- Availability of components required to finish products is a big question
- Manufacturing facilities falling in red zones is also a big question
A recent report highlighted that the likes of Samsung, Xiaomi, Oppo, Vivo, Apple, LG, Panasonic, Realme and OnePlus are planning to postpone their manufacturing plans. The smartphone and consumer electronics companies mentioned above might start manufacturing operations only after the lockdown imposed by the Government of India is over.
Executives related to these companies mentioned closed markets as one of the reasons behind the decision. Many of these companies are already facing troubles in keeping up with the inventory in their respective warehouses. Additionally, whether to produce products sold in summer season is posing a big question as well.
Availability of components required a big question
A lot of consumer electronics and smartphones produced in India rely on components sourced from China and many other countries. It is to be noted here that there are only a few flights operating from India and sourcing all the components might be a tough task.
A industry representative said, “Freight charges for sourcing components outside India are skyrocketing. There are only a limited shipping companies operating now and most of them are demanding very high prices.
He added, “The uncertainty at ports is another big challenge. We are not sure how to reach ports safely. Drivers are not ready to start amid the looming coronavirus threat.”
Components like display panels, semiconductors, ICs and many others are sourced from outside India. Even if companies start sourcing these at higher costs, availability of labour required remains another question to be answered. Moreover, mandating medical insurance for labour individuals involved, may have also increased operational costs for companies.
Manufacturing facilities falling in red zones
Several manufacturing facilities are falling in red zones, posing another problem in re-starting manufacturing operations. Smartphone brands Vivo and Oppo’s plants are located in Gautam Buddha Nagar, Noida. This area falls in red zones. Interestingly, Oppo also manufactures for OnePlus and Realme.
Panasonic, one of the biggest consumer electronics giant in India, stated that its warehouses are filled with inventory. The company said that it has enough to meet demands if they pick up. It is to be noted here that one of Panasonic’s manufacturing facilities are located in green zones.