COVID-19: 'World's Factory' is springing back to life
Abhishek G Bhaya

As new coronavirus, or COVID-19, cases continue to decline in China, the country with the reputation of being the "World's Factory," is gradually springing back to life. Several businesses, factories and manufacturing units are reopening after the outbreak put a break on their operations for weeks.

While many manufacturers in China are hopeful to achieve a "full production capacity" by next month and efforts are on to meet their annual targets, the news of the epidemic spreading globally is proving to be a dampener on their business prospects for the rest of the year.

Soumen Biswas, a Shanghai-based fashion apparel exporter, who partners with several factories across China through a "smart factory" initiative, told CGTN that both the workers and manufacturers are driven to make up for the loss and put things back to normal at the earliest. The biggest bottleneck remains a shrunken workforce, as many returning workers must be quarantined for two weeks before entering factories.

"As far as the fashion industry is concerned, our manufacturers based in provinces like Anhui, Zhejiang and Jiangsu, have already started working. The workforce is still not in full capacity because they are still in the middle of the coronavirus fear. But I guess that by the end of this month, or first week of April, we will get back to full capacity," said Biswas, CEO, GC Apparels and Smartfactory4u, through a Skype interview from Shanghai.

However, with COVID-19 creating dire situations in countries such as the U.S., Singapore, Italy and other European countries – all major export destinations for Chinese goods – Biswas is concerned that Chinese manufacturers, who are already struggling from the weeks-long disruption in production, may face a "double impact."

Soumen Biswas praised the "huge amount of support coming from the Chinese government" to help companies get through this challenging phase. /CGTN

Soumen Biswas praised the "huge amount of support coming from the Chinese government" to help companies get through this challenging phase. /CGTN

Related story: China focuses on road to recovery

"So earlier we were struggling due to internal situation like not getting people back to work. Now that the matter is coming under control, we may still face a decline in orders, especially from countries like the U.S., Italy and other EU nations because the situation has become worse there," he remarked.

The Indian entrepreneur, who has lived in China for over 13 years, meanwhile praised the "huge amount of support coming from the government" to help companies through this challenging phase

"The Chinese government has offered several relaxations. They have given an extended interval of three months for firms to pay up their Social Security expenses. The medical insurance cost has been reduced. And the government has encouraged firms burdened with a large number of employees to get into flexible payment and salaries. These measures are definitely going to help the employers," he said.

'Shift towards a healthy factory'

Factory operators also face the additional challenge of creating a sanitized work environment to prevent any further infection. Following government instructions, factories are providing face masks and disinfectants while also checking employees for any telltale symptom of the virus.

Offering an insight into the mood in the factories, Biswas noted that there's an increased sense of social and hygiene awareness among the workers and the companies. So, there are adequate safety measures in place in the factories.

"People are now very concerned when they get back to work and also the factory owners or the management want to make sure that their workers are healthy; they are not getting sick; and that the precautions are taken properly. So, all the workers are getting masks from the management. There are sanitizers at the entrance. Their temperature is routinely checked," he said.

Most importantly, the workers are "maintaining a minimum distance" between each other. "There is an internal drive of cleanliness in their mind. So, their workplace is very clean. They make sure there is no garbage. If there's trash that it has been cleaned properly on time. So, there's certainly a very visible shift towards being a healthy factory," Biswas remarked.

'Impact of global apparel industry'

China is the biggest exporter of both raw materials and final products for global apparel industry. /via Soumen Biswas

China is the biggest exporter of both raw materials and final products for global apparel industry. /via Soumen Biswas

Biz Analysis: U.S. apparel trade deficit grows wider during trade war with China

Read also: Racist COVID-19 headlines torment Chinese diaspora, says study

Considering that China is such a huge player in global supply chain, a manufacturing halt in Chinese factories have repercussion in other markets too.

Pointing out the China is the biggest exporter of both raw materials and final products for the garments and fashion apparel industry, Biswas said that the weeks-long shutdown in production has led to a shortage in many countries.

"The countries that import from China, like Bangladesh, Cambodia, Myanmar, and India are facing severe shortage of raw materials. So, it's not only China, they're also getting affected," he said.

Biswas however is optimistic that China could escalate its production capacity in the coming months to reduce the overall impact in the sector. "The fashion world works with the seasons. The customer needs certain products on certain time. If they miss that, they miss the sale. So, we are trying to reduce this fashion cycle, which currently has a 90-days lead time [for delivery of products], and compress it to 45 days," he elaborated.

'None can compete with China'

Biswas emphasized that the manufacturing capacity that China has developed over the years and the one that has given it the moniker of the "World's Factory" could not be easily replicated elsewhere. Therefore, it is simply a matter of time before things improve through a postponed consumption.

"Not a single of our clients have cancelled any orders. They acknowledge the difficult situation. So, we believe that whatever we are losing right now due to a manufacturing halt, we will make up for it in six months. It's going to be a better situation after six months," he said with optimism

"As things go back to normal, the orders will come pouring in to China, because the kind of raw material sources or the number of factories or the capacity China has, it's very difficult to get outside of China," he added.

Biswas also insisted that this period of disruption has already made the Chinese factories "hungry for business" and therefore result in a dramatic escalation in production time.

"They will be definitely be more aggressive on getting orders on manufacturing. Probably the lead time, that is already compressed to 45 days, might get improved to 30 days. And if that happens, hardly anybody in the world can compete with China," he said.

'Changing consumer behavior'


Related story: Here's how coronavirus battle is paving the way for a much stronger China 2.0

Read also: Humor and hope: Beijing's long-time German expat compares life during SARS, coronavirus

The epidemic has had a lasting impact on the priorities of consumers globally. Biswas said there has been a momentous shift in consumer behavior, who are now increasingly conscious about healthcare and the source of products and services, which will affect the luxury industry in the long run.

"People are not inclined to spend much on luxury products right now. Many Chinese people used to buy branded luxury products from Europe and the U.S., that has certainly reduced. And with Italy under lockdown, the luxury sector is going to see a big downturn," he elucidated pointing out that Italy alone has a luxury market of over 100 billion U.S. dollars.

"People want to stay fit. They want to use more healthcare products and they want to save money for emergencies. They would not be spending more on luxury products," he added.

Biswas noted that increasing consumer awareness about product sources will lead to a surge on sustainable practices across industries.

Another shift the Shanghai-based businessman observed in consumers due to a long period of lockdown is greater appreciation for local businesses and extended communities.

"There's a feeling of giving back to the community and therefore a move towards localization. As people were confined to their homes, they have a better appreciation for the neighborhood mom-and-pop stores which helped them in the tough times. So, consumers may buy more from these stores in the future to show their gratitude," he predicted.

Interviewer and script: Abhishek G Bhaya

Video editor: Zhu Huijie

Graphic Artist: Fan Chenxiao

Chief Editor: Wu Gang