For the last 2 years the virus situation here in China has been very stable. The few and small virus outbreaks that have happened were handled with extreme lock downs and city and town wide closures. It was standard for an entire town or city to be closed, for all factories and places of business to close and for all residents to be confined to their homes, typically with one member of a family allowed to leave the home every 2 days for a maximum of 2 hours to purchase food and essentials. These lock downs would persist until no new virus cases were recorded in that location for several days. While these methods were effective in controlling the virus very well, they were very damaging to the economy, factory output and well-being of the residents of that particular location.
Recently however the virus situation in China has changed and the government’s response has modified as well.
The Omicron Variant as we know is much easier to catch and it is showing itself in many locations at once in China. The good news is that 85% of the Chinese population is vaccinated and the severity of the disease is much milder in vaccinated people.
The government’s response has also changed. Rather than closing entire geographic areas the virus response is much more localized. Now mass testing of populations is standard and if an entire neighborhood is tested negative all people are free to leave the neighborhood. Individual neighborhoods that have positive tested people and locked down but entire cities are not. The government is taking a particular interest in keeping factories running and commerce moving.
Currently in our city of Changzhou (population 3.5 million) we have 33 virus cases as of today – we had 17 yesterday so it is increasing. Per the governments new policies however the entire city is not closed and our factory and all factories continue to operate. All 3.5 million people are receiving a virus test every day (which is a bit of a pain as each night I am in line for testing for around 2 hours each time).
Each morning on arrival at the factory every employee must show their virus test report from the previous day and observe pandemic practices of mask wearing and social distancing throughout the day. EMM has near to 700 employees in our two facilities here in the city and currently we have 9 of our people that live in neighborhoods that had a positive test so those 9 individuals are in lock down and not allow to come to work.
We have a government contact that visits our factory every morning to assist us should we run into trouble in securing needed raw materials or any other issue that might cause factory disruption. We have had a couple of issues. Our lens supplier for our microscope drapes is in Shenzhen and is shut down for 2 weeks as many of their staff tested positive. Our sterile pouch supplier lost 6 days production but is working now overtime to recover.
It is true however should a significant percentage of our employees test positive then we might be forced to close our factory for a period of time. Our daily efforts are 100% focused on preventing this.
While the situation is challenging the government is much more supportive to keep factories open now than in the past and so far, we have had no chronic disruptions. As you are well aware we routinely keep a couple of months of safety stock of raw material, so should a significant disruption occur we have time to make alternate arrangements.
It is my personal opinion that China’s policies will not be able to halt the virus spread this time and eventually the government will simply declare it endemic rather than pandemic. Our government contacts have spoken of this policy shift as pending for several months now and the change will be inevitable.
Regardless, so far so good and as always, we hope for the best but prepare for the worst.
Best Regards
David Power
President
Exact Medical Manufacturing
