BUSINESS 'World factory' Dongguan industry sees boost from domestic and overseas orders


'World factory' Dongguan industry sees boost from domestic and overseas orders

By Chen Qingqing and Wang Bozun in Dongguan | Global Times

18:34, September 20, 2020

N95 face masks on a production line of KYD, an automatic mask machine factory in Dongguan, South China's Guangdong Province on Thursday. (Photo: VCG)

"Dongguan traffic jam, global shortage" goes the widely known saying, referring to South China's Guangdong Province and its reputation as a manufacturing center. As China became one of the first countries to emerge from the COVID-19 pandemic, the economic revival could be seen in the flocks of migrant workers, heavy traffic and noisy machinery finally returning to the world's factory.

When a migrant worker, surnamed Wan, was stuck in his hometown in Central China's Henan Province in mid-February due to strict epidemic control measures, the middle-aged man said he felt very anxious. His concerns echoed those of many migrant workers in China who had been so eager to get back to work after the Spring Festival holidays in order to make a living.

Due to delayed orders in the first three months of 2020, the second quarter of this year has been much busier for Wan, who works at a Taiwan furniture factory that has been operating in the southern city for over 20 years. "We work around the clock, and it feels so good to get busy so I can earn more money," he told the Global Times.

February was a period of struggle for hundreds and thousands of factories in Dongguan, with most of them facing labor shortages following the suspension of the movement of workers due to the spreading epidemic. As some factories, like the Taiwan furniture plant, welcomed their last wave of migrant workers from Central China's Hubei Province - the region most hard hit by the epidemic by the end of April - local business representatives saw factories regain the pace of production, which was even faster than expected to meet growing demand, both domestic and overseas.

Recovery accelerated

"The operation of my company fully recovered in May after workers from Hubei returned ... Now, we are tightening our working schedule to catch up with increasing orders," Alex Chen, president of Stylution,a Taiwan-invested mattress and furniture manufacturer in Dongguan, told the Global Times in a recent interview.

Chen was one of the lucky ones. His furniture factory was not severely impacted by the epidemic, but the unprecedented "black swan" event of the year crushed a large number of small and medium enterprises in China, causing job losses across the country.

At Dongguan Kinyet Metal Products Co, a stamping parts supplier in Dongguan, which makes 30 million different components every month for supplying various electronic devices and products such as smartphones, laptops, automobiles and paper cut machines, regular epidemic prevention work has become a new normal for factory life.

With posters hanging on the walls providing guidance on personal hygiene steps and detailed prevention measures in the workplace, employees at this Taiwan-invested factory said they were confident in both the epidemic prevention and production acceleration to meet order demands. And they would be well prepared for any possible resurgence of the epidemic in the coming months.

"There's a growing demand overseas for electronic devices. The COVID-19 pandemic boosted online services and communication, for example, students have to stay at home and take online classes, which also drove up the demand for products like laptops and tablets," Lu Yongchang, president of the company told the Global Times.

China recently reported that its manufacturing activity expanded in August as the country continued to recover from the epidemic, and its official manufacturing Purchasing Manager's Index (PMI) reached 51.0 - an expansion - in the past month, driven by new orders for products such as electronic equipment and pharmaceuticals, according to official data from the National Bureau of Statistics.

The rebound from the coronavirus epidemic has also helped ease the pressure on the job market, as some economists hold bearish views on unemployment levels amid COVID-19 outbreaks.

In a recruiting office outside the campus of Arun, a consumer electronic product manufacturer in Dongguan whose product line spans from power banks to earphones, a number of job seekers crowded the 50 square meter office on Wednesday afternoon. Some were even waiting outside.

According to an executive from the company, since the COVID-19 outbreak, Arun's orders from both domestic and overseas markets, which account for 50 percent of whole orders respectively, contracted nearly 20 percent.

Post-COVID-19 demand boosted

But as the epidemic came under control domestically, the number of orders quickly jumped from July with a slight year-on-year increase.

"Our orders from both domestic and overseas clients doubled in August compared with several months ago, we are now eager to hire more workers to meet the production schedule," Sun Defeng, deputy general manager of Arun, which now employs more than 1,000 workers, told the Global Times on Wednesday.

It was not easy for some local factories to resume production at the early stage of the outbreaks, especially when they faced insufficient personal protective gear like masks.

At the factory of Kinyet Metal, some production lines have been transformed to produce masks since February, and as the plant also produces breast pumps for export, it was an easy process to apply for new certificates to export masks as medical supplies. And the quick shift to a new type of production line was also thanks to an integrated and comprehensive supply chain in Dongguan, which enabled the factory to easily access raw materials, Lu said.

'Dual circulation'

Though China has successfully contained the epidemic, many foreign countries where factories in Dongguan export products have been seeing surging cases every day, which casts a shadow over the prospect of export-driven businesses, according to local factory owners.

As the US imposed anti-dumping sanctions on Chinese-made furniture even before the yearlong trade war between the US and China began, some factories have already realized relying solely on export may not be viable, said Chen from Stylution. "We have been shifting our focus from export to the domestic market, particularly by using new sales channels like e-commerce and live streaming promotions, we find the domestic market is more and more important in a post-COVID-19 economy," he said.

First introduced in May this year, the "dual circulation", which takes the domestic market as the mainstay while letting domestic and foreign markets boost each other, has been placed high on the authorities' agenda, according to the Xinhua News Agency.

While more factories like Stylution, which used to heavily rely on foreign markets, are now adjusting their strategies toward domestic markets given the sluggish demand overseas amid the pandemic, some economists also suggested that there's no one-size-fit-all approach and for some industries, returning to the domestic market may lead to an oversupply problem.

"In some labor-intensive industries like textiles or shoes that are mainly exported to developing countries, factories may continue facing a struggling period," Tian Yun, vice director of the Beijing Economic Operation Association, told the Global Times.

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