Electronics Market Battered By Japanese Disaster

by Amit Ben-Yehoshua and Steve David Salem

China’s electronics market has been seriously harmed by the recent earthquake and tsunami that hit Japan on Friday. The natural disaster has forced many Japanese producers of electronics to halt their production lines within China, which will cause the supply in certain Chinese markets to face pressing shortages that could last up to June. Top named Japanese manufacturers including Sony Corp, Toshiba Inc, Canon Inc and Panasonic Corp, have all been forced to close factories affected by Friday’s disaster. Sony has been the most adversely affected, having to close up six of its plants. A Sony spokeswoman has remarked that the main priority is to safeguard the well-being of its employees in the affected areas, and has donated products and money to help Japan recover from the disaster, but added that “the loss to Sony is significant”.

Given that Beijing’s largest retailing market for electronic goods by size, Zhongguancun, does not place orders ahead of time like major retail chains, it is highly dependent on the principles of supply and demand. Therefore, ‘the price of Nikon’s camera D3X (has) increased by 2,000 yuan ($304) within three days of the earthquake’, according to Cheng Ying, a vendor in Zhongguancun. Since the Chinese market does not have enough inventory to challenge the Japanese brands, the consequence could drive Japanese electronic goods sky-high. In addition, Japan exports electronic products worth about $3 billion to China every month, according to the Shenzhen-based securities company Guosen Securities.

Friday’s tsunami swept away 120,000 Sony PlayStation3 units, forcing the price of the item on the Chinese gray market up by 200 yuan immediately. “The 120 gigabyte version is already out of stock. Because of the shortage caused by the earthquake, we will have to raise the price even higher,” said Lei Tao, a games vendor from Zhongguancun.

Many Chinese semiconductor manufacturers have seen their share price rise in the days following the earthquake, but Vincent Gu, an industry analyst from the US-based market analysis company iSuppli Corp, said that the effect was “limited” to the Chinese market because most of the destroyed facilities supplied the Japanese, rather than the international, market.

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