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  • Writer's pictureBen Chu

How did Chinese manufacturers and buyers survive the virus? The China Experience

Some said it is transmitted from wild animals, in particular bat, during the butchering or cooking process that people consume them as meal, while some said it could be some new form of evolution of regular flu virus. None of them are self-proved with sufficient evidence. What could be sure of is that it is definitely a shaky start for the World in this Year of Rat. By the time I start putting this topic on paper, most of the factory has already been, somehow, managed to restore their manufacturing operation, so to speak. Global buyers are starting to receive their long-awaited shipment. Although it is not necessary up to expectation, the global supply chain is once again getting back to its very function. Being a business coach for SME, I was asked many times to give my opinion to tackle with the difficult situation (one of them is honorably from Bloomberg news). From that, I see incredible capacity Chinese SME could have made to fight, to make the delivery - a commitment to their customer. To give a comprehensive picture of the two sides of the business, I've also interviewed a Chinese Supply Chain manager who works in the local buying office of Multinational company, on how she manages to deal with her desperate suppliers.

Elaine Zhao is the business owner under the spotlight of this story. "It was like the toughest moment of my life during the last two months.", the mother of 3 young kids said. "On one hand, I am fighting to restart my factory production and comforting my customers, while the other hand with my three kids online schooling schedule. I am going crazy!". Every morning she thirsted for news about latest policy development from at least three media: Weibo (the Chinese's twitter) for quick rumor and info, provincial government for news of policy which usually ahead of the city, and of course, the city news for actual policy to be executed. To make her workers back to the production line possible and safe, she carefully planned her purchase of mask, thermometer and cleaner spray for a reasonable price only. In its worst, mask could be as expensive as few US dollars per piece. If she cannot get this resource at a reasonable price, she would instead choose not to work that day - until new supply came in.

Workers are in very heavy demand. Only less than one-third of workers could back to their factory location due to mobile restrictions. In that short period of time, factories compete for workers, skilled or unskilled. "That was expensive but relatively easy. I had some extra "red pocket" for our own workers who loyal to our factory. We make sure they won't get any better deal than us outside.", said Elaine. "still, many of our workers absent, and we hunger for more workers." She was innovative enough to create a new temporary form of "supply chain integration." "One of our supplier bosses was "trapped" in Wuhan during the CNY, and so did the management of his workshop since they run as a family business. Their workers were there in the production line, but lack of supervisor tell them what to do next. We hired their worker to do our work until the boss's family is safe to come back to our city. We managed this as a win-win, as we pay him for that."

During this period of time, Elaine were forced to employed a new tool to manage her crews. Alibaba's DingTalk, a not-so-new product that focused on intra-corporate communication, did an exceptional job in adopting itself to better support SME staff management during the situation. "working completely online from home is something new. We have to change our way of teamwork, and this added one more new challenge." The app helps her to visualize most data for "Cloud-office." Inspired by a particular reputable business coach from HK, and despite all the difficulty, Elaine still manages to have her salesgirl work on getting in new customer - which generally take time to develop into real paying customer. "We just take sales as a regular process.".

The other side of the story isn't any easier. Karen, sourcing manager of a well-known multinational corporate with headquarter in the US, had been going through the same challenge from a different angle. "The first week right after CNY was easy. We still got raw material inventory to work on, so the impact wasn't so bad at the beginning." Karen's company is manufacturing in China, Fujian province. For strategic reason they also manufacture in other Asian country, such as Philippines. "Our long strategized risk management measure helps us to buy time. We keep inventory in the raw material level and this benefit us. No complain from our production line." However, along the way, her life was becoming less comfortable. In the midst of it, she has to prioritize the demand from other manufacturing site around the World and make limited delivery - just enough to keep their production line going. Every day she learned and communicated best practice between different suppliers: Though her, Supplier A in Jiangsu could learn from a successful reworking supplier B in Zhejiang on what they have done to hire and protect workers, or to show the government their readiness for getting rework approval. Also, she need to report to the headquarter weekly on the latest situation and roadblock. "With all the effort, we are able to restore most of our capacity. Some suppliers with higher level of automation or out of major affected zone could have even achieved 100% capacity by the end of Feb."

By the time I close to finish writing this article, already many Chinese cities report zero new outbreak for consecutive numbers of the day. The optimistic atmosphere slightly dominates the mainstream. However, I also start to see the impact of the global spread of the virus hit directly to the root of many businesses. Followed by shop closure and flight termination, it is quite easy to expect the coming down-turn of the global economy. The trading business will, unfortunately, face another wave of challenge.  

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1 Comment

May 11, 2020

Hi Ben, thank you for taking time to write this kind of post, I have read some related topics, but only with problems, no solutions... we might be another story of Chinese manufacturers which survive the virus, we are a textile testing instrument manufacturer(mask testing instruments included), our boss decided to make mask production line at the early beginning of march, and this decision made us survived(quite well by far), we also experienced the same process Elaine faced, but with less pain: 1. since we had adopted to use Enterprise version WeChat(The Chinese Whatsapp but for enterprise purpose, before the pandemic, and maximize the usage of the app during the Chinese New Year, which helps us maintain a promising efficiency…

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