May 18, 2021
Many Chinese businesses have flourished since the coronavirus pandemic was mostly under control in China, but the results differ.
One year after the WHO declared COVID a pandemic, we wanted to see how our clients´ factories cope with this distressed situation. With this survey we kick-off our Shiftery Insights. We continuously monitor our clients´ supply chains and now decided to share our insights to a wider audience; giving insights to small and medium sized factories in China.
The COVID pandemic has a massive effect on the world economy. China was the first country to be hit by the virus and also one of the first countries to increase its industrial production again. What effect did the pandemic have on Chinese factories and how did their business develop in the first quarter of 2021, one year after the pandemic started? Can we see differences across sectors, company size or between new and long-established factories?
Let´s find out in our first issue of “Shiftery Insights”.
Please refer to the dynamic PowerBI dashboard below for further insights and details about our survey participants.
Surprisingly, almost every second participating factory (45%) was able to increase its sales during Q1 2020 (Figure 1). One driving factor here was how established the businesses have been. Only 14% of companies in business for over 15 years had decreasing sales.
However, at the same time every third factory (34%) suffered from decreasing sales, giving a first glimpse on how divided the impacts are. Considering the employees as a measure for size, mid-sized factories (50-199 employees) have been hit most (Figure 2).
That three out of four textile companies suffered from decreased sales during the COVID outbreak, exemplifies that certain industries were especially hit by the pandemic.
Have factories, that suffered during the breakout of the pandemic, been able to turn things around to become pandemic winners? Overall, 2/3 of factories increased their sales YoY, but which ones? Astonishingly, 92% of companies increasing their sales during the beginning of the pandemic further increased their sales until Q1 2021. The survey reveals that at the same time recently established companies are now even more hit by the pandemic, as the whole world remained in lockdown and the customer base was still small.
Given this difficult and changing situation, did factories start offering new products? A significant 45% of clients asked the factories for new products. At the same time only 21% of companies are offering new products since the inception of the pandemic (Figure 3).
While one would expect companies with decresing sales to be more open to changing their product offerings, only a low correlation can be identified between changes in the product portfolio and the sales development.
Two painful issues for most companies during the pandemic were the shipping issues caused partially by container and a supply shortage for various products and materials. However, in our survey 52% of factories answered to not having faced any shipping issues (Figure 4). Especially, more recently established companies had fewer issues. While this sounds good on first glance, it is probably linked to their decreased sales development.
Check out our dynamic PowerBI dashboard below for further insights at your own interest. Share your findings, thoughts and own experiences with us on social media and join the discussion or get in contact with us directly. More Shiftery Insights to come shortly!
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