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What’s the current situation with Chinese manufacturing?

Riverside Brands’ Ashley Holman, who has clients in China and Hong Kong, shares an update on the current situation.

As we entered 2020, we had already been through whether the annual January toy industry road trip to Hong Kong was going to happen or not. However, with some of our largest clients here at Riverside Brands being HK/China-based toy companies, it was important for us to be there. While attendance was noticeably down, overall the feeling was that HK was recovering from the extreme demonstrations it had seen previously and things were getting back to some form of normality for the city.

It was in the last few days of the trip that the conversation started to change from demonstrations to the fact that in mainland China a few people were starting to get sick with a virus which we now know to be Coronavirus or Covid-19 as it’s officially named. Luckily, we were home before it really took hold of the region.

The virus started spreading very quickly over the Chinese New Year period and only businesses connected to the health sector were instructed not to close throughout the pandemic. The government in every district set up checkpoints to stop people crossing district lines and people were restricted from being out of their homes to try and stop the spread. Something the rest of the world is now going through.

So, as Europe starts to live through what we are hearing China and Hong Kong (seems) to be coming out of, the question is where is China currently at?

In early March, the central government of China instructed all businesses to return to normal gradually. It also supported financially with up to $250USD compensation to each worker that returned to their workplace.

The incentive was given to encourage the manufacturing sector to return to normal output as quickly as possible.

Three weeks ago, toy factories we work with were running at circa 25-33% capacity and their offices were empty. Today they are up to more like 75-80% with workers back on site and it won’t be long until they are back up to 100%.

The good news, therefore, is that commerce is returning to some form of normality. Albeit a new form of normal.

Workers have to ensure social distancing is in place, buildings are being regularly deep cleaned, masks are mandatory, but people are back at work and the toy industry is coming back to life.

Ports are dealing with the bottle neck now that product is once again coming through, but it’ll be back to normal soon enough.

There are also some sectors that are seeing a spike in demand. Home delivery of food and digital businesses for example are in high demand. Viewership of OTT platforms has also been rapidly growing with three to four times the normal levels of traffic which will benefit some brand owners.

Schools are still shut so home education has become important. Restaurants, while still shut down have adapted and partnered home delivery services to try and maintains some level of business given the length of time they have been closed for.

Now of course the issue is, Europe was desperate for stock only weeks ago but as we enter the next phase of the virus here, do retailers want it?

There are already some big cancellation numbers being published and some very tough times ahead for us here as more and more stores shut temporarily.

The factories that worked so hard to get back to being open, don’t have the orders they thought they did. Only time will tell if retailers, suppliers, factories and everyone associated with the industry can come out the other side as cash becomes king for the foreseeable future.

One thing is for sure, things are now changing daily and who knows what the longer term ramifications will be once we get through the worst of this, but all we can do for now is do our part to support one another.

Stay safe one and all.

Ashley Holman is md of Riverside Brands, an IP brand and licensing agency with the additional ability to provide retail distribution solutions in the UK and EMEA. He can be contacted by clicking here.

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