SARS (sudden acute respiratory syndrome) entered the world lexicon seemingly overnight. Yet its impact on the global economy, and particularly on the gross domestic product of China and Taiwan, has been much slower to make itself known.
That a microscopic agent could threaten to toss the entire electronics supply network off its axis would have been unthinkable six months ago, when concerns over a possible war in Iraq topped the list of market-thwarting wild cards. And to be sure, the industry to date has handled the crisis admirably, with no reports
of logistics snafus and only a few minor instances of disruptions to manufacturing lines.
Of more concern is the fact that consumers in several Asian countries have curtailed spending, which is translating into higher inventories at some PC makers. Taiwan's Market Intelligence Center now expects China's consumers and businesses to buy 1.91 million PCs in the second quarter, down from earlier projections of 3.13 million. Citing SARS as the principal cause, Taiwan's BenQ Corp. said second-quarter sales will fall 5% to 6% below earlier estimates.
Of course, the timing of the pandemic could not have been worse. With the heavy fighting over in Iraq, U.S. markets last week celebrated their third consecutive month of growth. Corporate earnings are decidedly less gloomy than last year, and EBN's Electronics Buyers' Index rose 20% in May to a one-year high.
A number of executives and government officials have lately claimed that because new SARS cases are fewer, there is evidence that the virus has been contained. Hopefully, that's true, and the world market can remove another variable from its forecasts. However, even if SARS is suppressed, it may take time before the buying public is comfortable rubbing elbows at their local computer retailer.
The silver lining in all of this, specifically in China, may be the fact that the mainland's budding electronics industry has been taking to the Web like never before. ChinaECNet, the joint venture between Avnet and the China Ministry of Information Industries, is reporting a surge of interest in the Internet portal for Web-based seminars and training. Moreover, ChinaECNet's online brokerage service said it has seen an eight-fold increase in traffic in recent months.
While the venerable Chinese concept of Quan Xi--in which business ties are forged through close interpersonal relationships--continues to hold cultural and commercial value, the country's electronics manufacturers must somehow integrate that tradition with the Web if they are to compete and communicate in a global market. It appears that SARS, for all the misery it has visited on the region, may be providing the impetus for that change. E-mail your comments to Andrew MacLellan at email@example.com.