Corona & Manufacturing in China

Anyone that knows me will know I am pretty critical of many things in China, but also grateful for the opportunities it presents. It's a sort of double edged sword. And those wet markets where they serve up half of the amazon on one dodgy ill-lit table have always freaked me out. When I first moved here I used to go around buying up the turtles and tortoises before releasing them back into the streams and ponds. Given how slow they move, how populated the cities are, and how every market including Walmart had a fresh supply of live turtles I quickly had to give up that 'hobby.' Walking into a restaurant, ordering some noodle soup and finding bits of shell in my bowl - I quickly realised I'd have to improve my Chinese and just sort of try and look the other way for many things if i was going to avoid being outraged. Point being, whatever the origins and cause of this virus, things are unlikely to change in China anytime soon when it comes to looking at palatable dinner options.

Fast forward 11 years and bang, there's a virus on the rampage and it cleared out pretty quick. It's doing its rounds now and whilst I am in no position of authority to talk about the peaks, the methods, remedies etc I have spent the last two weeks visiting all my suppliers getting an update on how the Coronavirus is affecting backpack manufacturing in China.

Backpack manufacturing is more complicated than garment manufacture but it's not rocket science. It does depend on a few variables that have definitely been disrupted by this bug. Firstly most of the labour force that operate the sewing machines do come from Hubei and Wuhan, the province and lead city most affected by the virus and locked down around the time of Chinese New Year. This means that whilst everyone is back at work in China and life is sort of returning to normal we are experiencing a huge dip in productivity and output. A backpack factory in China with a pre-CNY workforce of 35-40 is probably down to less than ten now on average. Yes some factories are recruiting new workers, but this in itself is a double edged sword. New workers don't work as quickly, diligently as the ones who have been with the factories before. Quality may suffer as factories bring in new workers, add pressure and try and make up for lost time by rushing through orders to keep the wheels turning so to speak. Time has a very close indirect relationship with quality. The quicker something is done, the chances are the less well it is going to be made. My stance with my partner backpack factories is this. Stay tight, keep me in the loop and if you need an extra fifteen days its ok, just keep me looped in. I'd rather things take 35% longer than take a 35% hit on quality control. The Idea LabGZ has reached out to all our clients and let them know that whilst things have gone from fast to slow, ultimately quality won't suffer.

The markets where materials are bought, sold, traded and bartered are the backbone of the backpack manufacturing industry here in China. Every factory will appoint someone to go and purchase material for orders. These markets only re-opened recently and there is a cap on how many people can go in, how close they can get to other people, the means of exchanging money, sanitary measures in place etc. The markets were the last to open and given that there are not that many markets in China, the whole backpack manufacturing is dancing on ice a little bit. If someone gets a sniffle in the market - it gets shut down and everyone is back to sitting on their hands again. Many factories will keep stock of fabrics such as blue, black, grey etc so reach out to them and check if they have material in stock and if so, in what colours.

The next point regarding backpack factories in China is the issue of insolvency. Some of the big backpack manufacturing boys have huge overheads, massive workforce salaries, huge contracts and credit lines with fabric suppliers. Since December, that has pretty much been a standstill and that unfortunately will trickle down to the majority of people who are buying from China in the form of inflated pricing. Factories need to make that 40% extra to recover some shortfall coupled with the productivity fall. Some of the smaller factories who have lower overheads are now moving into a competitive space as they try and win back customers with orders. The city of Yiwu in Zhejiang, well known for being the largest small commodities market in the world, was offering free international flights to the city and hotel accommodation paid for in an attempt to entice commerce back into the city. Yiwu as it happens, rose to prominence in 9/11 giving arab and middle eastern traders access to markets where they felt insecure elsewhere. Many have stayed and prospered. There is a lot of middle eastern money in Yiwu. So with that in mind, it should bounce back pretty quick and business as usual.

Keep good dialogue with your factories, don't feel uncomfortable asking difficult questions. The first thing I said to all my suppliers was "If someone gets a fever, let me know immediately" and "how many workers have you got now in the factory." We all know everyone is taking a hit here around the world, so its about being as transparent as possible to get solutions on the table for backpack manufacturing problems as quickly as possible.

Wu' Flu as its also known here in China has knocked logistics on its head too. Airplanes, Boats, Cruise Ships, Trucks & Trains are under tighter and tighter measures. Rest assured though, whilst people maybe facing increased restrictions, stock and cargo mostly isn't. For one this virus isn't going to be living inside a carton for 45 days while it sits in a cold damp wet container on the pacific ocean. Logistics companies may well be putting in place some measures for controlling staff exposure to risk, which of course may directly affect timelines on stuff, but the bottom line remains the same. Your goods leaving China will arrive at your door. Currently travel inside China, so thats delivery from factories to ports is taking a couple more extra days than normal. Customs clearance too is running a little slow, but the rest of it in between and there is business as usual.

Finally as a closing note. Let's be honest. There are much more serious threats out there in the world right now. Ebola has killed 2000+ since November alone and It hardly makes the front page. HIV and the common cold do much more damage annually than Corona has done. Whats dangerous is how quietly it moves, but if there is one thing to be sure of is that the world still turns, day becomes night and night becomes day. Just make sure you have toilet roll. Here at the IdeaLabGZ we are open, we are still here. We are working closely with our manufacturers to keep everything as clear as can be. And for that thank you everybody for your continued patience and trust.

If you have any questions shoot them over to me at richard@banfa.co.uk

check out our website at https://www.idealabgz.com

eBook on manufacturing in China, with some pretty useful information available at https://www.idealabgz.com/product-page/10-secrets-to-making

$20 OFF our eBook with IDEALAB2020

Thanks again, Rick