Coronavirus Forces Samsung To Change It’s Modis Operandi
Yesterday Samsung Australia was forced to conduct a video briefing to media Companies for their new Samsung Z Flip smartphone it was a whole new way of doing business for both Samsung and media Companies.
The virus has already transformed Samsung’s operations as it has for hundreds of other consumer electronics and appliance Companies.
Earlier in the week Samsung issued an internal memo urging all employees to “work from home where possible,” and said it would be conducting health screenings, including temperature checks, before allowing workers to enter any of its facilities.
The big Korean tech Company has also restricted travel to trips that are “mission-critical,” it said.
Meetings with retailers are now done over a Zoom connection.
Yesterday Samsung held their AGM in Korea attendees were told how Samsung had initiated a program to moved its factories out of China with some production still being held up because they are still reliant on components from China for its new factories in Vietnam and India.
At the shareholder meeting D.J. Koh, president and chief executive of the company’s IT and mobile-communications division, acknowledged the virus was forcing them to revise demand projections for the company’s handsets.
“Originally the demand for smartphones was expected to grow this year,” he said. But with Covid-19 and the possibility its effects could last longer than expected, “the smartphone market is somewhat contracted.”
Last month Samsung moved to splash the cash among suppliers offering $2.1 billion in loans and cash payments to local suppliers to priortise Samsung over other Companies.
What was set to be a big year for Samsung has turned into a nightmare scenario as demand for Samsung’s handsets fall, now that the virus has reached the U.S. and Europe and is spreading across Australia.
Analysts have estimated the widespread lockdowns and quarantines in China, the world’s largest smartphone market, have depressed handset demand by more than 30% in the first quarter.
Australia is are expected to see a more moderate decline in sales as communication is vital in a time of crisis said one analyst.
Samsung recently had to shut down the factory where they manufacture its Galaxy Z Flip devices and some Galaxy S20 phones.
This allowed the Company to disinfect the premises after cases of coronavirus were detected, the plant is now back operational.
Samsung executives that ChannelNews has spoken to said that supply-chain issues are improving and the Company is confident that they will be able to deliver stock to retailers, what is uncertain is whether consumers will actually buy consumer electronics and appliances while there is so much uncertainty about jobs.
The slump in demand across Australia has affected Samsung plans to grow share in the TV appliance and smartphone markets as well as in the PC market.
Prior to the downturn the Company was set up to woo consumers with its newly 5G S20 line of smartphones with the Company already dominating the 5G handset market in Australia.
The big problem now for Samsung Australia and archrival LG is inventory with air freight shut down and sea freight restricted.
Also set to impact the local operation is the close down of Europe where some Samsung TV and battery manufacturing operations are located.
Samsung manufacturing plants in the USA including a washing-machine factory in South Carolina are now closed.
The big plus for Australia is that Samsung Chinese and Korean plants along with their Indian and Vietnam plants are now coming back online, this allows the Company to supply retailers with some analysts tipping that this could benefit Samsung as they are a trusted brand.
Analysts are tipping that the recovery could be slow.
“The expectation of a quick recovery has diminished the further out we’ve gotten. Uncertainty keeps going up and the news keeps getting worse,” said IDC analyst Linn Huang, who has been assessing the pandemic’s impact on device sales trends.
South Korea, where Samsung’s key factories are based, has emerged as a world-wide model for combating Covid-19, with widespread testing and treatment that has helped cap cases as other manufacturers struggle.