Live-streaming and surgical masks: Chinese smartphone manufacturers adapt to business under restrictions from the coronavirus
Xiaomi, the Chinese smartphone manufacturer, became the first one to host an online-only launch of a prototype product this week, a step that may become normal in the tech industry of the country during the continuing coronavirus crisis.
The founder of Xiaomi Lei Jun, formerly from the province of Hubei, where he did his university studies in Wuhan-the core of the coronavirus outbreak- was emotional on Thursday as he began the live-streamed video forum.
"Heroes reside in Wuhan. The people of Wuhan are courageous, fearless, and hopeful… the epidemic can affect life, but it cannot defeat us,” he said, resisting his tears while donning a mask.
Although the objective of the event was to launch the new Mi 10 prototype 5G phone from Xiaomi, the billionaire business person acknowledged that the smartphone sector was "quiet" during the crisis of public health, and he had hopes of a sooner resumption of normal production.
The online occasion took place after Lu Weibing, Xiaomi's vice-president and the general manager for its Redmi brand, posted an apology on Weibo in the previous month, saying that there had been an interruption of the planned release of new products and the company was implementing changes amid the challenges facing the entire sector.
Live-streaming has quickly become one option of bringing new devices to the market during a time when the coronavirus epidemic has put a temporary end to the possibility of large meetings of people on such occasions.
The outbreak of the coronavirus has compelled the temporary closure of smartphone companies across China after regulators implemented restrictions on large gatherings of people in a single place.
Many brick and mortar retail stores remained shut to minimize individual-to-individual contact, and the stores that have not closed have witnessed a significant decrease in clients because residential communities in Chinese mainland cities have gone into partial closure to mitigate the spread of the killer respiratory illness.
This has led research firms to slash on their predictions on the sales of Chinese smartphones. Canalys and Strategy Analytics anticipate a 50 per cent drop in shipments in the first quarter from the previous year, while IDC predicts a 30 per cent drop.
Wu Yiwen, a senior analyst at Strategy Analytics, wrote in a report that "the coronavirus outbreak will probably interrupt the supply chain and the cycle of launching new products in the first half of this year." She told the Post, "Moving online focuses on short term…to some extent, I think these efforts are effective (in controlling the impacts of coronavirus)."
Other major brands such as Huawei Honor, Oppo-spin off Realme, and Blackshark from realme have also followed suit in launching new products online.
With a minimal reach of physical shops, consumers have no alternatives but to purchase their new phones online. According to a report by IDC, there will be a significant increase in the proportion of online sales in the first half of the year.
While launching products online and e-commerce stores offer a venue for vendors of smartphones to display and sell new gadgets, an offline medium is still critical because they provide more interaction with prospective buyers.
Jia Mo, an analyst from Canalys research agency, said that "offline medium (are still very critical), making up 70 percent of all the Chinese sales."
The significance of offline medium in launching products and sales is evident in the efforts of the leading Chinese smartphone manufacturers, such as Huawei, Oppo, Xiaomi, and ZTE, to maintain the annual biggest show of the mobile sector before its cancellation because of the concerns of the outbreak of coronavirus. The companies dispatched crews of workers to Spain weeks before MWC Barcelona after the organizers said that it would be a requirement for all visitors to substantiate that they had not visited China for not less than two weeks before the occasion.
Nonetheless, after the withdrawal of the major participants such as LG, Nokia, Vodafone AT&G, Sony, and Intel from the show, the organizer GSMA had no option but to call off the entire exhibition, which was to take place from 24 to 27 initially.
Oppo said it approves the decision of GSMA, reckoning that the firm has adjourned its global meeting of Oppo Find X2 that was to happen two days before MWC Barcelona. Xiaomi adjourned the global launch of its Mi 10 series product initially slated for February 23.
Wu from Strategy Analytics said that Vivo, which had declared its aim to withdraw before the cancellation of the show, was instead "greatly promoting is online-focus series, which is expanding to India this quarter". he further added that "growing in markets abroad has a more long-term focus."
With the launching of new products and the continuing overseas expansion, though mostly through online marketing, the focus is to resume full-scale production at the factories of Chinese smartphones, which subcontractors operate such as Foxconn and Pegasus, which make 70 percent of globally sold smartphones.
Conventionally, the duration between February to March is the phase where manufacturers test a product before beginning mass production after the Lunar Year holiday. Report by IDC said that “any alteration in the plan of a product in the first half of the year will hurt medium and even long-term plans,” reckoning that it predicts that the Chinese smartphone sector will decline 4 percent in 2020.
If subcontractors of smartphones such as Foxconn, Pegatron, and Flex-which make phones for brands such as Apple and Huawei- fail to resume full production in a short period, it could prevent the ability of brands to bring their newest gadgets to the sector.
According to a report by state-owned media Xinhua, Oppo is seeking to bridge the shortage by delegating most of its production to centers of manufacturing in Indonesia, Algeria, India, Bangladesh, and other nations.
The vice-president of Oppo, Shen Yiren, posted on Weibo that the crisis will significantly impact on the production of its upcoming prototype smartphone since there will be tight supply. She reckoned in the post that "the productivity of any segment of the chain of supply, even the packaging box, will affect the factory production of the whole phone."
With the experience of a shortage of resources in the medical sector, some electronics firms have begun making protective face masks for themselves. The leading supplier of Apple, Foxconn, has altered some of its production lines to make surgical masks for its employees, as it adjourns to the continual of the full-scale output as a result of the crisis. At the same time, Vivo is alleged to have two production lines dedicated to producing masks.
Jia said that "factories are taking steps to mitigate the coronavirus but producing mobile (device) consumes a lot of labour…it will be disastrous if one case of the virus is found in the factory. "nevertheless, if production fails to resume, the firms incur huge daily losses."
Automation could assist in the quick recovery of production lines amid the crisis. Taiwanese-owned Foxconn anticipates to fully automate 30 per cent of its China production within the year. Zaker Li, a senior analyst of the industry at Markit said that “automation can provide a solution and it is a trend, but the process of automation requires high cost of investment.Source