Transitioning Out of China’s Zero Covid Policy: Implications For The Toy Business
Big moves in China recently with the government finally softening their stance on Zero covid. As the rest of the world has been out of hard lockdown protocols for some time, the obvious question is why did China take so long to reach the same position that most of the rest of the world reached a year or more ago?
One of the major challenges for China has reportedly been the inefficacy of the non-mRNA vaccines deployed in China – an article in The Guardian newspaper in the UK suggested that the effect of China’s deployed vaccines did not last with hardly any evidence of any active effect 6 months after vaccination. To add to this, the article further suggests that only 40% of those aged over 80 years of age have been vaccinated, and the overall booster rate estimated at c. 68% versus Japan’s rate of 90%. [1] In addition to all this, due to the Zero Covid policy, estimates suggest that a mere 1.5m of China’s c. 1.4 billion people have had Covid so far – compared with an estimated 90% of the UK population by way of comparison.
But surely China will get through this – other countries have done after all – so what’s the problem from a Toy business perspective?
The major challenge here relates to 2023 peak season Toy production. China still produces the majority of the world’s Toys, albeit with an ebbing away of market share over time. We can reasonably expect that China will go through a significantly serious Covid wave which could last through to the annual mass movement of population that happens at Chinese New Year and due to the lack of Covid immunity could wreak havoc on China’s population and economy. Our business has long been used to seeing factory labour forces disappear off back to their distant homes and away from the major manufacturing zones around the Southeastern coast of China. This time though, many will take Covid back home with them. Others still may be reluctant to return to manufacturing working with thousands of other factory workers in confined conditions until Covid waves clear and the situation calms down. Replacing labour after CNY has often been a problem, but when the country is currently an estimated 20 million factory workers short of what demand requires, we can see how any further significant drop off in labour availability could have implications on peak season Toy production.
Moreover, we can surely expect that even when the first wave clears more waves will come, and they could be hitting at just the point in late Spring/early Summer when production is most ramped up for Toy manufacturing.
In conclusion then, it looks like we could see another disrupted year for Toy supply chains in China.
We run a Strategic Toy Sourcing Consultancy – www.ToyTeamAsia.com through which we have helped dozens of clients to review their vendor base and to reallocated production to other geographies. Please get in touch for details of how we can help you manage the ongoing shifts in Toy manufacturing.