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What does the ban on face mask export from China mean to small local retailers in Singapore?

China has just announced the ban of all medical equipment, including face masks, internationally after a series of embarrassingly poor quality Made in China medical equipment and test kits made its way into the headlines of foreign media.

Beijing has mandated that only those manufacturers with accreditation to sell their products within China are allowed to export test kits, surgical masks, protective gowns, ventilators, etc., regardless of whether they have any overseas recognized quality certificates required to sell in the international markets that they are exporting to or not.

This couldn’t come at a worse time for local suppliers in Singapore when the government has recently made it mandatory for all to wear a face mask when they are outside of their home. This is with exemption to those who are doing strenuous exercise though. There is also an exception for some groups that may face difficulties wearing a mask, including children with special needs and young children (2 years and below).

Nonetheless, that is a huge demand for face masks, disposable and reusable, waiting to be tapped into by the local suppliers.

If you are to visit China e-commerce giants like Taobao & JD.com now, you would have realized that you will not be able to arrange for these related products for them to be shipped back to Singapore as easily as you would a month ago. There is an option for you to arrange a private courier with the seller but almost none will want to risk it.

What does it mean to Singapore suppliers & online-resellers?

There are always the 2 sides of a coin when business is concerned. For one, should the online resellers continue with their digital marketing efforts considering that a big part of them are using the dropshipping model?

The short answer is no.

Since there is no guarantee of securing a shipment for this product from your original source in the near term, there is no way you will be able to decide on a profitable enough price to continue with any transaction with a potential client. The numbers for people infected with COVID-19 are also rising worldwide and, even if you have an alternative source outside of China, the demand for this product by cash-rich governments around the world is going to push your cost up significantly.

For those pure e-commerce companies that have leftover stock, you may want to adopt a wait-and-see attitude with the fact that major retailers like the large supermarkets & pharmacies are already well-stocked prior to the release of this new enhanced “Circuit Breaker” restriction by the government. The current price may not have factored in the cut-off of supply from China side in the long run and the stock you have on hand may be able to fetch a higher price should supply across Singapore runs low.

Do note that, as much as we do not encourage profiteering, to compete (against offline retailers) when supply is way above demand is never ideal from a business perspective. To come in with supply at a later date when demand is higher than supply may even be beneficial to the community at large.

Nonetheless, for offline retailers that are well stocked with face masks, now may be the time to just open your warehouse gates and sell as many as possible. Apart from the fact that there is a huge possibility of Singapore extending its, or even imposing stricter, “Circuit Breaker” measures, meaning it may come to a situation where you will be holding on to something without the means to sell it, damaging the user experience of your loyal customer who comes looking for a mask when everywhere else is selling will not be something you want to do. Especially for a product that has a certain lifespan. Hence, to hoard cash is definitely more logical than hoarding mask from our perspective in the current situation.

Also due to the fact that it is not a blanket ban for all China manufacturers (only those without a China certificate), major players that have a larger physical presence and an appetite for a larger MOQ may still be able to gain access to these “verified” China manufacturers.

Alternatives

As much as the export of surgical and reusable masks has been restricted by China, it doesn’t mean that one will not be able to get their hands on an “uncertified” source should they put in an effort to. One way is to get someone in China that is willing to source internally from within China and ship it to you without declaring the details (in full) of the shipment. Not exactly that legal but not impossible.

Since the start of COVID-19 (earlier known as the coronavirus) in late 2019/early 2020, resellers should have already seen the “uglier” side of protectionism trade from even countries like Taiwan and would have already been actively sourcing for alternatives in other countries. It has been easier in the beginning when the United States and Europe have been largely unaffected by the virus but has become more challenging recently when it feels more like an arms race after the virus exploded in almost every country that allows tourists in freely (not North Korea).

To not have even an alternative source from countries like Vietnam or India for a Singapore reseller will be unimaginable. Take our company for example, even when we are getting one of our key products (the Shockwatch Label we sell in Singapore) from a reliable manufacturer Taiwan, it is not stopping us to secure vendors and quotations from China & Europe.

The silver lining

Although disruptive, what China is doing now may be a huge opportunity for those that have contacts with manufacturers with the much desired China certification. This certificate does not come cheap and they are mostly factories that produce much more than surgical masks.

This also means that you could be having more products you can export to other parts of the world who are facing a COVID-19 pandemic that is urgently in need of medical equipment like the protective gowns, test kits, etc.

The image of “Made in China” medical equipment will also emerge with a stronger branding, after this export ban to make sure every manufacturer toe the line, where customers are more willing to pay for quality products that really save lives.

There is still time

With the Singapore government extending its “Circuit Breaker” measures and have most companies and all schools closed, most of the people are working from home even after the phrase one "safe re-opening" on 2nd Jun 2020. With this and the recent distribution of reusable masks for every Singaporean by the government, the need for a mask is actually greatly reduced since nobody is going out as often as they need to be.

For resellers or pure e-commerce plays that are unable to secure certified China manufacturers as suppliers, this may be the window to look for an alternative source outside China before the stock runs dry. If not, it may be time to seek the next alternative product that can possibly replace disposable surgical masks.

For those that are already dealing with these approved manufacturers, it will be time to up your game and start exploring bringing in more related products and expanding into new markets since it seems like this virus is here to stay for a longer time than expected.

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