Stricter regulations and plummeting prices: Chinese mask makers are fighting for their survival in a market that has become ultra competitive and no longer synonymous with the goose that lays golden eggs.
“Since April, our orders have been divided by five or six”, plague Yang Hao, commercial director of CCST, a company in Shenzhen (south) specializing in anti-pollution purifiers but converted into masks at the height of the epidemic. .
The first country affected by the new coronavirus, China quickly established itself as the main manufacturer of masks in the world, Beijing not hesitating to use it on the diplomatic level with donations – highly publicized – abroad.
Between March and May, the Asian giant exported more than 50 billion masks, according to the latest figures available from Chinese Customs. This represents 10 times the total production of the Asian giant last year.
Hundreds of companies embarked on a frantic mask-making race at the start of the year, as the need for protection from the virus exploded around the world and prices soared.
Most of the firms were new to the subject, like the BYD automotive group, which in just a few weeks has become the world’s largest manufacturer of masks, with a capacity of 5 million units per day.
According to the Tianyancha Business Database, nearly 74,000 companies registered as mask makers in the first half of the year, up from less than 6,000 a year earlier. And the month of April alone represented half of the creations.
Quality in doubt and scams
But the tide has turned, even if the wearing of masks does not appear to be going away with the epidemic resurgence of recent weeks in many countries.
Even in China, which has not recorded any deaths from Covid-19 since mid-May, the overwhelming majority of the population continues to wear the mask in some cities such as Beijing.
But “there are too many small unqualified producers and this has led to a collapse in prices,” notes analyst Wilfred Yuen of the investment bank BOCI in Hong Kong for AFP.
The sales manager of a medical products company based in Hebei, near Beijing, claims to sell his masks today at a loss, with a selling price “around 0.4 yuan (0.05 euro) against 1, 7 yuan at the height of the epidemic ”.
A blow all the more hard for the person in charge, called Xu, that the raw materials which he bought in full shortage cost, according to him, “30 times more expensive” than today.
If the race for masks has been an undeniable asset in terms of health, it has “led to a general drop in quality and an increase in scams”, notes the market research firm Daxue Consulting in a note.
After several complaints abroad pinning the supposed quality of Chinese production, Beijing drastically tightened its export criteria in April. Manufacturers are now required to present a certification from the recipient country.
Towards cascading bankruptcies?
The company CCST obtained its own from the German authorities. But business does not seem to be flourishing.
“European countries now produce their own masks using machines bought in China,” laments Yang Hao.
Latin America, the region of the world with the greatest number of contaminations, is today its main customer with the United States. Exports to Uncle Sam are “via a third country” because of tensions with Washington, said Mr. Yang.
Despite everything, “China will remain the world’s leading supplier of masks,” said Wilfred Yuen of BOCI.
“Many countries remain unable to ensure their own supply of masks,” he notes.
For France alone, state orders amount to around 4 billion masks since the start of the epidemic, according to the Ministry of Health.
The English-language daily Global Times recently estimated that 95% of Chinese manufacturers could go out of business by the end of the year.
“Low-end manufacturers will struggle to survive,” Yuen predicts.