CE's Fear, Anxiety Of SARS

If your family is anything like mine they are concerned for your safety whenever you travel overseas, or even on a long domestic trip. In my case that concern has always been expressed quite vociferously. And that was before Sept. 11, before the war in Iraq and before SARS (Severe Acute Respiratory Syndrome).

No, I'm not going to build a "safe room" in my house and live behind duct-taped plastic-sheeted windows, listening to a transistor radio and eating Spam (the meat-scraps type, not the e-mail version) under a flashlight until the world gets safe again. The world was never safe and it never will be. You'll see me at the usual industry events, both here and overseas. All of us must continue to operate and function as normally as we can.

As I write this, a report from Reuters indicated that researchers in Germany found a weakness in the SARS virus and said a drug being tested against the common cold could be modified to battle the deadly illness. While I'm sure everyone hopes a quick development like this is successful, the reality is that SARS may cast a shadow on CES and other international events.

SARS has created a mountain of concern among vendors who sell electronics and appliances that are built and designed, for the most part, in China and surrounding countries. As our page 1 report shows, companies of all types in this industry have changed the way they do business, not in a panic-stricken way, but with a shrewd approach that mirrors the realities of the disease. (See the related story on p. 1 about Thomson's strategy.)

According to our coverage, more and more products are being discussed and designed via phone since individuals and their companies are reluctant to travel around China and its environs as they do normally.

At the very least the number of retailing executives who always travel to the Far East to view new products and provide design input during the summer and early fall may be fewer. Those that do go may be quarantined, by choice, or by their companies, or even by our government. The same is true for those U.S. manufacturing execs who travel to China, Korea and Japan to negotiate pricing and shipment numbers with their factories.

What happens if some factories begin to shut down because of illness in a specific area of China or the rest of the world? Alternate manufacturing sites are now being scouted, with backups in Mexico and possibly the U.S. reaching the top of the list.

And the scariest thought for the industry, aside from a massive outbreak of the disease, is the general public being afraid to buy CE products that come from China or some other area of the world that has suffered an outbreak. What's to be done then, especially in the short term, namely the fourth quarter?

These are just some of the factors that the industry must deal with, and has no control over. When it comes to its effect on business, the fear and anxiety in a situation like this is almost as bad as the disease. The industry must track SARS very carefully to make sure that fear and anxiety of the disease does not cripple business.

Editor's note: The next issue of TWICE will appear June 9. Visit www.TWICE.com for breaking news.