Chinese brands fear acute shortage, price hike as containers stuck

In deep distress after losing over Rs 40,000 crore in the lockdown while recovering less than 40 per cent to date, smartphone brands in India on Thursday said that if their containers carrying essential parts, components and accessories from China are not cleared by customs soon, there will be massive shortage and end users will only suffer.

The reactions came after the Indian Cellular and Electronics Association (ICEA), in a letter to Finance Minister Nirmala Sitharaman, said that all China-origin imports of the electronics industry have come under adverse action by customs at the ports without prior warning, which has impacted the supply chain.

One of the leading Chinese smartphone makers told IANS on the condition of anonymity that a long-term delay would force them to pass on the burden to the consumers as they would be left with little supplies soon as the demand has risen.

“We have just started to limp back to normal after facing losses for nearly three months and now, our consignments are stuck at various ports. Keeping the rise in demand in concern, we will not be able to sustain if the goods are not cleared maximum within a week’s time,” lamented a Chinese smartphone company spokesperson, adding that the price hike will be an “imminent step”.

Another spokesperson from a rival brand who is in a little better position as the next device launch is some days away, said there is a good demand coming from all locations in the country

“As there is a rebound after months-long lockdown, if shipments are stuck for a longer time, it will affect all brands irrespective of whether Chinese or Indian as a larger supply chain would be hampered,” the spokesperson told IANS.

In the letter to the Finance Minister, Pankaj Mohindroo, Chairman of ICEA said that they understand that even goods already cleared and loaded in trucks for transport to the users’ warehouse are being recalled and examined.

“Opening up finished products for full examination will soil them, making it impossible to sell in the market. This will lead to millions of dollars of losses, a shortage in the market and spook large foreign investors,” he wrote.

India imports nearly $56 billion worth of electronic items from China annually.

According to industry watchers, there is already some feedback from retailers that products are not reaching on time to them.

“However, this is likely to be solved soon as per our understanding. The original equipment manufacturers (OEMs), especially at this point, can’t afford to lose sales because of consignments being held up at this crucial time,” Tarun Pathak, Associate Director, Counterpoint Research, told IANS.

Factories are already operating at below normal level and “retailers have a perception about brands diverting more stock to online channels,” Pathak added.

Holding back Chinese electronics items would mean acute shortage across the board in factories (components) and markets (finished products).

“They are simply unwilling to take a risk at this stage, especially since no written orders or instructions or processes have been notified. In essence, the global supply chain from the point of origin is beginning to slow down, as it did in the initial days of the COVID-19 lockdown,” Mohindroo said in the letter.