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Tag: global supply chain

  • Sony raises PlayStation 5 costs by as much as 20% in most markets

    Company cites world financial surroundings and inflationary pressures; costs within the US aren’t affected

  • Refurbished units in demand as costs rise

    NEW DELHI :

    Indian consumers are more and more turning to refurbished digital units as international provide chain disruptions take up the costs of recent merchandise. While smartphones are main progress drivers, different digital merchandise, too, have seen rising demand amid the expansion of organized sellers of refurbished items.

    According to a report by analysis agency RedSeer on 5 May, IT providers main Tata Consultancy Services Ltd sources 100,000 refurbished laptops yearly from organized reverse commerce (or recommerce) firms.

    Redseer mentioned the refurbished electronics items market in India may develop to $11 billion in gross worth by March 2026, up from roughly $5 billion in March 2021.

    Siddharth Surana, engagement supervisor, Redseer, mentioned laptops, televisions, headphones, wearables, washing machines, and gaming consoles will represent about $1 billion of the market. “In India, wearables that would contribute to the sector can be the aspirational ones, such because the flagship Fitbits or the Apple Watch,” he added.

    The progress has additionally led companies to develop into extra organized. Organized sellers accounted for just one% of the market and about $20 million gross sales in FY16, which grew to eight% and $400 million in FY21. By FY26, organized sellers are anticipated to outpace the remainder of the trade and account for 20% of the market and submit $2.2 billion in gross sales.

    The progress within the sale of refurbished merchandise has additionally attracted massive e-commerce gamers. While Amazon has been promoting refurbished merchandise since 2017, Flipkart acquired refurbished electronics market Yaantra in January.

    Nakul Kumar, co-founder and chief advertising officer, Cashify, mentioned a majority of the sale of refurbished units is pushed by smartphones. “Around 5-6% of Cashify’s enterprise comes from refurbished laptops, which grew as a result of pandemic-driven demand for units final yr. Another 2% of Cashify’s market comes from equipment, whereas smartphones account for 92%.”

    The Redseer report, too, mentioned smartphones account for 90% of the sector. Fuelling this progress are two components—rising costs of recent smartphone and better revenue margins for retailers.

    “Factors resembling distant work and schooling, pent-up demand because of markets being closed within the wake of the pandemic, tighter funds, and constricted provides had been main the explanation why the refurbished marketplace for smartphones noticed sharp progress in 2021 over 2020,” said Glen Cardoza, senior research analyst, Counterpoint Research. “2021 saw a rise of nearly 25% year-on-year in India’s refurbished smartphone sales.”

    Redseer mentioned whereas a fundamental smartphone begins at $90 ( ₹6,800) in India at the moment, the same used smartphone prices $30 ( ₹2,300). For retailers, whereas new telephones have a margin of about 5%, used telephones may fetch them as much as 8-10%.

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  • A traditional provide chain? It’s ‘unlikely’ in 2022.

    Written by Peter S. Goodman
    With the havoc at ports displaying no indicators of abating and costs for an enormous array of products nonetheless rising, the world is absorbing a troubling realization: Time alone is not going to remedy the Great Supply Chain Disruption.
    It would require funding, expertise and a refashioning of the incentives at play throughout international enterprise. It will take extra ships, further warehouses and an inflow of truck drivers, none of which may be conjured rapidly or cheaply. Many months, and maybe years, are prone to transpire earlier than the chaos subsides.
    “It’s unlikely to happen in 2022,” stated Phil Levy, chief economist at Flexport, a freight forwarding firm primarily based in San Francisco. “My crystal ball gets murky further out.”

    For those that preserve tabs on the worldwide provide chain, the very idea of a return to normalcy has given technique to a begrudging acceptance {that a} new regular could also be unfolding.
    Cheap and dependable delivery might not be taken as a given, forcing producers to maneuver manufacturing nearer to prospects. After a long time of reliance on lean warehouses and on-line techniques that monitor stock and summon items as wanted — a boon to shareholders — producers might revert to a extra prudent deal with additional capability.
    The deepening understanding that the availability chain disaster has endurance poses a frightening problem to policymakers.
    Mayhem at factories, ports and delivery yards, mixed with the market dominance of main firms, is a key driver for rising costs. Spooked by the very best charges of inflation in a long time, the Federal Reserve has resolved to tighten credit score, whereas the Bank of England and different central banks have already lifted rates of interest, sowing alarm in inventory markets from New York to Tokyo.
    A warehouse underneath building in Palmer Township, Pa., on May 11, 2021. The provide chain crunch has made space for storing a premium. (Erin Schaff/The New York Times)
    Public anger over rising shopper costs — particularly for meals and gas — helps clarify why Democrats could also be in peril of shedding management of Congress.
    Record beef costs, together with rising prices for pork and poultry, have prompted the Biden administration to pursue the prospect of antitrust enforcement towards the 4 firms that dominate the U.S. meat provide.
    But regardless of the politicians and central bankers unleash within the identify of taming inflation, companies proceed to wrestle to fabricate and distribute their merchandise.

