SARS Tough on Buyers

Study indicates some glitches in purchasing due to the illness, but flexibility remains the saving grace for buyers

Hong Kong — May 20, 2003 — Buyers aren't taking Severe Acute Respiratory Syndrome (SARS) lightly, but they aren't letting it hinder their jobs, either, according to a survey conducted by Global Sources Ltd., a trader solutions provider.

The survey, which examined buyers' views on purchasing volume, prices, impact on suppliers and new product development in the SARS environment, concluded that SARS has definitely impacted the way buyers source.

"With trade shows and sourcing trips cancelled, face-to-face meetings between trade partners are currently not an option," said Merle Hinrichs, Global Sources chairman and CEO. "However, sourcing must continue. More than 60 percent of respondents said SARS was not affecting their search for new suppliers from affected areas. This not only shows buyers' views on the current situation, but also confirms the regions' critical role as a global supply base offering quality, competitively-priced products."

The survey, conducted from May 9 to 19, generated 871 responses from 97 countries. Respondents were all volume buyers, with 50 percent wholesalers/distributors; 20 percent buying/trading houses, brokers and agents; and 17 percent manufacturers and assemblers, with the remaining 13 percent home centers, discount retailers, supermarkets and others.

Buyers said that SARS is having a limited impact on the development of new products, with 58 percent of buyers continuing to develop new products with suppliers in affected areas. While almost 20 percent said they are developing fewer new products, they are increasing their supply of existing products from the region.

Other findings show that just over half of buyers expect prices of products to remain unchanged, while nearly a third expect prices to decrease; fifty-one percent of respondents expect SARS to have no disruption or minor disruption to their current suppliers; and over 60 percent continue to search for new suppliers in affected areas, despite the cancellation of most sourcing trips to, and within, the region.

Hinrichs added: "The absence of face-to-face meetings has led buyers to rely even more on electronic tools to source. We have seen an increase in buyer activity on Global Sources Online, above the growth that we would have normally expected. In April alone, the 385,000 active buyers in our independently-certified community sent 50 percent more inquiries online to suppliers, compared with April last year."

Suppliers on Global Sources Online are also noticing this increased online activity. One supplier, Rick To of Sinomax (Holding) Group Ltd. said, "The quantity of sales inquiries that I receive online has increased, from both new and current buyers worldwide." This reflects the survey findings, where buyers indicated they continue to source new products, as well as increase replenishment of current products from existing suppliers.

The added uncertainty of SARS and sourcing without meeting face-to-face has impacted buyer behavior. While the survey showed that most buyers remain confident, about 15 percent of respondents are feeling the pinch, noting increased prices, major disruption to supply and quality control concerns. Supplier Zhang Xia of Shandong Xinlang Dress Co. Ltd, also a member of the Global Sources community, noted this change: "The urgency of buyer inquires is higher than ever before: Rather than us following up on our replies to buyers' inquiries, they are calling us to follow up on their e-mails."