VENDOR PAIN
Virus disruption means low growth
The domestic IT market is braced for a supply shortage in Q2 after production disruptions in virus-hit China.
The domestic IT market is expected to be hard hit by a supply shortage in the second quarter following a production disruption in virus-hit China, say IT vendors.
Somyot Chaowalit, chief executive of JIB Computer Group, a major IT retailer, said he downgraded the firm’s business growth this year from 5% to flat.
“In the second quarter, the shortage of new products will become serious as factories in China have yet to resume full production capacity,” said Mr Somyot.
In the first two months, the company saw an 8-9% drop in sales at retail shops, but online sales increased by 40%, he said.
Mr Somyot was speaking at Commart X PRO 2020, a four-day computer show and sales event that kicked off yesterday at Bitec.
He said the number of buyers the first day was 10% below the last event, which is better than expected.
“They tend to come to buy and leave fast,” Mr Somyot said.
This event has had average discounts of 3,000-4,000 baht per computer set, compared with 2,000-baht discounts usually, he said.
JIB sees strong demand in mid and high-end gaming computers, said Mr Somyot. The company remains uncertain on when the virus would be contained and how it would affect the market.
Somsak Pejthaveeporndej, chief executive of VST ECS Thailand, a Hong Kong-based IT distributor, said IT products are mainly produced in China. As factories in China are operating at 50-70% of their production capacity, a shortage of computer products can be expected in the second quarter.
Inventory is nearly depleted and orders must be made 1-2 weeks in advance, he said.
Chukkrit Watcharasaksilp, chief of sales and marketing at Advice, a major IT retailer, said IT product prices are likely to increase in the second quarter because of the weakened baht, a 20-30% rise in freight charges and the supply chain disruption in China.
“We have to manage our inventory to meet demand. If we run out of inventory, we will lose sales opportunities,” said Mr Chukkrit.
In 2020, overall IT spending is expected to decline 10% because of the outbreak and economic woes, he said.
Normally sales from the three major IT distributors averages 170 billion baht per year, including mobile phones.
Pornchai Jantarasupasang, assistant general manager of ARIP, the organiser of Commart, said the event is likely to see a sales drop of 10-30% from 2.8 billion baht recorded at a computer fair in the fourth quarter last year.
This event is likely to see 700,000 visitors and 2.5 billion baht in revenue, he said.
The exhibition area has shrunk by 20% from the last event as major IT retailers Advice and Banana pulled out from concern for the coronavirus outbreak.
The event increased the budget 10% to provide incentives for people attending, including insurance coverage for coronavirus and coupons.
Zero-interest instalment payments for up to 24 months for select computer models are also on offer for the first time.
Mr Pornchai said buyers tend to ask for information and order products from vendors in advance, them come to pick them up at the event, reducing time spent at the site.
On the first day of the show, attendees were projected to have declined by 10% from last year, better than expected, he said.
If we run out of inventory, we will lose sales opportunities.
CHUKKRIT WATCHARASAKSILP
Chief of sales and marketing, Advice