    Whirlpool just lately warned that prospects who bought its washing machines, fridges and different family home equipment would proceed to expertise delays as the corporate contended with provide chain issues.
    Even as Tesla final week introduced file income amid overwhelming demand for its electrical automobiles, the corporate stated that gross sales can be damage by difficulties within the provide chain — not least on account of continued shortages of laptop chips.
    A gasoline station in San Francisco on Nov. 18, 2021. The rising price of gas dangers stoking public anger, which some political analysts consider may price Democrats seats within the midterm elections. (Jason Henry/The New York Times)
    The chip scarcity has restricted the manufacturing of automobiles worldwide, whereas stymying makers of medical gadgets and an enormous vary of digital devices. US Commerce Secretary Gina Raimondo just lately described persistent chip shortages as an “alarming” risk to American trade.
    The International Monetary Fund final week cited provide chain woes amongst different components because it downgraded its forecast for international financial progress for 2022 to 4.4% from 4.9%.
    The breadth and persistence of provide chain troubles partially outcome from how the coronavirus pandemic has accelerated tendencies which were unfolding for many years, particularly the expansion of e-commerce.
    Whereas main manufacturers historically ship items from factories world wide to central warehouses that provide stores, e-commerce calls for a much more sophisticated endeavor: Retailers should ship particular person orders to properties and companies.
    As warehouses have been swamped by items, main retailers have added capability at a breakneck tempo. Amazon spent greater than $164 million to assemble new warehouse area final yr, whereas Lowe’s, the house enchancment retailer, spent greater than $17 million, in accordance with Reonomy, a business actual property information supplier.
    Containers are stacked excessive on the Port of Los Angeles on Oct. 29, 2021, simply after the port skilled its busiest September ever. (Stella Kalinina/The New York Times)
    Warehouses are stuffed to the rafters within the locations with essentially the most demand — these close to the most important metropolitan areas.
    As of late final yr, warehouses within the Inland Empire area of Southern California had emptiness charges of lower than 1%, in accordance with CBRE Group, a business actual property providers and funding firm. Those in northern New Jersey had emptiness charges of solely 2.4%.
    “The basic physics of land scarcity matters quite a bit,” stated Chris Caton, managing director of worldwide technique and analytics at Prologis, an actual property funding belief centered on warehouses. “If you look at Southern California, you look at the greater New York-New Jersey area, there’s just no more land in the most sought-after locations.”

    The tightness in warehouses helps clarify why US ports stay seized by dysfunction, particularly the busiest one, the advanced of terminals at Los Angeles and Long Beach. With restricted room to stash items offloaded from inbound vessels, containers have piled up on docks uncollected. That has prompted port overseers to pressure ships to drift offshore for days and even weeks earlier than they’ll unload.
    Over the final three months, container ships unloading items have remained at US ports for seven days on common, a rise of 4% in contrast with all of 2021, and 21% larger than initially of the pandemic, in accordance with FourKites, a provide chain consultancy primarily based in Chicago.
    As ports work by means of the backlog, they’re contending with structural issues — growing older and overtaxed infrastructure, a scarcity of chassis used to haul containers with vehicles, and never sufficient drivers, whilst trucking firms enhance pay.
    Shipping firms are hobbled by outmoded expertise that has restricted their skill to anticipate and plan round issues.
    “Those systemic problems in the supply chains, this has been building for years,” stated Steve Dowse, senior vp and basic supervisor for worldwide options at FourKites. “The pandemic has really just highlighted the fragility of our supply chains.”

