Sign Up for Updates

Business Fallout from Coronavirus Mounts image

Business Fallout from Coronavirus Mounts

While China appears to be getting the Coronavirus under control and production slowly resumes, new concerns flared this week as infections spread rapidly in South Korea, Iran and Italy. Those developments are affecting an array of industries in which licensing plays a significant part, impacting everything from factory output and global retail to key industry trade shows that have been cancelled, postponed, or reduced in size.

The virus’ impact was top of mind for many at this week’s Toy Fair in New York amid continued uncertainty about supply chains and the return of full production in China, which accounts for more than 80% of the industry’s manufacturing. But its spread also is impacting many other industries.

Factories Re-Start Production

Mattel’s factories in China re-started limited production on Feb. 17, while Hasbro, which relies on contract suppliers, said resumption of manufacturing was slower than it had expected. And most toy industry executives we polled at Toy Fair said supply will be an issue if the production delays stretch into May. Many had built up inventory last fall as a hedge against threatened tariffs, which insured supply for Q1.

Officials in the Guangdong region of China that is home to a large part of the housewares industry’s manufacturing base, delayed factory openings to March 1, a move that will likely require 30-day extensions on product deliveries. And in furniture, where limited production began around Feb. 13, the rampup to full manufacturing isn’t expected to start until March. Vietnam-based suppliers for retailers such as Gap and Uniqlo and brands such as Tommy Hilfiger and Nike also face delays in getting raw materials from China.

Trade Show Impact

The Bologna Children’s Book Fair (and co-located Licensing Fair) was just pushed back five weeks to May 4. And retail buyers from across Europe and some from the U.S. skipped this week’s Ambiente housewares show in Frankfurt, Germany.

Yet Toy Fair New York appeared well attended during its four-day run despite The Toy Association’s decision earlier this month to close the China Pavilion due to the outbreak of the Coronavirus. Likewise, the International Housewares Association (IHA) cancelled the International Sourcing Pavilion slated for next month’s Inspired Home show in Chicago. And AW20 Fashion Week in Seoul, South Korea that was scheduled to begin March 17 was canceled, a week after a similar event in Shanghai was scrapped.

And, as a sharp upsurge of cases was reported in Northern Italy, Milan Fashion Week felt the impact.

Meanwhile, there has been “some slowdown” of sales at the 70 Macy’s stores in U.S. with a “strong” Asian customer base, Macy’s CEO Jeffrey Genette told analysts Tuesday in releasing Q4 earnings. Macy’s relies on China for about 50% of the production of its private label brands, which it is increasingly focusing on.

become a member today

learn more

  • Copyright © 2024 Licensing International
  • Translation provided by Google Translate, please pardon any shortcomings

    int(217)