Medical and Disinfection Supplies in China

Due to the worldwide spread of COVID-19, the demand for medical and disinfection supplies has increased sharply. Many countries and big international companies are doing their best to satisfy the needs of their medical staff. Some brands, including car brand Fiat Chrysler, luxury brands Balenciaga and YSL, fast fashion brand Zara, have retrofitted production lines to produce face masks.

Also, luxury giant LVMH announced on March 15 that three major factories producing perfumes and cosmetics for its brands, Dior, Guerlain, and Givenchy, were converted into producing hydroalcoholic gels for hand disinfection and these products will be provided for French health authorities and hospitals for free. Following LVMH, L’Oreal and Hermes also started to produce hand sanitizers.

However, the domestic manufacturing capacity and production output of most countries around the world is inadequate, making importation necessary. China is the world’s largest production base for many of these vital medical supplies. LVMH ordered 40 million face masks from China to help France to fight with COVID-19 ^[1]. The problem is whether China, as a country also hit hard by the pandemic, has the production capacity to satisfy the demand from overseas.

The production capacity in China

On February 24 Government Press Conference, Yulong Tian, the chief engineer with Ministry of Industry and Information Technology of the People’s Republic of China, said that the resumption rates of five major categories (medical protection, disinfection supplies, inspection and testing, medical drugs, medical equipment) have reached or exceeded 100%, and measures have been taken to expand production while guaranteeing supply and resumption of production ^[2].

• Face masks

According to the data from Tianyancha (an information website where users can search for companies’ information), as of March 18, there were a total of 47,000 enterprises in china whose operation scope includes face mask production. Among the 47000, 8950 were newly added after the outbreak on January 25.

Also, National Development and Reform Commission has stated that as of February 29, China's daily output of masks was over 100 million, while industry practitioners estimate that China’s daily mask output has “conservatively estimated to have reached 200 million” ^[3].

The large daily output and decreasing number of patients have promoted domestic supply and demand to reach equilibrium. Compared to the massive shortage of masks in February, people can buy affordable masks on e-commerce platforms and pharmacies now. Therefore, the overseas market becomes a choice for some factories, but there are still some concerns:

 -          First, domestic demand for face masks has increased as most factories have expanded production lines, hired new staff or new factories are opened. Companies still tend to satisfy domestic demand first.

-          Second, most foreign countries don’t support healthy people to wear masks. The demand for masks is mainly from the medical system, which means the demand for masks in foreign markets is currently less than overall domestic demand.

-          Third, there are many thresholds for exporting masks. For example, entering the European Union requires CE certification, and entering the United States requires FDA certification. However, certification requires time and cost, which is the reason why most companies don’t have much desire to export their masks.

•  Protective suits

On March 4th, Government Press Conference, Junjie Luo, the director of Equipment Industry Division of Ministry of Industry and Information Technology of the People’s Republic of China, told the media that the production capacity of medical protective suits is about 600,000 pieces per day. The daily number of protective suits provided for Hubei Province is 250,000, which has exceeded demand for more than ten consecutive days ^[4].

Unlike face masks that are subject to both public and private sector demand in China, the demand for protective suits is mainly from the healthcare sector, so after satisfying the domestic demand, some companies have started to export protective suits. The CEO of Anhui Fumei Medical Company said that they had exported 5000 pieces of protective suits to Japan at the beginning of March. Another company, Zhejiang Longtai Medical Company, is in a similar situation. Both companies finished their domestic orders two weeks ago and are going to export 100, 000 pieces of protective suits to Italy ^[5].

•  Disinfection supplies

The disinfection product market is also a severely competitive market.

According to the data from Tianyancha (an information website where users can search for companies’ information), there are about 63,000 companies whose operation ranges include disinfection products in China. Among them, 1121 companies were established in 2020.

On February 20, the daily output of major disinfection products such as 84 disinfectant, disposable hand sanitizer, and alcohol increased by 207%, 151%, and 270%, respectively, compared to the end of January ^[6]. In some areas, supply now significantly outstrips demand. As alcohol companies have resumed work and some distilleries and chemical factories have switched to alcohol disinfectant production, oversupply has occurred in some areas. Some enterprises have begun to reduce their production output.

Meanwhile, famous brands are also joining the competition.

Recently, some well-known domestic brands, like Pechoin, Proya, Two Needles, have changed their business scope and added medical equipment, disinfection products production, sales, manufacturing, and processing business to the business scope.

In March, Johnson & Johnson China also changed its business scope and added a wholesale business for disinfection products.

In February, Galan Group added the operation of medical devices and the production and sales of disinfection products in its business scope. After that, in February, two brands from this Group, Chando, and Spring Summer launched their disinfection products.

Therefore, we can see that the production capacity of disinfection products in China has totally recovered and can satisfy both domestic and overseas demand.

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