    Even as firms confront the availability chain upheaval, the prices and complexity of fixing their troubles might dissuade executives from taking efficient motion.
    In a current survey of greater than 3,000 CEOs performed by consulting agency Alix Partners, fewer than half stated they have been taking longer-term motion to alleviate provide chain challenges, whereas a majority stated they have been counting on short-term measures. Regardless of their strategy, greater than three-fourths of CEOs have been skeptical that their plans would show efficient.
    The provide chain issues have endured regardless of a lot speak that they might show a largely momentary phenomenon ensuing from the pandemic.
    In the preliminary months of the unfold of Covid-19 — as markets plunged and American companies laid off employees — producers slashed orders for an enormous array of products on the belief that well being fears, lockdowns and diminished paychecks would restrict demand for his or her wares.
    Using the identical logic, laptop chip producers lower manufacturing. Global delivery firms decreased service.
    That calculus proved disastrously mistaken.

    The pandemic didn’t remove spending a lot as shift it round. People stopped going to eating places, sporting occasions and amusement parks, whereas directing their {dollars} to outfitting their properties for all times underneath lockdown. They added treadmills to their basements, desk chairs to their bed room places of work and online game consoles to their dwelling rooms.
    Many of those items have been made in China. And the surge of demand swamped the supply of delivery containers at ports in Asia, delaying transport.
    As ships arrived at ports from Los Angeles to Savannah, Georgia, they carried extra cargo than dockworkers and truck drivers may deal with. Stacks of uncollected containers towered like monuments to globalization gone awry.
    Shipping firms have expanded their fleets, however the impression has been canceled out by the variety of vessels marooned off ports.
    “A ship that’s queued up is not a ship that’s moving stuff back and forth across the ocean,” Levy, the Flexport chief economist, stated. “It’s a floating warehouse.”

    Many economists assumed that after a couple of months, Americans would exhaust their demand for merchandise, permitting the availability chain to catch up. As vaccines reached the bloodstream and the pandemic loosened its grip on many components of the world, it was thought that buyers would cease shopping for stand mixers and return to eating places.
    This shift has but to occur meaningfully — a seeming testomony to the financial impression of Covid-19 variants like delta and omicron, which have led many to return to social isolation.
    The largest uncertainty facilities on what occurs subsequent.
    Once a family spends a number of thousand {dollars} to outfit an train room within the basement, its occupants might not return to their outdated fitness center after the pandemic ends. Rather than shell out for a fitness center membership, they could choose to put money into further gear at house, including extra weights or an elliptical.

    As white-collar professionals start a 3rd yr of their house places of work, attending video conferences in sweatpants, what number of will bounce on the probability to once more don enterprise apparel? And what does that imply for retailers that promote such clothes?
    These are merely among the variables at play as companies attempt to divine the longer term. The dearth of strong data might dissuade investments — in trucking, in delivery, in warehouses, in expertise — that may ease the availability chain upheaval.
    “All of these head-scratching puzzles, these are really difficult,” Levy stated. “Everybody is wary of getting caught out.”
    This article initially appeared in The New York Times.

