By Kritika Arora
As consumer durable companies gear up for the upcoming festive season with hopes of robust sales of refrigerators, washing machines and TV sets, the Covid-related lockdowns in Shenzhen, China, have raised some concerns.
Majority of the components for electronic products are imported from China and the city of Shenzhen is known to be the hub for electronic components. The Chinese government has put the city under lockdown because of rising Covid cases.
The consumer durables industry imports over 60% of components for ACs and around 25% for refrigerators from China. Though consumer durables manufacturers in India are all set for the festive season and have enough inventory to cater to the expected rise in demand, industry players say that if the lockdown in Shenzhen continues, there could be an issue of components shortage after the festive season, which would again increase the prices of parts.
“The impact of the lockdown in Shenzhen has not been felt yet because we are carrying enough inventory. But there could be some impact in the long term. We don’t know how the situation will pan out. But if it continues, post festive season there could be some shortage and increase in prices of components ,” Kamal Nandi, business head and executive vice-president of Godrej Appliances, said.
Avneet Singh Marwah, CEO at SPPL, the exclusive brand licensee of Thomson in India, said since Shenzhen is home for electronic components in the world, the curbs would definitely impact the market in the long run. Its effect will come in November and December. If the festive season goes well, there can be shortage in high moving segments.
The festive season is taken care of, but Shenzhen plays a very important role in TV manufacturing as it’s a hub of electronic components, Marwah said. “It will also have an impact on the replacement market because a lot of replacement components come from Shenzhen. That will be a challenge for a lot of brands,” he added.
B Thiagarajan, managing director at Blue Star, said they are all covered for the festive season and have inventory for four months. “These things keep on happening now and we have begun planning for a longer period,” he said.
As far as demand in the festive season is concerned, industry players expect good demand, especially in the premium segment. The demand in May-June-July was subdued due to inflationary pressures.
Nandi said the mass segment is still under stress and there is some degrowth. “This trend has been observed in the last four months. For the festive season, we expect that this trend might continue across categories because we don’t see inflationary pressures in the mass segment easing out so far,” he said. However, the premium segment will continue to grow in the festive season, he added.