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How could the Covid-19 impact spread through the licensing trade?

Kelvyn Gardner, md of Licensing International UK, offers his view on the challenges we could face.

I was back in Hong Kong last month visiting the International Licensing Show for the first time since 2016.

The day before I flew out, a local contact sent me a WhatsApp message: ‘If you have an N95 mask, bring with you to HK’. N95 masks not being something with which I was overly familiar, I did a bit of instant research to discover that three people from Wuhan had been quarantined in Hong Kong with a virus, not yet named.

From that small beginning we now have this virus affecting many parts of the world. The worldwide business community is beginning to sit up and notice. Stock markets have registered 2-3% falls in the last few days as earlier hopes that the virus could be swiftly contained appear to be dashed.

This despite the fact, outlined in the media by sundry medical experts, that many more people die from common-or-garden influenza every year than the mortality rate so far attributable to the now precisely-named Covid-19 strain.

Whatever the truth of that, it is biting business. In the world of licensing, Toy Fair New York has gone ahead (though I believe that Chinese visitors faced quarantine when they arrived in NYC). The first real, practical negative has been the six-week postponement of the Bologna Children’s Book Fair, and associated Licensing Trade Fair, in Italy.

Bologna Licensing Trade Fair has been postponed until May 4-5.
Bologna Licensing Trade Fair has been postponed until May 4-5.

With the country currently having the highest infection rate outside China, even this first delay may be optimistic. A couple of years ago a SARS outbreak in South Korea caused their annual Character Licensing Fair to be postponed by six months, moving it from the height of the Korean summer (temperatures regularly exceeding 30 degrees) to the (quite literally) freezing winter.

We may see more international calendar fixtures affected by delays and cancellations. Long before we have to begin to wonder about Licensing Expo in May, it may well be that the quarantine rules, plus reluctance to travel for businesspeople as a whole, will have the most effect. If your international contacts are not going to Las Vegas because of Covid-19, or because they face 14 days medical isolation before being allowed to attend, then your own trip there may not be worth it.

Of course, we’re discussing here the licensing-business end of the equation. The virus can be bad news for us in other ways, too. Start with production. Gary Grant of The Entertainer is one of a number of business owners I’ve heard on talk radio being asked about supplies from China. Gary is a natural target for comments given China’s importance as a production centre for the toy trade. Gary educated his interviewer about the shape of the toy business in that the busy period for production and shipping is still some months away.

But those months will get eaten up, and other Asian countries are already affected. Are licensors going to give licensees a minimum guarantee break if they simply can’t manufacture for a prolonged period?  Even if you can manufacture and ship, will there be any customers in the shops? During my week in Hong Kong, retail business was already feeling the pinch from lower footfall brought about because of the pro-democracy demonstrations, so dependent are they on visitors from the mainland. Now I read that footfall in the city is down by more than 70%. If you are a retailer of luxury branded goods – many of them produced under licence, of course – you won’t be filling up your suppliers’ order books any time soon.

Then again, we don’t have to look as far away as Hong Kong. I wonder how they are getting on at Bicester Outlet Village? This is a prime tourist destination, seen as a ‘must do’ day out for literally tens of thousands of Chinese visitors to London each year. Another place chock full of licensed brands. It can’t be great.

They are even discussing the Tokyo Olympics in this context: pity the poor Olympic Games licensees if the worst were to happen and that gets postponed. Nervous times indeed.

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