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Coronavirus impact hard to gauge

As Chinese manufacturing is set to resume after a prolonged halt due to the Lunar New Year and then coronavirus, it remains unclear how severely the Australian photo industry supply chain will be affected.

The battery cover of a Fujifilm X-T20. Made in China!

Chinese manufacturing plays a huge role in the supply chain of almost every tech industry. While most major photo imaging companies are based in Japan, many rely on either assembling products in China or sourcing parts from the region.

Nikon, for instance, has operating plants in the Guangdong and Zhejiang Provinces that specialise in camera components. Numerous Nikon lenses are likely assembled at one of these two Chinese plants. Likewise, Fujifilm manufactures some X series camera models in China, including the enthusiast X-T200. As does Sony. There are undoubtedly others that are left exposed, or may be impacted, by the deadly coronavirus.

Immediate effects of the outbreak haven’t yet been felt in the Australian photo industry, partly due to the manufacturing halt coinciding with the Chinese New Year on January 25. Every Chinese New Year factories halt or slow down for anywhere between a week to a month, and suppliers factor this in to ensure it won’t result in a shortage.

However, the virus has forced many factories to remain closed for longer than usual, and experts are uncertain to what affect this will have on the global manufacturing supply chain.

‘We’re hearing some retailers are being told that supply will be a few weeks late because of coronavirus,’Australian Retailers Association chief executive, Russell Zimmerman, told The Australian this week. ‘Now, most retailers have actually stocked up because of the Lunar New Year, and supply is usually a little slow coming in from China around this time of year.

‘But again the question is how long these delays are going to take? When are the factories going to be up and running again?’

Zimmerman’s words are echoed by Jeff Servaas, founder of Melbourne’s Protog – a professional equipment distributor which sources some products from Chinese companies.

Jinbei and Yongnuo are two well-known Chinese companies distributed by Protog.

‘All but one of our [Chinese] factories returned to work yesterday,’ he told Inside Imaging. ‘The last one is due to return to work at the end of the week. Normally the country shuts down for one week for Chinese New Year. We are used to working around their holiday, and stock up accordingly. The extra week will mean a bigger backlog of production for them to work through, but from discussions we have already had this week, it sounds like it will be back to normal within a few weeks.

‘What is harder to predict is the secondary lag from getting all that new production loaded onto ships. There is only so much shipping capacity available worldwide. We expect to see some delivery delays in March and April as a result. This will affect most of the photo industry, as many western brands manufacture in China, or source components from China.’

So far only Sony, with four major factories in China, has made any public statements, noting that the coronavirus outbreak could ‘enormously’ affect its supply chain.

Hiroko Totoki, Sony’s CFO, told Nikkei Asian Review ‘depending on the future progress of the virus, we cannot deny that our production and sales supply chain for the image sensor and electronics business could be affected enormously.’

Sony has been unable to contact its factory operators in China due to the halt in operations, so it was difficult for Totoki to make an accurate assessment. Sony’s Chinese-based semiconductor operations covers its smartphone image sensor manufacturing. The company also supplies image sensors to Nikon, Pentax, Olympus, and Leica, but it’s unknown if Chinese factories have any involvement.

Kodak-branded film, paper, and chemistry is also sourced from China. Stuart Holmes is managing director of local Kodak distributor, Independent Photographic Supplies. He said that ‘to date supply has been relatively unaffected. We understand that for safety reasons, all factories and facilities in China were closed for a period of a week or two as a precaution against the spread of the coronavirus, but have reopened again this week.’

IPS warehouses a minimum of three to four months worth of stock, so Stuart is confident that short term disruption will not affect ongoing supply.

Likewise, Camera House reports no delays so far in the supply of photo products.

‘All distributors are monitoring the situation both from a distribution, manufacturing and component supply point of view,’ Paul Rogers, Camera House general manager, told Inside Imaging. ‘As most people only went back to work this week after the holidays, they will know more over the coming weeks.’

So, for now, it’s difficult to speculate the extent to which the coronavirus will affect the photo industry supply chain. However, news this week of an escalating death toll seem to indicate that the epidemic will get worse before it gets better.

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