How Coronavirus has impacted Indo-China bilateral trade

In the first quarter of 2020, China’s economic growth is expected to slow down to 4.5%, which is the slowest since the financial crisis, reports

e4m by Shreshtha Verma
Updated: Mar 2, 2020 9:01 AM
Coronavirus

India and China's history of bilateral trade and cooperation goes back a long way and has been steadily growing over the past decade. There has been strong growth in the economic ties between the two countries with a lot of companies entering India and vice-versa. However, with the recent onset of the Coronavirus epidemic, there has been a significant effect on the socio-economic operations between the two countries.

Chinese companies have made significant investments in media, tv and sporting rights. Mobile phone brands alone are spending up to Rs 2,000 crore on traditional media and sponsorship rights annually, making them the single-largest block supporting the advertising and media industry, tell sources. Unfortunately, the Coronavirus epidemic has happened at the time of the Chinese New Year, which has impacted bilateral India-China trade.

In the first quarter of 2020, China’s economic growth is expected to slow to 4.5 per cent, which is the slowest pace since the financial crisis, according to a Reuters poll of economists.

Chindia Chamber of Chinese Enterprises in India through unconfirmed statistics estimates that the loss to Chinese enterprises is already $50 million.

Kirin Crayons, a multifaceted agency focused on Chinese brands, recently organised an industry roundtable on Indo-China Bilateral Trade relations & the Impact of Coronavirus.

Sukrit Singh, Co-founder of Kirin Crayons feels that the loss to Chinese enterprises may grow manifold till the current crisis abates. The domino effect of this will be on marketing activities.

'Since Chinese companies in India operate on the January-December financial year, the Coronavirus travel ban and the epidemic has washed out the entire first quarter for Chinese brands. Back of the envelope mathematics alone tells us that we can expect a 20-30 per cent cut in spending by them. It was expected that the industry would grow by approx. 10.9 per cent to 75000 ( according to the DAN report 2020) by the end of the year. Keeping this in mind, the challenges with Chinese brands, it would be optimistic to say that the industry would be flat, if not see the growth," tells Singh.

Furthermore, Singh tells that the brand impact story doesn’t end with Chinese  brands alone. "It extends to all other brands and products that get their components, supplies and raw materials from China,  the Indian automobile industry is one of the driving forces of the economy, contributing about 49 per cent to the country’s manufacturing GDP (gross domestic product) and 7.5 per cent to its overall GDP. Currently, the Industry is already slowed down by a bumpy economy - the double whammy of supplies being effected will reduce the traction further. We can expect challenging times for agencies handling auto clients. 

Even factory shutdowns are slowing the flow of products and parts from China, affecting companies around the world, including Apple and Nissan.

India is surely the biggest market for Chinese smartphone brands like Xiaomi, Oppo etc. However, their business is seeing a massive downfall. According to highly place industry sources, Chinese mobile phone brands are spending up to Rs 2,000 crores on traditional media and sponsorship rights annually- that makes them the single largest block supporting the advertising and media industry.

Talking to exchange4media, a Xiaomi spokesperson tells that their business is going a critical phase at the moment yet they're doing their best to adopt all the safety measures.

"Business is critical but the value of human life is the biggest priority for the company. We are continuing to adopt all measures to ensure the safety of our employees and partners and continue to evaluate the situation real-time," says the spokesperson.

He says that the extended shutdown in China is likely to have an impact on their supply chain and, there is a risk of impact on the overall quantum of component supplies. While they are working to explore alternative supply channels for components and raw materials.

"The immediate impact is that the short supply might cause some negative pressure on prices of these components," he adds.

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