  • Why India must look east at Taiwan

    As far again as December 2019, Taiwan’s surveillance of Chinese web chat conversations found that there was a mysterious viral outbreak in Wuhan. Its public illness management equipment was thus primed to shortly put in place strict journey restrictions and in addition rigorously monitor quarantines, which included monitoring through cell phones. Through its “Taiwan Can Help” programme, the country’s health professionals then started to advise other countries. When the world was short of masks, the country’s renowned factories shifted gears quickly and donated 10 million surgical masks. The irony is that while Taiwan might have been best-in-class in responding to covid-19 and in helping the global community, it is not a member of the World Health Organisation—because China objects to Taiwan being recognised as a sovereign nation. Even the New York Times shrinks from referring to it as a country, bizarrely calling it an “island”. However, 2020 marks a shift within the international temper towards Beijing, which has helped Taiwan’s worldwide standing. Continuing controversy about whether or not the WHO is ready to work successfully in China undermined the probe into the origins of the virus (Beijing, in flip, has demanded an inquiry into whether or not its origin was within the US). “It’s essential for nations with outbreaks to tell different nations,” says C Jason Wang, a professor of paediatrics at Stanford University. “Currently, the WHO has to be invited into a country to get the process going. The entire world has suffered for more than a year. There has to be a better way.” For far too lengthy, a Cinderella pushed to the sidelines of geopolitics and international boards, Taiwan’s success in managing covid and alerting the world to its virulence has out of the blue raised the nation’s profile. If there’s one nation India ought to be utilizing as a task mannequin for pandemic administration, in addition to for placing its Make in India initiatives on a stronger basis, it’s Taiwan. On two key counts which have been self-identified by India as key priorities within the decade forward—constructing a stellar public well being system and making certain that native factories are embedded within the international provide chain—the east Asian nation with a inhabitants of 24 million affords a viable mannequin. The China+1 pivot Alan Hao Yang, a professor on the Institute of East Asian Studies at National Chengchi University and government director of the Taiwan-Asia Exchange Foundation, observes that the pandemic has given “Taiwan a possibility to show its functionality to be a accountable member of the worldwide group. Its practices in sharing medical sources and pandemic governance” highlighted the differences between Taiwan and China. In stark contrast, he says, China “took advantage of the strategic window when other major powers were preoccupied with controlling the virus.” This evaluation is shared by Indian analysts attempting to post-facto perceive China’s incursions alongside the Ladakh border final 12 months. Recently, the Financial Times revealed particulars of a letter despatched to Taiwan’s financial system minister from a Joe Biden administration official during which he expressed gratitude for the Taiwan authorities’s “clear dedication to work with producers in Taiwan” to alleviate the semiconductor shortage. In the midst of a global semiconductor chip shortage for automobiles, Taiwan’s global leadership in the industry gives it yet another reason for prominence. Trade in goods between the US and Taiwan has increased three-fold since 2000 and is now close to $150bn. “This is all music to Taipei’s ears. Taiwan has been pursuing a trade deal with the US for at least 15 years,” the FT noticed. Similarly, India too ought to be working in direction of widening contact with Taiwan by exploring a free commerce settlement, says former nationwide safety adviser Shivshankar Menon, who’s a former ambassador to China. Given Taiwan’s manufacturing prowess, particularly in high-end cell phone elements, this could instantly reinforce the Narendra Modi authorities’s production-linked incentive (PLI) schemes. Many Taiwanese giants resembling Hon Hai’s Foxconn and Pegatron are already taking part. As with most import substitution-led industrial insurance policies dreamt up in New Delhi, nonetheless, the chance is that the complexity of managing uncooked materials prices inflated by duties on imported elements will handicap India’s probabilities to be a worldwide provider. The aggressive international cell phone manufacturing enterprise is already dominated by China and Vietnam. In a way, the PLI scheme encapsulates each the promise and the pitfalls within the days forward as India and Taiwan search to work extra carefully. It builds on a rising curiosity for India amidst Taiwanese corporations, arguably the best provide chain managers on the planet. Professor Yang factors to a Taiwanese authorities survey that confirmed that over the previous few years, Taiwanese corporations have invested $2 billion in India, creating tens of hundreds of jobs (This is only a fraction of the $14 billion of outbound FDI from Taiwan in 2018 alone). “Having invested in Southeast Asia for over 40 years, Taiwanese corporations are skilled in assessing areas for his or her provide chain,” he says. But there are plenty of pitfalls ahead too. For one thing, the PLI schemes are skewed towards large companies, whereas most of the Taiwanese companies that played a critical role in making communist China the world’s largest exporter over the past few decades are small and medium-sized enterprises. India’s unique difficulties with bureaucratic red tape also make it difficult for smaller exporters from Taiwan to use India as a base. Recent data shows small and medium-sized exporters in Britain have lost market share as the costs of processing exports rose post-Brexit. The Modi government’s partiality for raising duties on thousands of manufacturing inputs will also prove to be a hurdle for labour-intensive industries, which typically have razor-thin margins. Lo Chih-Cheng, a Taiwanese parliamentarian and member of the country’s foreign affairs