An employee of Chinese face mask maker Dasheng Health Products Manufacture Co works at the company's factory in Shanghai, East China in February. Photo: Yang Hui/GT

As many as 95 percent of the nation's qualified mask suppliers will go bankrupt in the second half of this year despite rising global demand driven by the coronavirus pandemic, industry insiders warned.

Some Chinese manufacturers are seeking quick sales of their production lines to reduce losses as domestic demand dives.

A factory owner surnamed Zhao in East China's Shandong Province, speaking on condition of anonymity, told the Global Times on Monday that he is looking for buyers to take over his two cutting machines for mask-making, and he's asking for just half what he paid.

"There are so many producers and the industry has become too competitive for us to cover our costs," he said. "We've been making KN95 masks, but as domestic demand has been falling, we are turning to overseas market. We just can't get the necessary licenses within a short period."

Shi, a trader of medical supplies, said that overseas demand for masks remains strong, but the requirements to obtain certification from the US Food and Drug Administration or the CE marking from the EU are barriers that stand between supply and demand.

"There are hundreds of thousands of orders for not just surgical masks but ordinary masks for both children and adults from the US, Canada and the UK. But only a very few FDA- or CE-certified suppliers in China can accept these orders, and they already have huge backlogs," he said.

Sales of masks in May were down about 15-20 percent from April and the factory price fell by almost half, said Zhao. At the same time, growth in the number of new entrants to the industry has slowed.

According to data from Chinese corporate database Tianyancha, there were 10,283 newly registered mask-related enterprises in May, down 70 percent from April. Meanwhile, registered melt-spraying related enterprises stood at 1,728, with a month-on-month decrease of 57 percent.

"More than 95 percent of the mask factories will go bankrupt in the second half of the year," Bai Yu, president of the Medical Appliances Branch of the China Medical Pharmaceutical Material Association, told the Global Times on Monday.

Ironically, massive factory closures loom despite the demand for masks around the world remaining strong.

Statistics released by China Customs on Sunday showed that the exports of textile products including masks rose 25.5 percent from January to May.

"There were hundreds of qualified mask suppliers at the beginning of the outbreak, and now the number stands at more than 10,000, but only tens of those mask suppliers have received the FDA or CE markings," Bai said.

There's a lack of understanding of Chinese standards among destination countries, analysts said.

"The Chinese quality requirements for masks are no less than those of the FDA or CE, but those who receive the foreign markings don't necessarily meet domestic standards," Bai said.

"The production capacity of mask makers in China is able to cover 10 times what the world needs, but overseas demand and domestic supply can only meet when countries such as US build up more knowledge about Chinese standards," he said.


Newspaper headline: Only 5% of qualified nation's mask makers will survive: experts