Apr, 2020     

China coronavirus hits UAE online shoppers

Apparel, smartphones and electronics are the worst hit as shipments get held up in China.


Dubai: Did that online order you were expecting by February 14 fail to turn up? You may not be the only one to be disappointed.

UAE shoppers are finding their orders are getting delayed, especially when it involves merchandise from China. And it’s only going to get worse over the next few weeks. Blame it all on the Coronavirus.

“Timelines for deliveries have definitely lengthened and for a variety of product categories – from clothing to toys to electronics,” said Altaf Patel, Procurement Manager at Dubai Bazaar, which operates an e-tailing portal and which sources more than 60 per cent of its merchandise from China. “At the lower end of these categories, there are already shortages because most factories in China have not resumed taking orders.”

It’s not just price-focussed portals like Dubai Bazaar that have sizeable China exposures; noon.com has sourcing arrangements through its offices on the Mainland and in Hong Kong. In the last two years, it has made headway by bringing in more Chinese suppliers onto its marketplace.

According to market sources, if in another two weeks the shipping situation does not clear up, this could pose problems in high-volume categories such as electronics and mobile phones. “Outside of Apple and Samsung, the Chinese dominate the smartphone space – any delay in new shipments will play havoc with our first-quarter sales,” said an electronics retailer in Dubai. “We have no clarity from the majors whether they can ensure consistent supplies.

“This is the problem when the whole world puts its manufacturing into one place – China.”

A concern highlighted by Patel as well – “There have been delays already… and prices are moving higher in certain categories because of the shortages that have developed.”

A word of advice for online shoppers – apart from the price, just check the origin of the merchandise.

Away from the online world, doubts over timely supplies from China are felt across sectors. Auto parts traders in Dubai say that supplier factories in China are yet to operate at full capacity after the end of Chinese New Year holidays on February 9.

“In the worst affected regions, some factories are still telling their workers to remain home until they get the all-clear from the authorities,” said a senior official with a trading firm. “It usually takes 45 days for orders to arrive at Dubai ports – if the plants are not operational, we could face supply shortages all through the second quarter.

“One bright side – shipping rates from China might go down drastically – no one wants to import from China these days. Because no one wants to place an order and then have no guarantee about delivery schedules.”

Construction sector puts in Plan B

In the last two weeks, UAE’s construction sector – and industries allied with it – have already put in place alternate arrangements for their raw materials. These days, Turkey is benefiting from China’s woes.

But it comes at a price – “Coated flat products from Turkey have shot up by $150 a tonne in the last few days purely because Chinese supplies dropped drastically,” said Bharat Bhatia of Conares, the steel mill operator. (This is a raw material it uses for its PPGI (pre-painted galvanised iron) production.)

“I don’t think China and its factories will be able to restore halted/stalled production back to full mode within weeks. There are still offloading delays at ports in China – and these are raw materials China needs for its factories.”

For the time being, UAE steel suppliers are starting to get calls from Singapore and other Asian markets; if these negotiations are successful, expect a few major orders to be placed with UAE and Gulf mills for rebars, pipes and tubes. These Asian markets had previously sourced nearly all of their needs from China.

For the moment, UAE’s construction sector has got enough stock to take care of the immediate needs. “From our experience, the market remains well supplied in building materials – and prices have remained stable or in some cases decreased slightly,” said Mohammed Mustafa, Managing Director at Emsquare Engineering Consultants. “This situation could change depending on what happens in the next few months.

“All kinds of materials come from China – from steel to finishing materials. However, in many instances, there are alternative sources of supply that are available. It’s a fluid situation.”

China Woos The Fashion Conscious

Chinese online retailers have built up quite a following among UAE and Gulf fashion shoppers in the last three years.

“So much so, Clubfactory, AliExpress, and Jollychic are leading cross-border trade (CBT) earlier dominated by an Amazon, Asos or Shop & Ship,” said Sandeep Ganediwalla of RedSeer Consulting.

“The key growth drivers are the wider assortment, lower prices, localised marketing strategies, and convenient returns/exchange policies.

“Where they lack is customisation according to local tastes – but so do Western CBT players.”

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