Page 12 - Ragtrader Magazine April 2020

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APRIL 2020 NEWS FEATURE CORONAVIRUS
It went viral
Langsey Company’s Li Zhang gives us an extraordinary look at the logistical impact of coronavirus.
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THE LAST DAY of February 2020 co- incided with the weekend, and my friend Dong Xu was driving to his of- fice in Nanjing, the capital city of Jiangsu province in China.
It was not necessary to go to work on the weekend, but the stagnation of work for more than a month caused Dong to panic. The government extended the Lunar New Year holiday in an effort to contain the spread of the deadly coronavirus (Covid- 19). It wasn’t until late February that busi- nesses in the provinces outside Hubei started to be reopened. Dong’s overseas clients were extremely concerned that they would not receive their products on time, and he thought they may be right.
Dong owns a small-scale garment export company that accepts European and American orders and sends them to
This is the largest batch since she started her business, and if all the pieces are sold out she stood to make a net profit of $400,000.
cooperative factories for production. He has been in this industry for more than 15 years and experienced various challenges including Chinese manufacturers’ decline in competitiveness due to the rapid growth of labour and environmental protection costs. But this time is a story beyond his imagination.
Gigi is an Australian KOL who has 300,000 followers on Instagram. She founded her own activewear brand three
years ago, and all of her products are made in Zhejiang province. When she saw the epidemic in China at the end of January, Gigi immediately contacted Pan, the per- son who looks after her production in China. Pan was optimistic that the virus mainly affected Hubei province while Zhejiang should have no problem. Pan said confidently that her factory would be reopened after the normal holiday, and Gigi’s 20,000 pieces of fitness cloth- ing would still be shipped in early March according to the contract.
Gigi was very relieved. After all, this is the largest batch since she started her busi- ness, and if all the pieces are sold out she stood to make a net profit of $400,000. Although Pan was confident, Gigi kept watching the situation China and contact- ing Pan on WeChat from time to time to
ask about the updates in Zhejiang. However, after the Lunar New Year, the situation seemed to crumble rap- idly. In early February, Pan told Gigi that all businesses including her factory were required to extend their holidays and not allowed to open. Gigi was so shocked that she began to think about how to explain and apologise to her fans in case she has nothing to sell on her announced Official Release Day. To Gigi, fans were everything, and the last thing she wanted to do was disappoint them. When SARS raged in China in 2002, a large number of clothing factories in places such as Guangdong province were producing low-cost products such as cot- ton T-shirts for the whole world. At that time, the ‘World Factory’, China, had just joined the World Trade Organisation, and its economy was still centred on exports
while not the domestic consumer market.
Seventeen years later, China has com- pleted the transformation from a large production country to a large consump- tion country. As far as the garment manu- facturing industry is concerned, the last ten years have been the decade when global fashion brands have fled from China, not because the quality of ‘Made in China’ is not good.
On the contrary, in the years of mak- ing clothes for people all over the world, the ‘Made in China’ of textile and cloth- ing products has already become a guaran- tee of high quality, but fashion brands are gradually unable to afford ‘Made in China’. Today, the strategy of most high-street brands is to produce products with high margins in China and products with low margins in Cambodia, Vietnam, Laos and other places with lower labour overheads.
Does that mean that the impact of this new virus on the global clothing indus- try will be less than the impact of SARS in 2002?
The answer is quite the opposite. The impact of the Covid-19 on the global consumer goods supply chain is just unpredictable.
Although Southeast Asian countries have seized opportunities to vigorously develop garment production in recent years, the industry in these countries has so far been mainly a ‘Cut-Make- Pack’ (CMP) model. It lacks a coherent upstream and downstream industry chain, and is particularly weak in the supply of raw materials, including main materials such as fabrics and yarns and accessories such as buttons and zippers.
The Myanmar Garment Manufacturers Association (MGMA) held a media con- ference on February 21, and a spokesman