Chinese device brands such as Lenovo, Xiaomi to see manufacturing, sales delays due to coronavirus

Chinese device brands such as Lenovo, Xiaomi and Oppo are likely to face operating issues as the spread of the new coronavirus leads to manufacturing delays at factories and the temporary closure of retail stores.

The deadly coronavirus, which originated in the city of Wuhan in Hubei province and has since infected over 20,000 and killed over 400, has led China to extend the Lunar New Year holiday and enforce mandatory factory shutdowns from January 31 to February 9 in an effort to contain the outbreak.

For smartphone companies in China, the suspension of factory operations could lead to a snag in manufacturing processes and even supply shortages, according to analysts. This is especially so for companies who rely on factories and components in the province of Hubei – ground zero of the outbreak – where many cities are currently under lockdown.

“Companies which rely on components from Hubei will be the most impacted, such as Lenovo,” said Canalys vice-president of mobility Nicole Peng. “For companies like Huawei, whose operations are in Guangdong, the situation is less severe, although no company right now will be able to resume factory operations at 100 per cent capacity.”

The longer factories are unable to resume operations, the larger the impact and uncertainty, said Peng. This would make it difficult for brands and manufacturers to implement business planning. The supply chain issues in the tech sector are just part of a bigger economic problem for China as a result of the coronavirus outbreak, with Wuhan an industrial powerhouse for the steel, semiconductors and automotive sectors.

“Uncertainty is going to bring the biggest damage to [these companies],” she said.