Will China lose its world factory status?

By Feng Yu in Ningbo Source:Global Times Published: 2020/4/15 20:48:40

Manufacturer confident in its complete industrial chain

Editor's Note

The whole world is now contemplating the tough balance between virus containment and economic revival. After having primarily blocked the domestic spread of the deadly disease, China has put increased focus on restarting its economy. 

To understand the Chinese approach to handling the economic fallout from the pandemic, GT Source reporters recently visited the manufacturing and export hub of Ningbo in East China's Zhejiang Province. The visit came on the heels of GT Source's investigative tour of Zhejiang's Yiwu, the small commodities capital, intending to offer a glimpse inside the mechanics of economic development amid the virus spread.

Ma Jianrong, board chairman and executive director of Shenzhou International Group Holdings Limited Photo: Yang Hui/GT

China has officially entered the next stage of its fight against COVID-19 as the lockdown in Wuhan, the country's hardest-hit region, was lifted on April 8.

How China can retain its world's factory status amid shrinking external de-mand and fierce global competition is now under consideration. 

Global Times reporters visited the headquarters of Shenzhou International Group Holdings Limited, China's largest vertically integrated knitting manufacturer in Ningbo, East China's Zhejiang Province late last week and held an exclusive interview with Ma Jianrong, chairman of the board and executive director of the company, on industrial transfer and the competi-tiveness of made-in-China at the firm.

The 55-year-old confidently told the Global Times that "at the core of the world factory, based on the its competitiveness and complete industrial chain, Chinese manufactures will tightly retain their world factory status. Any claims that other countries will replace China are groundless."

Ma outlined work resumption in Shenzhou's Ningbo, other Chinese cities and overseas plants in 2020. 

Work resumption 

"I rushed back to Ningbo from my home in Shanghai on the second day of the Lunar New Year when the novel coronavirus broke out in China and bad news kept coming. Predicting the difficulties of workers returning to factories from as far as Northwest China's Gansu Province, we encouraged them to set off as early as possible. Designated teams were established to arrange workers returning. Many phone calls and WeChat messages were sent, at first to persuade them to come back and then to help them return from their locked-down or blocked hometowns."

"We utilized all of the administrative supports we could get from government officials at all levels to make our workers' returns smooth," Ma said. He ad-mitted that official communication and support was of significant help when Shenzhou urged employees to return, adding that some local governments wanted to take advantage of the lockdown to keep skilled workers home to start small businesses and boost local economies and employment. 

Only 37 percent of employees had returned by February 10, the first day the Zhejiang government allowed enterprises to resume work, but the return rate reached almost 100 percent on February 20. Ma said a February 13 phone call from Zheng Shanjie, deputy secretary of the Zhejiang Provincial Party Committee and secretary of the Ningbo City Party Committee, was of particular importance. 

"Zheng enquired about our preventative measures and I told him details of our actions and emergency preparations for the worst-case scenario. Then, Zheng encouraged us to fully resume production guaranteed by strict im-plementation of virus prevent and control."

The conversation gave Ma great confidence and support as he had previ-ously worried the local government would stop him as knitting manufactur-ing is labor intensive and therefore vulnerable to COVID-19 cluster infec-tions. The business environment in Ningbo has helped enterprises develop, he said.  

"Judging from the overall situation in China, I feared similar lockdowns or transport blockades may occur in other countries. I ordered all my Chinese colleagues spending the Spring Festival holidays in their hometowns to travel to our overseas plants as soon as possible, changing their flights." Shenzhou's plants in Vietnam and Cambodia resumed production before worldwide lockdowns and traffic restrictions were enforced.

Excellent communication

With machines running at full steam, Shenzhou employees began com-municating with clients in Asia, Europe and the US to convince them that Shenzhou had implemented stringent prevention and control measures and all disinfection tasks had been completed. "Much more effort was needed compared to normal times. For example, we had to send dozens of the same sample to all relevant Uniqlo staff at their home addresses. We spoke with them one by one and collected their responses to create a final solu-tion, totally different from [how we operated] previously." 

"Only through faultless communication can we keep our orders from clients. What's more, the crisis has tested the real capabilities of all manufacturers worldwide. Very few companies can truly realize work resumption. Chinese companies with a complete industrial chain like Shenzhou have stood out in the pandemic, both at home and abroad. We took the opportunity to seize orders to develop new clients. 

More importantly, our virus prevention experience has been shared with our clients. No individual company is an island. Chances favor those who are prepared. That's why I say that the made-in-China isn't easily replaced."

Prepare for the worst

"With all efforts, Shenzhou could support our more than 80,000 employees worldwide for one year with our solid financial foundation which we have ac-cumulated, even if the pandemic lasts for as long as one year," Ma said, adding the company has sufficient orders for the first half year of 2020.

The net profit for 2019 climbed 12% to 5.10 billion yuan ($718.7 million) while revenue increased 8.2% to 22.67 billion yuan, the Hong Kong listed company said in an earnings statement on March 23.

Ma said there is a lot Shenzhou can do if the day comes that some of their production lines have to pause due to the global economic crisis. Equipment upgrades, product optimization and employee training are on the agenda. 

Meanwhile, the group has an environmentally friendly campaign in the works to use more wind and solar energy and save water with advanced technology. "If we face a production halt, we are sure to be busier than when the machines were running. We would prepare for a new round of or-ders when things get back on track, bracing for the rainbow after the storm," Ma said.


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