China has ‘nationalized’ the big N95 mask manufacturers, making it harder for buyers here to get their hands on a product that, once again, China dominates, says a big U.S. importer.
“All of our orders, for millions of N95 masks, were canceled last week,” says Leo Friedman, CEO of iPromo in Chicago, who has been importing tens of millions of masks all month. “They were for hospitals and state governments. We told them last week that we can’t get them.”
iPromo is known for making branded giveaway goods seen at trade shows, or other corporate ‘swag’. The company shifted to servicing those clients with medical-related goods, from surgical masks to face shields and anti-bacterial gel in order to stay in business as the trade show market collapsed in the pandemic.
The N95 is a disposable mask used by doctors. They fit tight around the face, and are believed to be the best defense against airborne pathogens. Any pictures of doctors with red, pressure lines on their faces are surely faces imprinted by N95s.
Last week, Daymond John, the Shark Tank host and CEO of The Shark Group, was unable to deliver N95s to Florida, according to a story by The Miami Herald on April 22. The story did not say why The Shark Group was unable to deliver, only that Florida’s Department of Emergency Management said N95 delivery deals had been “falling through for weeks.”
The heart of the Herald piece was that John was charging too much for the masks, something the Florida state leadership denied anyway.
The problem seems to be, if Friedman is correct, that the Chinese government has either fully taken control of, or has banned major N95 makers like Dasheng Health Products from working directly with buyers. Now people have to source those products through another party — such as in a broker relationship — which has prices of the masks going up seven-fold.
Industrial face mask maker Makrite entered into what appears to be a contract with the government of China for full capacity N95 mask manufacturing, meaning China is buying everything they make to replenish local hospitals. Makrite N95s will no longer be exported, as a result.
The pandemic has exposed over-reliance on China as both a potential health risk, and a business risk.
“Our China partners said they couldn’t get them to us because the government nationalized them a month ago,” Friedman says. “There are only a handful of N95 factories in China and now they are all enforcing the nationalization. They are busy with back orders to service Russian and European orders, I was told,” he says. “This is the first time in my 20 years in business that I had to cancel orders and give money back.”
3M committed to making around 100 million masks a month, but the Center for Disease Control and Prevention, whose leadership now says masks slow the spread and should be worn in public, thinks the U.S. needs 50 billion masks. That means 3M could not possibly serve demand even if that was all they were making.
China ramped up production of the medically approved N95 respirator mask for their own outbreak of the new SARS coronavirus. Now that their infection curve has flattened, they are still firing on all 8-cylinders in order to produce for export.
The nationalization doesn’t mean they are not serving export markets anymore. It just means that they are not taking new, factory direct orders and those who are selling internationally are only doing so through third parties who are Uber-surging because of demand