Coronavirus outbreak to affect Location Based Services Industry (GPS, RFID, Mobile Phones)
A casual search about China on your preferred search engine will give you results about the corona virus outbreak and images of abandoned cities and offices. The situation on ground in China appears that the virus outbreak is under control and that all necessary measures are being taken to ensure that the virus is contained. Large parts of the country are still under shutdown. This also means that factories in large parts of the country are currently not functional. About 70% of all global electronics manufacturing is based in China and about 90% of the world’s smartphone supply is from China.
Several Large global manufacturing players including the like of Foxconn who is famously known to be the manufacturing partner of Apple Inc. has partially shutdown their factory in order to mitigate the risk of employees infecting each other. Johnson & Johnson and Samsung have also followed the lead of Foxconn by asking employees to not return to work for another week. Factory operators in China have gone a step ahead and have already started warning their customers about possible delay in fulfilling order commitments. Most international airline carriers have stopped almost all flights to China causing further agony to manufacturers who are used to airlifting important components for their customers internationally. Although the fears of virus outbreak are growing, it is unlikely to create a huge dent in the growing Chinese economy as the virus outbreak coincides with the Lunar New Year holidays. Experts had expected the Lunar New Year to cause some slump in manufacturing as this period is considered as a part of the holiday season.
Factories are also monitoring the health of their employees by gathering temperature reading from their employees at frequent intervals and by issuing guidelines on maintaining personal hygiene. Distributors of consumer electronic goods are also bracing from a supply shock as a result of limited number of factories operating in the region at this time. Manufacturers across China also expressed concerns about receiving raw materials from within the country as checkpoints have been setup within the country to screen truck drivers for possible infection.
We see serious short-term impact on the LBS (Location Based Services) industry as China is the largest producer of GPS Devices, RFID Cards and Readers, Mobile Handsets. China, in addition to being the manufacturing factory for the World, also controls global raw material availability of critical elements in manufacturing and hence operationally alternatives cannot be created quickly. Lithium, the most common storage element for Batteries is controlled largely by China.
We at Safetrax, are presently in a position to service our customers for their GPS, RFID needs for the next two quarters and we believe things should be normal by then.
We express deep regrets for the lives that have been lost due to virus outbreak and the economic tragedy it has wrecked on the Chinese economy. There are a lot of lessons to be learnt globally in this tragedy.