and defense committee, feels India ought to be the prime beneficiary of Taiwan’s south-bound policy of the past few years: “It includes not just south east Asian countries, but India and Australia. Logically, India would be the most important country.” Now, with Taipei financially supporting its corporations to facilitate a transfer out of China, he underlines the significance of its SMEs shifting to India. Lo factors out that 98% of corporations in Taiwan are SMEs and 70% of the roles are produced by them. Lo says that Taiwan’s funding has disproportionately gone to Vietnam, Thailand and Cambodia, however observes, “Taiwan and India are pure companions not simply in safety elements, but additionally in constructing a political relationship.” Nicest country in Asia Analysts in Taiwan feel that the two countries have shown that they can cooperate in the transfer of skills when it comes to earthquake-preparedness management or in large-scale manufacturing, but there is more to be done on public healthcare management. Stanford University’s Wang points to the success that Taiwan had in using chips in mobile phones to track people who were under quarantine and ensuring that they stayed at home. He attributes its success to 17 years of preparation following the outbreak of SARS in east Asia in 2003. In countries like the UK, using private companies employing teams of callers to contact people by phone failed spectacularly, in part, because rising infections tend to quickly overwhelm the public health system’s ability to track people’s movements and health using human contact tracers. In a vivid example of Taiwan’s technological prowess, its response to a visit from the Diamond Princess cruise liner was exemplary. Three thousand passengers disembarked from the cruise liner for a one-day tour in Keelung, Taiwan, on 31 January. Wang notes that 627,000 potential contacts from that fateful visit were notified via text messages and asked to self-quarantine or call health authorities if they had any symptoms; 67 Taiwanese were tested, and all were negative. This incident also reflects a digitally-savvy governance set up. Taiwan has often been called the nicest country in Asia by veteran foreign correspondents in the region. Its efficiency and team spirit on display in combatting covid is a classic case of nice guys finishing first. Covid has shown once again that the world has much to learn from democracies in Asia such as Korea and Taiwan—and, indeed, India, which has stepped in to manufacture vaccines at scale. Vaccine diplomacy As India pursues its vaccine diplomacy, Taiwan should ideally be high on its list. Last month, Taiwan’s health minister accused China of pressuring BioNTech just as it was on the verge of signing a contract with a German pharma company to deliver 5 million vaccine doses to Taiwan. The Serum Institute’s head start in global production of the vaccine makes India an obvious partner. Indo-Taiwanese relations are hamstrung in part because of New Delhi’s sensitivity to what Beijing’s bellicose response would be to deeper engagement with Taiwan. On 7 March, China’s foreign minister Wang Yi warned the US that “the Chinese government has no room for compromise or concessions on the Taiwan issue”. Given the tensions on India’s northern border, these are already particularly tough instances for New Delhi to navigate a secure relationship with China. Still, Lo, the Taiwanese MP, argues that on condition that China has grow to be “extra assertive in creating its sphere of affect” in Asia, all the countries neighbouring China should work together. “For now, there is no official track 1 strategic dialogue. There is a need for that sort of discussion. We are facing a strategic threat from China… (India’s unofficial) office in Taipei focuses (only) on economy and trade,” Lo says. Menon cautions that whereas the federal government of India has a a lot greater stake in China, it ought to nonetheless be pursuing nearer ties with Taipei, together with utilizing it as a listening submit to China. Taiwan has been locked out of the Regional Comprehensive Economic Partnership (RCEP) as a result of China is a outstanding member. A bilateral commerce deal as a substitute might improve Taiwan and India’s complementary nature in manufacturing, with Taiwan offering international know-how prowess and information of worldwide provide chains whereas India steps up with its massive workforce and mid-level managerial expertise. There is thus a lot to play for in nearer relations between the 2 nations. Sana Hashmi, a visiting fellow on the Taiwan-Asia Exchange Foundation, says, “In the sphere of science and know-how, cooperation is in depth, however primarily on the observe II degree. However, different elements of the relations have been sidelined because of the lack of a framework or a rule e-book on easy methods to govern India-Taiwan ties.” Lo, the Taiwanese MP, remains optimistic. He admits that he has heard “complaints” from Taiwanese SMEs with regard to their dealings with India’s paperwork. “Any enormous market has dangers and prices, and it’s important to settle for that… In 1979, China was tough,” observes Lo. “Our SMEs are very courageous and willing to go anywhere.” The Quad assembly earlier this month renewed India’s partnership with the US, Australia and Japan. But India has by no means taken smaller East Asian nations as severely because it ought to. Given Taiwan’s pre-eminent position in semiconductor chips and computer systems, and its place as a liberal Asian democracy threatened by Beijing, that shift is already overdue. Despite nearly every day intrusions into Taiwanese airspace by China final 12 months, Taiwan’s exports to the mainland and Hong Kong totalled $151 billion in 2020, underlining how essential China stays as a producing base for Taiwanese corporations. It is one other reminder that for 4 a long time, Taiwan has served because the speedy tugboat that has pulled China into its pre-eminent place in international commerce at this time. Rahul Jacob was the Financial Times’ South China correspondent between 2010 and 2013 Subscribe to Mint Newsletters * Enter a legitimate electronic mail * Thank you for subscribing to our publication. Topics