Interview with Sharon Hiu, APAC Channel Analyst with Canalys, based in Singapore.
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.