[Chinese] manufacturers of everything from toys and tennis shoes, to electronics and lingerie began churning out respirators, surgical masks, rubber gloves and more to cash in on surging global demand.
Even small manufacturers, with as few as 50 people, set up workshops or added production lines, often aided by government-backed loans and reduced registration requirements, Anjoran said.
Some new factories have struggled to meet quality standards. Last month, the Dutch government recalled 600,000 defective Chinese masks, Spain scrapped nearly 60,000 Chinese testing kits that had a high failure rate, and Slovakia’s Prime Minister Igor Matovic complained that a shipment of more than 1 million Covid-19 testing kits from China was so ineffective it should “be thrown straight into the Danube.”
China has attempted to crack down on sub-par suppliers, counterfeiters and unscrupulous middlemen, said Biju Mohan, vice president of consulting at GEP, a global supply-chain software and services firm in Clark, New Jersey. The government has investigated more than 1,000 recent cases of companies making fake or unreliable equipment and seized nearly 50 million face masks, he said. On Friday, government officials announced a plan for China’s customs agency to inspect every shipment of medical respirators, medical protective clothing and other equipment before export. That move led to reports of delayed shipments.
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Premier’s top executives in Charlotte, North Carolina, had watched as hospitals began ordering N95 respirators at a scale 17 times greater than usual, said Moloney, who’s responsible for fielding and filling supply orders for U.S. hospitals. Publicly traded Premier is one of the largest health-care group purchasing organizations in the U.S., accounting for more than $61 billion in purchasing volume.
After striking out on finding enough FDA-approved, medical-grade N95s, Premier mobilized its Asia-based employees to locate alternative manufacturers. Instead of newer Chinese factories — the cosmetics and toy-makers turned nascent mask mavens — Premier sifted through dozens of sites that had previously made medical facial guards.
In normal times, Premier’s vetting process for new manufacturers involves months of due diligence. Last month, for KN95 purchases, it threw out that playbook in favor of quicker methods. A first step was reviewing videos from factories, with the requisite code words.
If a factory passed that test, Premier would send employees for in-person visits. Once on site, they inspected KN95s at various stages of production, and scrutinized the manufacturer’s own quality testing. Premier rejected some goods and discontinued talks with some mask-makers outright. But if a factory looked OK, the buying firm would oversee the final packaging process, and green-light a deal.
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China remains a difficult market for conducting adequate due diligence. It’s not uncommon for Chinese manufacturers to issue fake documents extolling their bona fides, or to use pseudonyms, said Anjoran, the supply-chain consultant.
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