Aftermath of China's Factory Shutdown... Home Appliance Inventory Revealed for Dryers and Laptops

Samsung Electronics, which halted operations at its Suzhou factory in China,
will only be able to ship new AI dryers to India in early next month
due to supply disruptions and depleted inventory amid COVID-19 impact,
while Hyundai Kia's January sales in China halved amid a sharp domestic demand slump.

[Asia Economy Reporters Hyewon Kim, Dongwoo Lee, Jihee Kim] The supply chain crisis triggered by the COVID-19 outbreak originating from China has hit the domestic home appliance industry following the automotive sector. While five automakers, including Hyundai Kia Motors, are facing a 'production cliff' due to parts inventory shortages, Samsung Electronics, which temporarily suspended operations at its Suzhou plant in Jiangsu Province, China, is also struggling with shortages of some products such as dryers, washing machines, and laptops.

According to Samsung Digital Plaza's inventory information system on the 17th, all units of Samsung Electronics' AI dryer 'Grande AI' All-in-One Control model were sold out as of the previous day. The All-in-One Control system is an industry-first feature by Samsung Electronics that allows operation of the dryer from the washing machine control panel, making it one of this year's strategic products. These are imported entirely as finished products from the Suzhou plant in China.

For the new standard AI dryer models without the All-in-One Control feature, all stock except for the silver color has been depleted. About 40 units of the Black Caviar color are scheduled to be shipped from China to Korea on this day. Only six units of the silver color remain in stock.

Multiple dealerships explained that if ordering the All-in-One Control Grande AI dryer today, delivery could be as soon as the 25th or as late as early next month. A Samsung Digital Plaza representative said, "All new AI dryers are imported from China, but due to supply disruptions caused by COVID-19, orders have been piling up since the 10th," adding, "Not only dryers but also new laptops produced at the same factory have experienced delayed supply for a week."

Samsung Electronics' current supply instability of new products is attributed to the impact on the second batch of production caused by the suspension of the Suzhou plant's operations earlier this month due to the spread of COVID-19 in China. Samsung Electronics stated, "Since restarting the Suzhou plant on the 10th, there have been no issues with product supply," but frontline sales outlets are struggling due to a lack of inventory.

Domestic automobile factories, which were closed for up to nine days due to the direct impact of the COVID-19 crisis, are resuming operations from today. However, while emergency procurement of Chinese-made wiring harness parts has halted the shutdown for now, production adjustments such as line-specific output reductions are being implemented to respond flexibly. Hyundai Motor, which began sequential shutdowns from the 4th, has already resumed operations at its plants between the 11th and 14th, and today all production lines at the Ulsan and Asan plants are operating normally. However, due to insufficient parts, the proportion of 'empty conveyor belt' operation?running the conveyor without vehicles to assemble?is relatively high.

While production disruptions at manufacturing companies caused by the COVID-19 crisis are problematic, the fact that the Chinese domestic market has already frozen solid further darkens the outlook for the industry. The world's largest automobile market, China, is staggering, causing Hyundai Kia Motors' performance to shrink by half since the beginning of the year. According to the China Passenger Car Association (CPCA), passenger car sales in China last month were 1,699,000 units, down 22% compared to the same period last year?the largest decline since 2005. This is due to a sharp contraction in consumer sentiment amid the spread of COVID-19 around the Lunar New Year holiday.

During this period, Hyundai sold 65,500 units and Kia sold 22,000 units. Compared to January last year, these figures represent decreases of 40.6% and 52.1%, respectively. Hyundai Kia Motors' market share in China, which was 7.2% in January last year, has fallen to the 5% range. The CPCA forecasts that sales will drop by more than 30% this month due to the impact of COVID-19. With worsening consumer sentiment and production delays combined, there is also a forecast that the Chinese automobile market slump may continue through the first half of this year.

A survey conducted by the Korea Economic Research Institute, commissioned to market research firm Monoresearch, targeting the top 1,000 companies by sales, predicted that if the COVID-19 crisis continues for a relatively long period (over six months) like SARS (Severe Acute Respiratory Syndrome, November 2002 to July 2003) or MERS (Middle East Respiratory Syndrome, May to December 2015), annual sales and export volumes would decrease by 8.0% and 9.1%, respectively, and exports to China would drop by 12.7%. The top two industries with the highest sales decline rates were automobiles (-13.9%) and auto parts (-12.8%). Following were petroleum products (-12.4%), general machinery (-11.0%), and textiles (-10.8%). These rates exceed the average for major industries (-8.0%).

Yoo Hwan-ik, Director of Innovation Growth at the Korea Economic Research Institute, said, "Especially among companies with production facilities in China, 83.9% are expected to suffer adverse effects on management due to the COVID-19 crisis," emphasizing, "The government should take a more proactive approach to support affected companies through enhanced export and customs clearance assistance, financial support, and expanded loans."

This content was produced with the assistance of AI translation services.