While the world is yet to feel the full impact of the Coronavirus, with no known vaccine or confirmed way of preventing it from spreading, it’s too early to predict what the full impact will be. However, Australian retailers are already feeling the effect of this outbreak.
There have been widespread factory shutdowns and offices closed indefinitely across China, since Chinese New Year due to quarantine measures. This has halted the production of products and parts destined for other countries, including Australia.
Australian businesses need to plan for product shortages and delays if they rely on manufacturing or products from China.
China is Australia’s largest trading partner for imports and exports. According to the United Nations Comtrade database, Australian imports from China were valued at $85.9 billion in 2018. While retailers might not be impacted with low stock yet, they are preparing for shortages in coming weeks as the coronavirus continues to spread and Chinese factories remain closed.
Even the world’s biggest retail brands are reporting on the effects of the coronavirus with Apple saying there will be a shortage of products, including iPhones, due to factory closures in China.
But it’s not just stock shortages that will affect retailers in coming weeks and months. Many retailers are now waiting for their point of sale (PoS) and window displays and installations which are manufactured and shipped to Australia for their upcoming campaigns.
It is time to look at increasing supply chain options.
Reduce your risk & increase your resilience.
The coronavirus outbreak presents an opportunity to review and revisit Australians’ reliance on China for manufacturing. Ninety per cent of Australia’s merchandise imports are from China and, of those, 90% are elaborately-transformed manufactures. It is time for Australian businesses to reduce their risk and make their business more agile. What if you weren’t reliant on just China for your retail displays to be manufactured and built? What if you reduced your risk by increasing your supply chain?
While some retailers and Australian businesses have started looking at alternative options in Malaysia, India and the Philippines, this isn’t a quick and quality-guaranteed solution. There is the travel time and costs involved as well as researching and sourcing new suppliers who can produce what you need in time.
This is a timely crossroads for Australian businesses to be looking closer to home and working with local Australian businesses.