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Production in China picks up, but worries remain

Philippe Dova

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Production in China picks up, but worries remain

“Zero new local cases of coronavirus” were announced by the Chinese Ministry of Health on Thursday, March 19—a first since the beginning of the official count in January and a major step in the battle that the country has been waging with Covid-19. Our local correspondent gives a view of how consumption is currently faring in China.

This encouraging news coincides with relaxed confinement measures and industrial activity and consumption that is beginning to pick up in the country. "Since the second half of February, people are getting back to work and production has accelerated. The economic indicators in March will improve considerably compared to the previous two months as will the second quarter results," commented Mao Shenyong, director general of China's statistics institute, on March 16 to local media People's Daily. This optimism is shared by the general manager of a major European luxury accessories brand in China, who spoke to Luxe Packaging Insight. “After seeing turnover fall by -20% to -60%, sales have clearly improved this month. Most of the shopping centers have reopened and all of our boutiques in China, except those in Wuhan, are now operational. Our employees are equipped with masks, gloves and hand sanitizer and work in shifts every other day. After a period of confinement, people want to return to a normal life and to consume”. 

On the manufacturers' side, adapting to the constraints of Covid-19 was necessary in the short term, but expectations remain. "We stopped all travel for two months and have had to organize ourselves differently, either working by phone or by videoconference. But in the end business continues. Luckily, manufacturing and logistics in China have restarted and we are once again able to produce for our American and European customers. The real question, however, is how the demand in these markets will develop. Some of our clients are already asking us not to ship goods for the time being,” comments Jean Philippe Gry, CEO of The Blue Factory, a Hong Kong-based company whose Chinese factories supply American and French high-end sportswear brands.

It is indeed this spectacular drop in consumption in markets outside China that is currently the industry's biggest concern. 

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