Now most wheel factories in China have fully resumed from work after the extra long Chinese New Year Holidays (with Covid-19).
And now you and most wheel importers around the world are facing government shut down order. You are suspending 50-100% of your order shipment and holding back all new orders and limiting development back from your suppliers.
The wheel factories are then running half of their capacity, or working and stopping production alternative week, asking their employees to take leave at minimum pay (as low as $200/month), and proceed natural employee letting go. A very long May 1st Labor Day holiday is expected for a lot of factories.
The factories will also need to go to banks or lenders for borrowing new money, on one hand supporting the warehouse stock and WIP/raw materials in the workshop, on the other hand supporting operating expenses and repaying various types of bank and machinery loans.
With this disruption of production and human resources fluctuation:
will the supplier survive this wave financially?
is the wheel factory's various vendors getting paid (aluminum, paint, accessories, wages)?
is the existing management still intact?
is the product quality maintain, in terms of structural and cosmetics?
when shipment can be resumed, will the factory be capable of catching up the possible sudden demand?
are my new wheels development still going on? mold shop being paid for the work?
will the supplier liquidate my wheels without my consent?
In this type of Black Swan/Grey Rhino scenerio even Warren Buffet never encountered before, you and your staff cannot go to visit the factories on site, how will you do to mitigate the possible negative impact?
if you have staff in China, they will be your key to information. China has opened up internal travelling and on site visit frequently will be crucial. Even if your Chinese staff may only be on the technical side, or only on order follow up, they have to take up the position to observe and talk to all levels of the company to report
keep communicating (by voice or video call) with the owner of the factory. I know it is difficult he/she doesn't speak English, get the factories best translator and understand updates as much as you can, and get a feel by asking more questions about various financial aspects. One key question is how optimistic/perssimistic about the recovery. Email probably cannot help too much in this aspect of communication
go to shop floor and do the on site quality system auditing. It should be slack for the factory and you can reconfirm the integrity of the system by checking the recent QC record for critical process and control points
talk to key managers, especially the finance controller, QC/QA Manager and Sales Manager
give plan of shipment after resuming. I know that nobody knows the date of resuming, but you still need to do some estimation so you factories can plan on also, though this plan will continued to be adjusted based on actual recovery. And layout the plan of production to support this recovery plan, especially on labor.
apply audio and video conference with factory's development team, cheer them up with future demand and make sure they are keeping on development. Although USA suggested blocking ZOOM, but we can always have other free of charge choices. My company use Wechat/QQ/DingTalk and the quality has been acceptable
check with local aluminum, paint, machine parts and accessories suppliers to see if the wheel factory is paying normal
talk to workers on the floor and ask indirectly the satisfaction about wage payment punctuality
If you have any questions or information you want to understand about the wheel industry in China, please do not hesitate to contact the author : Gary Kong | Email ： gary@auto-metals.com
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