Tighter regulations and falling prices are causing a struggle for survival among China’s mask makers as the Covid-19 pandemic has made the market more competitive.
“Since April, orders have dropped between five and six times,” lamented Yang Hao, commercial director at CCST, a Shenzhen city company that specializes in air purifiers but has become a manufacturer of respiratory protection masks at the height of the epidemic.
First country affected by the new coronavirus, China quickly established itself as the leading mask manufacturer worldwide. Beijing did not hesitate to use this capability at the diplomatic level, with donations abroad released by official Beijing agencies.
Between March and May, the Asian country exported more than 50 billion masks, according to data from Chinese customs. This represents 10 times the total production of this type of equipment compared to the same period last year.
Hundreds of companies have embarked on the race to manufacture masks, as the need for protective equipment against coronavirus has increased worldwide and prices have skyrocketed.
Chinese car maker BYD, for example, became the world‘s largest manufacturer of masks in just a few weeks, with a capacity of 5 million units per day.
According to the consultant Tianyancha Business Database, almost 74,000 companies registered as mask manufacturers in the first half of the year, down from less than 6,000 in the previous year. The month of April represented half of that number.
However, the market was saturated, although the use of a mask continues to be usual or even mandatory in several countries, given the resurgence of the epidemic in recent weeks.
“There are many small, unskilled producers and this has led to falling prices,” explained analyst Wilfred Yuen, of Hong Kong’s investment bank BOCI, quoted by France-Presse.
As a result, several factories closed and workers were left with unpaid wages, leading to protests, according to the China Labor Bulletin, a magazine reporting on civil society in the Asian country.
The sales manager for a medical device company based in Hebei, near Beijing, said he now sells his masks at a loss, with a sale price “of about 0.4 yuan (0.05 euros), against 1 , 7 yuan (about two euros), at the height of the epidemic “.
The raw material purchased at the height of the epidemic then cost “30 times more” than it does now.
Consultant Daxue Consulting noted that the race to manufacture masks “led to a general drop in quality and an increase in fraud”.
After several complaints about the supposed quality of Chinese production, Beijing drastically tightened its export criteria in April. Manufacturers are now required to submit a certification for the country of destination.
The situation ended up affecting several importers, including Portuguese companies, who after having paid for orders for masks at the head were left with the equipment held in Chinese customs and have so far been unable to recover the money, according to businessmen contacted by the Lusa agency.
European countries, however, have also started to produce their own masks, using machines purchased in China, according to Yang Hao.
Latin America, the region of the world with the highest number of cases, is today the company’s main client, alongside the United States.
However, exports to the United States are made “through a third country” due to trade tensions with Washington, Yang explained.
The English-language newspaper Global Times recently estimated that 95% of Chinese manufacturers could close by the end of the year.
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