Delivery pressure of small home appliance exporters: cost is difficult to reduce, supply chain is not smooth
Author: Wang Zhen
On February 8, the Lantern Festival falls on Saturday again, but Liming Yang, general manager of Zhongshan Letu Electric Co., Ltd., is busy with the resumption of work.
In the morning, he submitted the application materials for resumption of work to the Economic and Information Bureau of Nantou Town, Zhongshan City. In order to prevent and control the new coronavirus pneumonia epidemic, Guangdong Province has previously announced that it will resume work no earlier than February 10. On February 7, the Zhongshan Epidemic Prevention and Control Headquarters issued a document to guide enterprises to resume work. According to the requirements, preparations for epidemic prevention must be prepared, including masks, thermometers, disinfectants, alcohol, isolation rooms and other protective facilities, and relevant materials must be submitted before returning to work.
The next day, the Town Economic and Information Bureau will send someone to check, check the ledger, and confirm the health status and epidemic prevention facilities of Leto Electric’s employees on the spot. Although the employees have not yet arrived, it is difficult to buy thermometers, and some suppliers will delay work. However, Limingyang can’t wait, because if he does not resume work on February 10, the batch of fans he exported to the United States will not be delivered in time. Delivery time – 10 days, must be shipped!
This small home appliance export enterprise located in Nantou Town, Zhongshan City usually has 140 workers. Due to the delayed resumption of work and the prevention and control of the epidemic, there are now only 30 workers in the workshop, and the number of workers who have returned from the workshop is less than a quarter of the usual. There are more than 30 people in the office, and some employees can’t come back for the time being. Because some other provinces have closed roads, and some buses cannot pass through, now only private cars can pass the customs.
On the day of Lantern Festival, some chambers of commerce in Zhongshan City also advised member units to postpone the resumption of work again.
“However, my export shipments cannot be delayed.” Liming Yang said in a hurried tone during a telephone interview with a reporter from China Business News: Exports must be on time, which involves future business cooperation. Several containers will be loaded on February 10, containers will also be loaded on the 11th, and containers will continue to be loaded on the 12th. If necessary, make a special application to the government.
Right now, the number of civilians and workshop workers combined has not yet reached half of the original number, only about 40%, but it is impossible to not return to work. Liming Yang was anxious, and there were a lot of problems waiting to be solved: the thermometer was in short supply on the market, and he borrowed it later; disinfectant and alcohol were ready; there were still a series of difficulties – one was the lack of manpower; , some until February 20, and some even until March 1, which has a great impact on the supply of accessories.
The factory of Lotto Electric is rented, the rent is fixed, and the factory is not in operation, which means that the amortization cost will increase, and the wages of the employees will be paid… Liming Yang feels heavy pressure on his shoulders. In contrast, what he is most worried about is that the delivery time will be affected, and he is afraid that the delivery cannot be organized in time. “It’s mainly about traffic control, this is not given, that is not given. Some employees can’t come, train tickets can’t be booked, and buses can’t get through. If this situation continues for a month or two, the biggest problem will be the performance of the contract.”
“Once there are not enough people in the workshop, the office staff will also go down (the workshop will help with production).” Liming Yang remarked, provided that the application for resumption of work passes the review of the local government. “We must guarantee the delivery time, otherwise the customer will not give us an order next year.”
He estimated that large-scale exhibitions such as the Hong Kong Electronics Fair in April this year may also be postponed due to the impact of the epidemic. In previous years, American customers took the opportunity of these large-scale exhibitions to go to mainland China to interview export suppliers such as Leto Electric. “They didn’t come this year, and the samples were sent.”
Ninety percent of Lotto Electric’s orders come from the US market. However, affected by the risk of tariff fluctuations, Lotto Electric’s orders from US customers in 2020 dropped sharply by 50% compared with 2019, and some orders were transferred to other regional suppliers such as Taiwan, Mexico, and Vietnam.
“The epidemic has made things worse for us both internally and externally.” Liming Yang said frankly that if the resumption of work is delayed and the orders in hand cannot be made, the factory may not be able to survive next year. Mainly, the confidence of customers will be affected, and the cash flow of enterprises will not be able to sustain for long.
Although the government has issued a policy saying that it will reduce or exempt rents, private companies rarely give rent reductions or exemptions. After all, landlords also have difficulties. Limingyang is distressed: “On the one hand, he has to pay rent and pay employees; on the other hand, there is no income without shipping, and the supply chain is not ready. Even the container shipping company said that the road is blocked.” But he did not She flinched, “Loading the cabinet on the 10th, if there is no porter, I have to go shirtless.”
On February 9, Liming Yang, who had completed the inspection, told the First Financial Reporter that Lotto Electric was the first batch of companies in Nantou Town to apply for resumption of work. The inspection team said that they would visit more than 80 companies that applied for resumption of work. It will take 14-15 days to resume production. Fortunately, the batch of goods to be loaded on February 10 was ready before the Spring Festival. However, there are still some goods that need to continue to be made, and some cooperative hardware mold factories in Shunde District, Foshan City are not expected to resume work until February 20 or even March 1, so he may have to find a new supplier.