Daily Management Review

Reports Forecast A 50% Drop In Smartphone Sale In China In First Quarter


Reports Forecast A 50% Drop In Smartphone Sale In China In First Quarter
A number of recently published research reports forecast a sharp drop of almost 50 per cent in the sale of smartphones in China in the first quarter because many of the retail stores and shops have been closed as well as the temporary shutdown in the production units – many of which continue to remain in lockdown, because of the coronavirus.  
China’s manufacturing industry has been battered by the virus outbreak which has killed more than 900 people in the country. This outbreak has come at a time when smartphone makers like Huawei were hoping to see a rebound in the largest smartphone market of the world, after years of falling sales, riding on the roll out of 5G mobile networks in the country.
"Vendors' planned product launches will be cancelled or delayed, given that large public events are not allowed in China," research firm Canalys said in a note last week. "It will take time for vendors to change their product launch roadmaps in China, which is likely to dampen 5G shipments."
While the prediction of Canalys is that there will be a 50 per cent drop in shipments of smartphones in China in the first quarter compared to the same quarter a year ago, another prediction from research firm IDC that tracks the tech sector put the number at a drop of 30 per cent.
The closure of the stores of Apple because of the virus was extended by the company last week and is yet to announce any date for their opening. On the other hand, its major assembler Foxco0nn has been forced to keep all of its production units, barring one, closed in the country because of the fear of spread of the coronavirus. The Taiwan based company was allowed to open just one production unit by the Chinese authorities on Monday in the city of Zhenghzou, but its major production units in the city of Shenzhen still remain closed.
The manufacturing capacity of Huawei, China's biggest smartphone vendor, is "running normally", the company said without elaborating further. However, similar to a number of its rivals, Huawei’s production is also heavily dependent on third party manufacturers.
According to analysts, the ability of smartphone making companies to bring to market  their newest products could be delayed if the manufacturing plants in factories in China cannot resume production to full capacity on time.
It is expected that flagship models are to be brought to the market by all major Chinese smartphone companies including Xiaomi, Huawei, and Oppo.
While its operations at some of its local factories would be affected by the coronavirus, Oppo told the media, "manufacturing capacity can be guaranteed effectively" thanks to its plants overseas.
"The delays in reopening factories and the labour return time will not only affect shipments to stores, it will also affect the product launch times in the mid- and long-term," Will Wong, an IDC analyst, said.