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March 9, 2020
GSMA cites ‘force majeure’
The GSMA will not be giving refunds following the cancellation of this year’s Mobile World Congress in Barcelona due to coronavirus.
An email from the organisation seen by Mobile News says: “Due to the outbreak of the global Coronavirus (Covid-19) disease and other events beyond our control, it was impossible to hold MWC Barcelona 2020.
“This is an unfortunate situation for everyone, and our first thoughts are with the people of China and all other individuals affected by this disease.
“Given this is a force majeure situation, no refunds will be provided under clause 21.10 of our Standard Terms and Conditions for Exhibition, Advertising and Sponsorship.”
The industry body cancelled the world’s largest mobile trade show on February 12 due to fears of spreading the coronavirus, after days of speculation. It was expected to attract more than 100,000 attendees.
Write-off
One furious UK mobile channel exhibitor, who declined to be identified is looking a write-off of more than £100,000 for its stand and has slammed the GSMA for “bullying” tactics.
“We ploughed over £100,000 into this show, covering everything from the stand to flights, catering and accommodation. Many companies have planned their entire budget around MWC. This is going to have a massive impact on many businesses and there is no intention from the GSMA of giving these exhibitors their money back.
“It seems like a case of a massive corporation like the GSMA telling these smaller businesses to go f themselves. This is going to affect growth in the industry in general. It’s going to impact everything and it is going to send small businesses under.
“One person told me his entire strategy is around MWC. What is he going to do now? He will potentially go bust. They haven’t even offered to transfer our stand to next year.
“What makes this ‘force majeure’? Barcelona hasn’t declared an emergency. We were prepared to go. So were our customers. We haven’t asked them to cancel. They’ve cancelled on us and said they are going to keep our money.
“This is going to affect our growth. We had plans to meet CEOs of large retailers and networks. It feels like the GSMA is bullying smaller businesses. They are avoiding our calls. We feel we are just being given a middle finger.
“At the same time, the big boys have spent millions on the event. Are they going to take the hit? I don’t think so. What will happen next year when the GSMA approaches companies to participate?”
Varied reaction
Samsung head of 5G research Dan Warren, who is an ex-GSMA member, said: “Reaction has varied from ‘it’s just a trade show’ to ‘MWC is dead for good’, but there has also been an undercurrent of sentiment for the GSMA staff that put the event together.
“My fear is that even with that consideration, we are only scratching the surface of what the ramifications of MWC being cancelled might be. I say that because of a personal history of involvement in the GSMA that has led me to have a huge level of respect for the role it plays in the wider industry” (see Page 36 for Dan Warren’s analysis of the MWC crisis).
A contractor and stand-builder said he expected to be negotiating for months to untangle the financial trail of who owes what to whom.
“Everyone wants proofs and receipts of payment down to the last detail,” they said. “If the companies at the top get paid out by their insurers, then it should all start trickling down the chain. All suppliers are negotiating internally and going over their contracts with a fine-tooth comb.
“This has had a huge impact on people. Some people started building their stands months ago. Huawei, for example, had its stand built in China and shipped it over. Some people have been on site for weeks.”
The contractor added that if companies successfully arrange alternative negotiations, it may throw the future viability of MWC into doubt: “If people continue with the meetings they had originally set up and meet their targets, who is to say they didn’t suffer any loss at all? Hopefully everyone will take a sensible approach.”
Several companies have announced alternative video briefings and live-streaming events to display the technology they would have displayed at MWC.
“The GSMA now needs to be careful that there is not a knock-on effect from this year’s cancellation. Major companies and many attendees will be reviewing the importance of MWC to their business and the GSMA must work hard to have a clear path forward,” added CCS Insight chief of research Ben Wood.
“Depending on how the organisers deal with the credit or refunds to this will affect how a lot of exhibitors will want to take part in future,” added the exhibitor.
Damage
It is thought that smaller companies will face significant financial damage from the cancellation.
“The cancellation won’t hurt the larger players, but for a lot of companies that took smaller booths – wherever they came from – they would’ve had everyone in one place and an opportunity to talk to people from countries all over the world,” said Robert Pryke, European CEO of rugged manufacturer AGM Mobiles. “Now they won’t have the resources to visit all these people.”
Wood added: “The impact on small companies that have invested a disproportionate amount of their budgets and time on this event should not be underestimated. MWC is an anchor event for many, and now they face the challenge of having to figure out the best way to salvage something from this difficult situation.”
Distributor impact
Meanwhile, despite the ongoing threat to handset and parts production in the Far East due to the coronavirus, UK distributors remained tight-lipped about any disruption to the supply chain. Data Select, Exertis and Westcoast said the virus currently had no effect on their stock levels.
Westcoast head of mobile Darren Seward said: “At the moment we have not seen any impact to deliveries and we have good stock levels across our vendor portfolio. However, the combination of Chinese factories being closed for Lunar New Year and this now being extended due to coronavirus could lead to supply shortages.
“At the moment, nobody really knows the full impact. However, the longer this goes on the greater chance of disruption.”
Eurostar Global sales and purchasing director Brett Watmough said: “We are seeing a definite nervousness throughout the industry and a strong uplift in demand. Thankfully we foresaw this, and Eurostar is heavily stocked on key lines. I would, however, imagine that those working to tight forecasts with just-in-time deliveries may come up short in the coming weeks.”
Research firm TrendForce predicts the virus will cause Samsung to produce three per cent fewer devices than it would have in the current quarter without the virus.
Given that Samsung manufactures many of its phones in Vietnam and sells mostly outside China, this figure is likely to be higher for Chinese manufacturers.