Real Estate

COVID-19 has cascading impact on traders, builders, architects

V Rishi Kumar Hyderabad | Updated on March 02, 2020

Businesses that depend on international travel and procurement face uncertainty

The impact of the deadly novel coronavirus (Covid-19) is having a cascading effect on supply chains and a number of segments.

Regardless of size, businesses that depend on international travel and procurement appear to be facing a lot of uncertainty.

Hyderabad, Bengaluru and other major cities, are no exception. Construction, travel, health, hospitality and, to an extent, household goods sectors are reeling under frozen production and shipments in the wake of the coronavirus outbreak. From mosquito swatter to door mat to luxury items, the Chinese products are in short supply. Project delays could stretch from 90 to 180 days, say people who regularly visit China for trade.

Looking at alternative markets

B Jayaprakash Reddy, CEO of JPR Projects, a Hyderabad-based design and development company, whose business model is import-driven, told BusinessLine, “With project delivery deadlines already stretched, our immediate alternative import market was Milan. If approximately 20 per cent cost escalation itself was a steep challenge, coronavirus spreading to Lombardy and Venito in Italy recently dashed that option too. We are compelled to look at Turkey as another alternative.”

Reddy said, “We have built up business relations with mainland China markets over the past 15 years and it is very difficult to find alternative support markets quickly that can match the established Chinese track record of product innovation, service promptness, price advantage and proven trustworthiness. Frankly, post-coronavirus, international procurement will be a totally new language.”

G Ram Mohan, an Architect, said, “Our funds are locked up with some of the suppliers. I travel practically every month to China for supplies. But I have not gone there since November. I am not sure when I will go there and execute our projects.”

“We were considering Italy for some time after the virus breakout. But with travel advisories, everyone is scared to travel. So we are left with the only option now to source locally, which will escalate our costs by 30 per cent,” Ram Mohan said.

Navin Gurnani, Director of the Mumbai-based Crystal Enterprises, said, “The number of blank calls shipping industry has made has shot up over the past four to five weeks and there is hardly any fresh cargo. Even the goods to be delivered to China have faced problems. Apart from several sectors dependent on Chinese imports, those which procure raw materials and inputs for their produce in India are the worst hit.”

“Interaction with some of the Chinese businesses shows that things have begun to look better from the last week of February and it may take couple of more weeks before things get better. The virus attack coming in the backdrop of the general slowdown and lower sales has further impacted the businesses,” Gurnani said.

Resolve to bounce back

A brief, but structured, survey conducted to assess the supply chain among a cross-section of 200 mainland Chinese suppliers including the construction machinery and equipment, architectural hardware, stone and tile, sanitary ware, lighting and furniture markets as well as a wide range of household goods reveals the Chinese resolve to bounce back regardless of the deep business hits suffered by them, Reddy said.

Hyderabad is one of the largest importers of construction and furnishing goods from China. The less-than-a-dozen local upscale retail showrooms that extend support to hard and soft furnishing projects in Hyderabad, Bengaluru and other prominent cities typically seek in excess of 120 days to deliver the shipments as they too depend on import for luxury products. This becomes unviable for an already initiated project with a frozen delivery schedule.

Published on March 02, 2020

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