The ripple effect could soon hit India that is flooded with cheap Chinese imports.
Traders, Mint spoke to, said they are anticipating a shortage of goods over the next few months, as large trade shows hosted to draw small businesses from around the world are likely to be postponed over fears of the deadly Coronavirus that has now spread to over 15 countries outside of China.
Coronavirus that was first detected in December in the city of Wuhan in the Hubei province—has now infected over 6,000 people, killing 132. On Wednesday, some airlines announced that they are halting select flight in and out of the region. The virus has also spread to 18 other nations.
Indian businesses that rely on importing goods from China say they are concerned and postponing their travels scheduled for February and March.
New Delhi-based distributor Smit Bangar, who has been importing footwear, apparel, mobile phone accessories from China for over two decades, said the current situation bears semblance to the 2002-2003 outbreak of the SARS virus that killed an estimated 800 people globally.
“Business took at least eight months to recover then," said Bangar, who runs Skymax international. Bangar who makes trips every two months, visiting the business hubs of Guangzhou, Shenzen, Hong Kong, among others, to place orders and meet manufacturers said his upcoming trip for March now stands cancelled. “It will be a big problem—workers would not come to work—which might decrease productivity and increase costs," said Bangar.
To be sure, January is a slow month for exporters in China as the annual Chinese Lunar New Year festivities sees businesses, banks, and offices halt operations for a few days. This year's Lunar break has been further extended by a week, according to several media reports.
Business picks pace in the last few days of February as traders rush to stock for local festivities, summer, and monsoon sales. Typically, these orders have a lead time of a few weeks to two months including manufacturing, shipping, custom clearances etc. Traders Mint spoke to said they are stocked till at least the month of February, but will take a call on future orders depending how the situation pans out.
Apparel manufacturers said they are not expecting an immediate fallout on orders placed with manufacturers in China as buyers plan their seasons well in advance.
“Apparel manufacturers plan their orders in advance and production has been going on. But if the virus spreads, and people stop travelling to China, and visitors from China are discouraged then ,to some extent, there would be an impact," said Rahul Mehta, president, Clothing Manufacturers Association of India. Mehta, added that there could be a dip in the number of buyers panning immediate trips to the region.
“If buyers were planning to go in month of February to place orders a—they would possibly postpone it and do it over calls or e-mail," Mehta said.
The Xiamen Stone Fair scheduled for March 16 to 19 has now been postponed to June 6-9, according to a letter received by visitors of the exhibit. The organisers have cited the coronavirus outbreak as the reason for pushing the dates to ensure safety of all guests attending the exhibit.
This is prompting traders to look for alternatives in the local or other neighbouring markets.
Another New Delhi-based trader of sustainable home and kitchen goods from China said he is holding on to stocks that will last till February. The trader, who spoke on condition of anonymity, said he has postponed his trip to China after news of the virus outbreak emerged. “Now in order to supplement that loss, we will start procuring from Indian manufacturers," he said.
For the company, about 50% of stock is procured from China. “As systems get delayed we are assuming it will take a month and a half till situation improves," he added. He said that there could be some delay in large exhibitions and trade shows scheduled in February right after businesses resume, post the Chinese New Year celebration. “This year we are expecting they will not happen or be postponed. And the impact would be that no new products would be launched.
Food importers have begun halting shipments including sauces, condiments, and noodles used in preparing Chinese dishes.
“Whatever other products were coming in—like sauces, noodles, etc, people have now kept their shipment on hold. They are not wanting to currently import anything from China and also avoiding travelling to that region," said Amit Lohani, founder-director at the Forum of Indian Food Importers (FIFI).
Lohani added that while it is too soon to gauge the impact on businesses, “There would be a long-term ripple effect. It is very difficult to contemplate right now whether it will impact 10 or 1000 containers," he added.