market.
In an Interview with Uttar Pradesh chief minister said- As per the current global situation of coronavirus, the US, Japan, and several other countries working to withdraw their investments from China. He also added that the concerned authorities are working to attract those investment opportunities toward Uttar Pradesh, India.
Responsibilities on Indian suppliers after Covid-19 Pandemic
After the COVID-19 pandemic, India will have the opportunity to attract global investors to Indian markets which will build an economy that is more resilient, diversified, and attractive. Majority of businesses throughout the world facing a high economic slowdown. Globally more than 2 lakhs of people were killed and almost every country is affected by it, which results in big economies like the USA and others are at war against China.
Today almost every country is appreciating the efforts India made to contain this viral infection. This image opens a doorway of a safe environment for foreign investment toward India, due to which today every other country is looking for more business opportunities in India.
As some say, more opportunities always come with more responsibilities. So here the responsibility of high-quality products at lower possible costs comes on Indian manufacturers. Packaging and timely deliveries play a key role in export-related business. Indian manufacturers have to decline their manufacturing costs so that suppliers do not feel the loss of vendors from China.
Today the USA, alias with Japan and Australia to penalizes China for its in-actions. China also started to feel this heat as Japan has released an amount of $2.2 billion to help its manufacturers to shift their production plants out of China, sources said.
The amount of time and money India invested to contain this viral infection is now the responsibility of Indian manufacturers to make a return on this investment. The government had played a very good role to contain this virus in India, now companies should make some pandemic-specific policies and procedures, to ensure less migration of labor by building high motivation among their employees.
There are both opportunities and challenges for the manufacturing sector due to this global health crisis.
Lighting manufacturing industries are heavily dependent on Chinese raw materials which can impact their production rate. But on other hand, it is the right time to create more assets so that the world can rely on them.
Initially, product supply can be hampered due to shortage in demand but this is a global problem once it ended the demand curve will exponentially increase.
Due to the impact of coronavirus Indian retailers and suppliers are completely dependent on Indian manufacturers only, which means India will have huge opportunities in the coming future.
The stock of Chinese products in India is nearly exhausted, so from the first day, Indian manufacturers will have the responsibility to fulfill all market demands.