Episode 206 – COVID-19 impact on Asia’s technology sector, Canalys Update #2
Interview with Sharon Hiu, APAC Channel Analyst with Canalys, based in Singapore.
This is our second update podcast (recorded 22 May, 2020) to gain current Canalys observations of the APAC Technology Channel sector and the impacts of the COVID-19 pandemic.
What has been the overall impact for Asia?
- Generally, partners are more optimistic now than they were in March, as they made adjustments to their businesses and access financial support extended to them by vendors and other agencies. Recognition as essential workers during the pandemic.
- Overall customer satisfaction of how IT has shown their support for the businesses is high
- Financial performance in the technology sector performs better than expected and demonstrates the role of IT individuals, as well as cloud, in a crises.
- China extends its 5G lead as Europe postpones 5G rollout and US grapples with the pandemic
- IT pricing increases due to impacted supply chain. Likelihood of IT supply chain shifting away from China moving towards a more distributed one
- Overall better infrastructure to manage crises and facilitate decentralized workforce
- Business outlook continues to remain uncertain as governments seek to ensure the virus remains under control and recession hits markets
What can we expect to see as countries relax lock-down restrictions?
- Placing priority towards physical area cleanliness and ensuring that the virus does not resurge. Hong Kong and South Korea show that this is possible, although we have learnt never to underestimate.
- Opportunities in robotics and automation, surveillance to identify health violations
- Possible consumer spending surge due to pent up demand during lock-down. Chinese were “revenge shopping” and “revenge travelling” post lock-down.
- Organizations that are digitally enabled are more resilient and will better weather through 2020. Some organizations have invested but overall, we can expect greater investments in cybersecurity and optimization of remote work.
- Marketing and sales are done digitally more, which has several implications including budget shifts away from physical events in 2021, experimenting for better digital audience engagement, training in new skills. Vendors like the extensive reach allowed by digital, which translates to a higher likelihood of better ROI.
- In terms of web-conferencing, APAC seems to be more at ease using voice only while Caucasian counterparts are very comfortable with videos.
What are some longer term impact?
- Market recovery depends on how well the virus is contained and stimulus measures
- Projects that were paused previously might resume but we’ll probably can tell better in a few more weeks.
- Hybrid model for future events where virtual attendance becomes the norm?
- More flexible work arrangements
- Formalization of data protection and privacy laws, reassessing labours laws such as minimum wages and compulsory leave days, increased efforts self-sufficiency in essential goods and materials such as food and agriculture supplies.
Episode 197 – COVID-19 impact on Asia’s technology sector, Canalys Update #1
This is an update podcast (recorded 20 March, 2020) to capture Canalys observations of the APAC Technology Channel sector and impacts of the COVID-19 pandemic. This follows Episode 194, recorded 28 February 2020 – COVID-19 deals a major blow to Asia’s technology sector, Canalys Report).
The latest reports on this tremendously challenging situation, published in the last 24 hours in the Canalys Channels and Partner Program Analysis services include:
How are APAC channel partners dealing with the ongoing COVID-19 crisis?
- The supply chain situation in China is gradually improving, with factories restarting work and production close to pre-virus levels, but exports will suffer as demand falls in the West
- Partners need to be brave and look at alternative areas to grow their businesses
- Vendors will need to support partners, especially in terms of flexibility in payment terms and short-term sales targets
What effect will COVID-19 have on the US economy and how can the impact be minimized?
- There is no manual for the economic situation facing the US
- The challenges start with transport and hospitality but extend to other sectors
- The technology sector can play a key role in helping the economy in both the short and long term
Key points include:
- There will be a global recession, that is certain. The only question is how severe that becomes.
- Smartphone manufacturing capacity in China is resuming back to a 90% level, better than originally predicted.
- Many EMEA and APAC partners are expecting IT supply shortage in Q2. The shortage in EMEA for Q2 is exacerbated by the demand surge in Q1. Product delay will be mainly due to logistic issue. Cargo capacity is cut massively.
- Partners across APAC, including Singapore, India, Malaysia, Philippines, are now being told to work from home, with the exception of China.
- Some of the impending impacts are unclear yet for partners, especially those who have just started to see COVID-19 increase, including India.
- Demand for remote working solutions and collaboration tools has given a short term boost to the channel
- Retailers in Thailand are seeing a decrease in their offline sales, but e-commerce sales increase significantly from before.
- Some partners are expecting IT price increases due to weakening currencies.
Effective communication between vendors and partners is critical, and vendors should prioritise virtual and digital engagements with partners to share information:
Information on product supply and flexibility in Ts & Cs are the top two areas partners want from vendors. The first of which is more difficult for vendors because in some cases, they are uncertain themselves. Nevertheless, to the extent possible, provide as much transparency as possible when it comes to the supply chain, including being clear about delivery time-frames and stock levels.
Vendors should be prepared to alleviate financial pressures through flexible and extended credit terms. Revise and be flexible when it comes to sales targets, especially for the first half of the year.
Recorded 20 March 2020 between Sydney and Singapore with reports of 169 countries recording cases, with COVID-19 cases surpassing 209,000.
Episode 194 – COVID-19 deals a major blow to Asia’s technology sector, Canalys Report
Interview with Sharon Hiu, APAC Channel Analyst with Canalys, based in Singapore.
Canalys Report, ‘COVID-19 deals a major blow to Asia’s technology sector’, dated 20 February highlights the COVID-19 outbreak will hurt Q1 sales in APAC, especially of smartphones, PCs and component products. But customer adoption of cloud-based services will increase as more people use videoconferencing and collaborative and online tools to execute business continuity plans and reduce travel.
Vendors are focusing on partner training and maintaining close communication with customers and partners. Technology vendors and channel partners in the Asia Pacific region face the unexpected challenge of coping with the sudden outbreak of COVID-19 (coronavirus). The crisis was largely unforeseen, even in mid-January. Most leaders this year were anticipating disruption from political instability and natural disasters, not an epidemic. Major technology and partner events around the world were cancelled soon after the World Health Organization (WHO) declared a global health emergency. China has taken the brunt of the social and business impact so far, but the rest of Asia Pacific and other regions around the world will face similar problems if the virus continues to spread.
As of 20 February 2020, the WHO has said that new cases in China are falling but also warned that any apparent trend must be interpreted very cautiously. Worldwide, there are now over 75,000 confirmed cases, with over 56,000 yet to recover. Over 98% of cases are in China. The immediate effects on supply chains, workflow disruption and lower spending will result in an economic downturn if restrictions on travel and factories remain. The extent of the downturn will depend on how widespread and protracted the virus becomes.
Recorded via Sydney and Singapore, 28 February 2020, with reports of a second wave of outbreaks, with COVID-19 detected in 49 countries and over 80,000 cases.