Economy "Corona virus is now reaching the economy"

“Corona virus is now reaching the economy”

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The short-term cancellation of the Mobile World Congress (MWC) in Barcelona caught the smartphone industry cold. Several months of preparation are now free. The organizers face high monetary demands. And that’s where the problems begin.

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The short-term cancellation of the world’s largest mobile communications fair MWC in Barcelona due to the corona virus causes high costs and has been regretted by industry representatives. The cancellation costs were around 100 million euros, according to organizers. This does not yet include losses for participating companies including hotels and other affected companies in the host city. “The Barcelona region will be hit hardest by rejection,” said Eric Matthes of Nokia handset maker HMD Global.

The GSM Association announced on Wednesday evening that the Mobile World Congress (MWC) would not take place from February 24-27 this year due to health risks. The trade fair in Barcelona is usually one of the most important industry shows with more than 100,000 visitors and around 2,800 exhibitors from all over the world.

That is why the MWC is so important

“For the smartphone industry, the MWC is the leading international trade fair and the entire industry meets there,” says Franko Fischer, head of the DACH region (Germany, Austria, Switzerland) at the French smartphone manufacturer Wiko. “We make very specific business deals, introduce new products, inform ourselves about the market and thus get an overview of how the industry is developing.”

The manufacturer of the Nokia mobile phones HMD Global also regrets not having to do this this year. “We now have to completely reschedule,” says Matthes, who heads the Nokia mobile phone business in Germany, Austria and Switzerland. Several months of preparation are free.

Live stream or own event?

Wiko sees an advantage over the top brands when it comes to re-planning: “Fortunately, unlike large corporations, we can react relatively flexibly, keep to our schedule and the damage is limited,” says Fischer. “Due to our close network in the industry, we will either bring the meetings forward or catch up, some in person, some by email or video call.”

Matthes finds the MWC’s rejection particularly regrettable for PR reasons. In previous years the fair was always a guarantee for international attention. Now the smartphone manufacturers are faced with the decision whether to hold their press conferences anyway. Sony, for example, simply wants to present its new products in a livestream.

Other companies will plan their own events, sometimes with a lot of effort. That of course costs. “There will be a lot of discussions about money in the coming weeks,” says Matthes. After all, the stands in Barcelona are already paid for. “Half of the fair is already there,” says Matthes. Companies will probably have to write off part of the expenditure.

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The search for the ideal time

In addition, there are possible deadline conflicts: The manufacturers run the risk of having to hold their product presentations in the shadow of a larger competitor. It’s not a big problem at the Mobile World Congress. After all, the distances are comparatively short. But if five different manufacturers invite to five different cities, the editors will have to refuse a few.

Both Fischer and Matthes are optimistic that their companies will be able to cope with the consequences of the MWC failure and that the new products will “make the headlines” even without the trade fair. But the health crisis in China remains an industry issue. “The corona virus is now reaching the real economy,” says Fischer. And Matthes also thinks: “The crisis has suddenly come closer.”

The corona virus crisis puts production at risk

Several cities in which major suppliers to the tech industry are located are under quarantine. More and more airlines are closing their connections to China. As a result, the production and supply chains get out of step. While the MWC’s cancellation is primarily a media loss, manufacturers are much more afraid of production delays. “The MWC failure is just a small stone in a large construct,” says Matthes. If the crisis continues, it could become “critical” for the smartphone industry.

And not just for them. There is also no international exchange in the mobile communications sector. “The Mobile World Congress would have been particularly important this year,” commented the president of the German industry association Bitkom, Achim Berg. “Worldwide, 5G networks are in the pipeline. Technology and the market are extremely moving, it is about billions in investment. The most important platform for this topic is now missing.”

“Epidemic of fear”

The Catalan Minister of Health Alba Verges expressed no understanding of the cancellation. “The epidemic here is an epidemic of fear,” she told AFP. There is “no health reason to cancel any event in Barcelona”.

Local hoteliers pointed out that the trade fair week was one of the most important of the year for them and that there was no chance of catching such short-term cancellations. Representatives of the entertainment industry in Barcelona and the taxi industry also spoke of economically “very important days”. City economist Angel Barbero called the cancellation “a disaster”.

The GSMA reacted with its decision to the withdrawal of important companies: In the past few days, the telecommunications groups Vodafone, Nokia, Deutsche Telekom, the British BT and the Japanese Rakuten announced that they would not participate in the fair this year to prevent the spread of the Coronavirus not to feed.

So far, only two cases of infection have been registered in Spain. However, according to the organizers, there are usually 5,000 to 6,000 participants from China, where the corona virus was first detected and is the most common with more than 44,000 known infections.

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