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How the APAC channel can bounce back from COVID-19

How the APAC channel can bounce back from COVID-19

Improvements seen in China but supply chains will continue to be disrupted

Credit: Dreamstime

Through the disruption of the COVID-19, the Asia Pacific (APAC) channel can expect to see a shift in conditions over the course of the short term, with some businesses moving for the better, but others needing to prepare for supply chain disruption.

With the S&P rating for the Asia Pacific region down just 0.8 per cent to 4 per cent for this year, research firm Canalys claims there are select markets that are either managing the crisis well or have passed the worst of the coronavirus disruption, while other markets still need to brace themselves.

The firm stated that China is forecast to see growth of 2.8 per cent, down from previously expected 4.8 per cent, but situations could improve locally as confirmed COVID-19 cases have been in decline since March 2020. 

Even with the rise in international uncertainty however, there is still a rise in demand for certain products, as a Canalys survey found 26 per cent of partners are seeing customer demand grow. 

Although some of this is likely to be short-term hoarding, cloud migration technology is going strong, particularly in Australia and China, as well as managed security, remote management and monitoring solutions.

Chinese cloud service providers are also expected to make their move and expand outside of the country with free offerings, which include Alibaba Cloud, Tencent Cloud and Baidu Cloud.

In addition, Canalys’ research suggested that the channel will survive through the uncertainty caused by COVID-19, but partners will need support from vendors to do so. 

The research suggested that this support can come in three ways – flexible and extended credit terms to alleviate financial pressures, being transparent regarding the supply chain, delivery time frames and stock levels and sales target flexibility, in particular for the first half of the year.

Internationally however, exporting will be difficult as the coronavirus pandemic shifts to Europe and the U.S., causing a decline in demand over the next three to six months.

Additionally, the disruption caused by trying to mitigate the spread of the coronavirus has been worsened by the US-China trade war and Intel inventory shortages, according to Canalys.

Research identified that the major disruptions across the regional channel are being experienced mostly in business operations, supply chain and events.

A survey conducted by the firm found 37 per cent of partners believe the pandemic will have a significant or huge impact on business and have rolled out contingency plans such as remote working and online collaboration.

Government actions like lock downs and social distancing are requiring staff to change the way they do business, with systems integrators and consultancies needing to adapt in particular, especially as they handle projects.

China’s return to work following an absence of new cases of COVID-19 will see its workforce return with factories restarting production. Supply chains, however, are expected not to return to full capacity instantly, affecting shipments of servers, networking equipment, storage and other components.

Additionally, the cancellation of events in the region, as well as around the globe, is expected to hurt the channel partners that rely on networking events for customer relationship building.

Distributors in the APAC channel are facing their fair share of issues. For example, Synnex, which Canalys labels the largest technology distributor in APAC, saw a 12 per cent year-on-year revenue decline for February, particularly in China and Hong Kong.

Problems are also being felt by Malaysia-based VSTECS Berhad and India-based Redington, which both anticipate disruption in their supply chains.

Additionally, Canalys provided an update on the conditions of various countries in the region, as well as some of the mitigations put in place.

Within Australia, the restriction of indoor gatherings to 100 people and the  advice for halting international air travel has disrupted workforces like Telstra and Microsoft, as well as events throughout the channel.

Across the rest of the APAC region, South Korea, Taiwan and Hong Kong have stemmed the tide of coronavirus and Japan’s outlook is optimistic with the summer Olympics scheduled to go ahead.

In Southeast Asia, Malaysia’s two week shutdown of non-essential markets and shops is expected to impact Singapore, as 10 per cent of its workforce is supplied by Malaysia, according to Canalys. Additionally, a surge of new cases in Singapore means COVID-19 is still disrupting daily operations and the Philippines has restricted access in Manila.

India’s positive cases have been low in relation to its population due to its government’s quarantine measures and visa suspensions for the five countries impacted the worst by COVID-19 – China, Italy, Iran, Japan and South Korea – as well as France, Spain and Germany.

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Tags SynnexbaidualibabaCanalysTencentAlibaba CloudTencent CloudcoronavirusRedingtonBaidu CloudVSTECS Berhad

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