China and the World

Healthy exports

Huge volumes of masks and other gear are being sent abroad by China


China is exporting protective gear to help fight the virus

“Insanely jealous”, wrote one. “Look at that gear,” exclaimed another. “This is the equipment all frontline medical professionals deserve.”

These are just a few of the comments healthcare workers from Europe and North America have made under images on Twitter of protective equipment being worn in Asia. Doctors and nurses at hospitals in mainland China, Hong Kong, Taiwan and South Korea have often seemed to have easier access to face masks, hazmat suits and goggles, while their counterparts in places like the US and the UK have been forced to don binbags or reuse N95 masks for protection.

“Lack of adequate PPE [personal protective equipment] endangers not only [frontline heath-workers], but their patients and families as well,” the American Medical Association said in a statement last week.

Quite why these countries don’t have enough PPE is now a subject of intense and often politicised debate.

Some say it was a mistake to allow a single country – China – to control more than 50% of the world’s mask production.

When the virus first emerged in Wuhan in December local demand for masks shot up. Although Beijing never formally banned mask exports, government officials requisitioned almost everything that factories were making – including output from plants run by foreign companies such as 3M and Medicom.

At the same time it began buying in masks and other PPE from other countries – either through formally contracted sales or informally via the huge diaspora of Chinese living overseas.

PetroChina was one of the companies to issue a PPE sourcing order to its international operations, Bloomberg has reported. As did the Shanghai-backed real estate developer Greenland, according to the Sydney Morning Herald.

The New York Times reports that in the first week of January China imported at least 56 million masks and respirators (a type of mask required by medical professionals), and that by January 30 it was importing 20 million units a day.

Western governments didn’t object because the epicentre of the crisis was still China and the focus was on containing the spread there.

By the beginning of March, things were starting to change. China was cautiously encouraging its citizens to go back to work, but Europe and America were about to see a dramatic surge in infection rates. With that came a new desperation to source more protective gear.

Companies in China had been busy retrofitting their factories so they could produce PPE – so just as demand came off its peaks at home they were in strong position to start exports around the world.

Businesses like OPPO, BYD, Haier and even PetroChina had turned over some of their resources to making protective gear or sanitiser.

And as the virus began to rip through the West, foreign carmakers Fiat Chrysler and Volkswagen said they would also be making masks and other PPE at their Chinese plants.

Meanwhile Elon Musk drew heavily on his Tesla team in China to source 1,255 ventilators (the machines that help people breathe) and flew them to Los Angeles for distribution on March 19.

Alongside all of this the Chinese government and well-known names such as billionaire Jack Ma and telecoms company Huawei, began donating equipment to countries in need – including in Ma’s case to the US.

This “mask diplomacy” as it has been dubbed, has given China an opportunity to burnish its credentials as a global leader and to style itself as part of the solution in stopping the pandemic (see WiC488).

But even as countries rush to sign new contracts with Chinese medical suppliers there have been complaints about the product quality of some of the shipments. The Netherlands had to track down 600,000 Chinese-made masks after they were found to be substandard. Spain and the Czech Republic also reported some of their virus testing kits as faulty and the 1.2 million antibody tests that the Slovak government bought from China via local middlemen for $16 million proved incapable of detecting Covid-19 in its early stages, Bloomberg has reported. “We have a tonne and no use for them,” Prime Minister Igor Matovic complained, saying they should “just be thrown straight into the Danube”.

China’s foreign ministry went on the defensive at the allegations, warning against “politicising” the sale or donation of defective goods. Hua Chunying, a ministry spokeswoman, said the Chinese had also received substandard goods from foreign donors in the early stages of the outbreak but that they had decided to focus on the “goodwill” from other countries instead.

Yet domestically China knows that the sudden explosion of new medical equipment producers has led to quality problems. According to the business data firm Tianyancha, more than 28,000 companies have added masks, disinfectants and PPE to their product ranges since early February. The number of firms selling forehead thermometers jumped 3,700% in the same period, it said.

On February 10 the Supreme Court and the Ministry of Public Security issued notices warning companies they would be held criminally liable for selling sub-standard equipment and “endangering human life”. But as the pandemic reaches a global population, it seems certain that Chinese exports will further surge. It is the one place that has the capacity to produce the medical goods at high volumes. The South China Morning Post profiled the case of Nanjing Liming Bio-products, which received European accreditation for its testing kits last month and soon had an order book “brimming with clients” from countries like Italy, Spain, France and Austria. Its founder Zhang Shuwen told the newspaper: “We have so many orders now that we are working until 9pm, seven days a week. We are considering working 24 hours a day and asking workers to take three shifts every day.”

Or take the example of BGI, China’s largest genome sequencing company. It had been making 200,000 testing kits a day in February but has since pushed that up to 600,000. “At the start of February, about half of our testing kits were being sold in China and half abroad. Now, there are almost none being sold domestically. The only ones we sell here now are for passengers arriving from outside [China] who need to be tested,” a senior executive at the BGI Group told the SCMP.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.