Asia Manufacturing, COVID and Sky-High Shipping Costs

China racism
Pretty much every day one of our clients that manufactures in Asia complains about their fate. The following are but a few examples of what we are hearing:

1. Client’s sales of one particular product fell from millions a year to zero because the China tariffs and astronomical shipping costs meant that it could no longer compete.

2. Client that booked a big sale many months ago ended up losing money on the deal due to unexpectedly high shipping costs — it had agreed to cap shipping costs at a rate it never thought it would see.

3. Chinese factories are having major problems hiring and retaining employees. This is due largely to COVID and fears of catching COVID. This is causing production delays.

4. Client was supposed to get its first season of Christmas merchandise many weeks ago and though it has been promised that merchandise by the end of this month, it does not believe that will happen, largely because of supply chain problems it is facing in both Vietnam and China, likely due in large part to COVID at the factories and/or at the ports.

5. Many of our clients that have their products made in Vietnam are complaining about ridiculously long delays in getting their product. None seemed to know exactly what was causing the delays and we (both them and me) thought it was due to Vietnam having become “full” due to having taken so much (too much?) manufacturing from China.

But yesterday, I received two emails from a trusted friend of mine in Vietnam, saying essentially that COVID is raging out of control in Vietnam right now and the government is trying to keep this a secret. The below are the key parts from this friend’s emails, modified in parts to protect their identity:

Updating you about the COVID situation in Vietnam, especially in HCMC now as I believe this is all being censored.

We saw a spike and a quick rising of cases during the Spring and it took off after Summer. We are seeing thousands of new cases with over 500 fatal cases per day at the moment. Hanoi just started the strictest lockdown in Ho Chi Minh and the southern regions. . . . and by strictest, they are going full China-style. The army arrived a few days ago with tanks!? I wonder how those are helpful for a COVID fight. This has caused even bigger panic in towns.

Most of the central-southern regions are on fire with COVID and Hanoi is also at the brink of a high infection rate. Factories in manufacturing parks and industrial zones around Ho Chi Minh were trying to maintain their production levels but this ended up creating huge and uncontrollable infection clusters. Workers died en masse in factory dorms. The number of unreported fatalities are higher than on the news, leaked by some essential suppliers to the quarantine camps. Saigon is running out of food and medicine while local authorities and Hanoi [Vietnam’s center of government] are focusing only on quarantine efforts, causing even greater outrage.

Saigon asks Hanoi for money and food, Hanoi sends tanks and the army, instead. The army is now in charge of keeping order as well as transporting bodies for cremation. Thousands are jobless so they can’t pay rent and can’t even get food so they are fleeing to their hometowns on motorbikes, ending up carrying COVID across the country.

It really went from heaven to hell in a blink… thinking how just a few months ago, our government was so proud of being among a few “green” nations on the world map.

Vaccines are still under huge shortage. Just last week, it came out that the Vietnam government tried to give Chinese vaccines to the people, the neighborhood found out and trashed the vaccine site. Hanoi is certainly not pleased and China took it to the next troll level; their embassy tweeted (but later deleted) an illustration (poorly translated into Vietnamese and posted above) describing the people of Saigon as “ungrateful victims. . . .”

For more on what’s been happening in Vietnam and in China with COVID, check out the following: