HIGHLIGHTS:
- There is almost an environment of surreal existence here in China at this time. Personal concerns about the Virus have evaporated.
- As the pandemic has taken grip in the rest of the world, China views this as a profit opportunity
- Any raw material associated with Personal Protective Apparel has become a coveted commodity at this time
- Many companies spout the language of being a good corporate citizen as part of their mantra. Now is the time to measure words versus deeds.
- Exact Medical is committed to weathering the storm and will do whatever is necessary to fulfill our obligations to our customers.
I had thought that my pandemic communications from here in China had come to an end, that the next chapters of this saga would be written elsewhere and by other people. However, there are important new developments here that I need share with our friends and stakeholders.
First to touch on personal existence. Personal and community concerns about the Virus have virtually disappeared from our daily existence. China was successful in eliminating the spread of this disease, but did it with draconic measures far in excess of those being taken by other countries in the world. We hope that actions taken by other countries are sufficient to cause the virus to subside, but we would recommend that stronger measures be taken.
While there is a general reduced anxiety here, strong measures are still in place. Upon entering any store or restaurant, hotel or establishment of any kind, you must record your name, places that you have visited in the last 5 months and have your temperature taken at the door. At our factory pandemic procedures are still in place. Everyone’s temperature is taken twice per day. Face masks, face shields or goggles and gloves are worn by everyone at all times. The production environment, meal facilities and all activities involve strongly enforced social distancing. Each employee must report each day their activities during the non-working hours, including who they came in contact with and where they were. While travel is not prohibited, no one is doing any traveling of any kind. Airplanes, buses and trains are empty all the time.
So, while daily existence here is very much normal, vigilance and precaution are strictly followed. As an example, I observed an individual walking down the street without a face mask. Several people accosted this person and verbally berated them for their behavior of putting everyone at risk by not wearing face mask protection.
One must wonder if this is now a permanent part of life or will such fears eventually subside.
As the rest of the world does battle with this enemy, the need for personal protective apparel has skyrocketed. China in general has viewed this development as a strong profit opportunity. Some of our suppliers have taken the position that they will not profit from the misery of others and will maintain pricing and supply. Others are not so high minded.
During this time, it seems every Chinaman in every Chicken Coop in China is making face masks and isolation gowns. There have been huge shipments from China of substandard quality products, these being sent to desperate people all over the world. Many shipments upon receipt have been destroyed due to unacceptable performance and quality. Unfortunately, most payment terms are cash in advance so many around the world are being taken advantage of in a most desperate time.
We were pleased that on April 1st, Beijing implemented a new policy that no personal protective apparel could be exported from China unless the supplier had a certificate of approval of performance and quality from the China FDA department. It is the governments goal to not have others view the country as a low quality, poor performance supplier of desperately needed items.
Unfortunately, this new initiative has not stopped the flow of substandard products. In response Chinese guys that don’t have the proper permits and documents now just sell to a Chinese company that does have the required approvals, and then those substandard products are still exported to a desperate customer. We caution all our friends that during such crisis times the moto of “Buyer Beware” is most adept.
Another area of concern is in the securing of needed raw materials. Some suppliers to Exact have committed to supporting us as long-term partners and strong corporate citizens. Others have not been so high minded. Any raw material item that is a component in face masks or isolation gowns has become problematic. One of our suppliers gave us a 43% price increase on Monday and invited us to place a long-term order to guarantee that price. Terms of sale of course – Cash for the full long-term commitment payable by Friday. This supplier intends to start auctions next week whereby customers can be at his factory with cash and a truck every morning. He will announce how much material was produced the previous day and customers can bid on the material. The successful bidder must pay cash immediately, load his truck and depart. Unsuccessful bidders are invited to try again the next day. Exact Medical did take a contract with this supplier at the higher price for multiple months of material and has paid for those many months in advance.
To conclude, Exact Medical is committed to securing raw materials and providing our customer’s needs regardless of the hurtles that must be overcome. It is possible that some raw materials will need to be substituted with alternatives but no such change will ever be allowed to affect the quality or performance of any of our products. In addition, we will do everything possible to mitigate or absorb costs and even if that is not possible, we refuse to profiteer on the misery of others.
I know everyone has concerns about the challenges of this pandemic both of a personal nature and professionally.
I’m reminded of some words of wisdom I was given so many decades ago. All things come and all things pass. Unfortunately, good things pass quickly and bad things pass slowly, but this too will pass.
Again, I want to thank all of our customers for the faith you have put in us.
WE WILL OVERCOME THIS CHALLENGE.
From Changzhou, China
David Power
President
Exact Medical Manufacturing, Inc.
