Haizol: Jennifer Grant

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Jennifer Grant joins us all the way from Shanghai to share what the outbreak of the Covid-19 pandemic has been like in China – both for manufacturers in and around Wuhan, as well as international businesses that used to source most if not all of their resources from that region.

Danny:

Well hello and welcome to today’s IndustrialSage episode. Today is a special new segment. I have Haizol, who is a Chinese manufacturing company who we’re going to be interviewing. I have Jennifer Grant, who is the marketing manager over there who’s going to be sharing some insights about what is going on on the ground in China. They are a company in Shanghai and we’re going to hear their story on sort of what Jennifer experienced through the pandemic, what the response has been, what’s going on over there. So this should be a really great episode. We’re looking forward to it. Jennifer, thank you so much for joining me today on IndustrialSage.

Jennifer:

Thank you very much for having me Danny.

Danny:

I’m excited about this episode because I think there’s been, there’s a lot of news you hear about in the media. There’s a lot of different stories that are coming out. So I’m excited to sit down with a manufacturer and kind of hear your story, hear Haizol and what is going on, what your experiences has been, what your insights are. So before we really jump into all that, to kind of lay the groundwork, could you tell me and our audience who Haizol is? What do you guys do?

Jennifer:

Yeah, of course. So we’re focused on custom parts and component manufacturing. So we specialize in CNC machining, injection molding, casting, stamping and fabrication. So to keep it very simple, we have two routes to market. We have our Haizol.com page which is essentially a sourcing platform where you can hop on, release a request for a quote as a buyer and receive verified quotes from suppliers within 24 hours and our suppliers are based in mainland China and we also have them in Southeast Asia. We also offer a one stop sourcing solution as well where Haizol will handle the processing of your parts from start to finish.

Danny:

Excellent. So obviously there’s been– a lot of things have happened, what’s been the impact with COVID specifically to these companies, these manufacturing companies in China?

Jennifer:

Right, I mean this is a really interesting question and certainly one that’s been discussed at length in recent months. So COVID has definitely had an impact on China’s manufacturing sector from February as we all know, the government policy was implemented and it forced a lot of the factories to shut down for at least a month which essentially halted the economic production during that time. That was at the end of January until around March, except for hospitals and pharmaceutical companies. So the disruption was quite substantial in terms of, we have many buyers who usually come to visit the factory and if they’re not going through Haizol, buyers who source manufacturers in China as part of their routine, come to visit the factory to see the quality, to see the capabilities but unfortunately all of that was stopped since January and still until now our borders are closed for any international customers.

Danny:

Yeah, so that’s a little bit of a challenge and that was happening back in January and February but how has it kind of, it seems like we’re hearing a lot of reports that it’s coming, it’s back, obviously you guys are having a faster recovery because you guys went through it first. What does that… What’s that been looking like for you guys?

Jennifer:

Yeah. So China has been on the road to recovery from February until now, I would say there is now actually a complete restart. So we saw an incredibly fast bounce back which was actually crucial for the factories because obviously when they were closed they had to keep running based on the savings and the cashflow that they’ve got. So it was crucial for them to get back on their feet as fast as possible so that they were actually able to reopen and not shut down completely. So I’d say now the situation in China has improved considerably and lead times are back to normal.

Danny:

Oh, wow. Okay, that’s fantastic. So all in all we’re looking at, it was like one to two months or so that things were really, really shut down and then they started trickling… When things started opening, was it just, was it a very quick recovery? Like just snap a finger, or was it kind of trickling in and then kind of ramped up? What did that look like?

Jennifer:

Yeah, I mean, it was trickling in, so what China did was the key factories and the key manufacturing plants were able to reopen quicker than a lot of the others but they did drip feed their employees back in. So it was a case of say, 10% go in this week, then another 10%, until it gets to full capacity and this way they were really able to control the health and safety and abide by all the regulations in China to stop the spread of the virus. So it was definitely drip feeding back into normal capacity.

Danny:

Yeah, we talked a little bit about the response from China to COVID: obviously a lot of lockdowns and all that good stuff. What we are hearing from our media here in the States, was that just a lot of, well, huge responses in the sense of like building factories but building hospitals and just like big lockdowns. What was your personal experience with that? Like in the company? What was that like going through that for you?

Jennifer:

Interesting one. I have to say it all happened very fast. So once China did start responding to COVID it acted very aggressively. So immediately at the end of January, towards the end of January, it undertook national mobilization to, basically it asked every person to do their part to stop the spread of the virus. So the public was notified that there was a virus, we should take immediate action. We should wear masks, wash our hands, use disinfectants and then they deployed 50,000 medical workers to the main area at that time in Wuhan to deliver the needed resources to the epicenter there and yeah, as you mentioned, 14 temporary hospitals were actually built in Wuhan, all at a very, very fast pace. So it was really a case of two weeks for all of this to happen and then obviously national lockdown happened after those two weeks.

Danny:

Yeah, that’s interesting. And then we were also hearing about, I guess what they’re calling it over here is “contact tracing,” but it’s just… as far as being able to track down maybe those who have been tested positive and then, “Hey, who have they been in contact with?” What… we’re hearing some interesting things on how they were rolling out with technology and stuff to be able to do that. What does that look like?

Jennifer:

Yeah, that’s it, again, exactly what’s been happening. So it’s China’s track and trace system and essentially it’s deployed to locate and test everybody who’s come into close contact with somebody who has had the virus or somebody who’s got the virus themselves. So the government can monitor exactly where they are. So we have two main apps that are doing this, it’s WeChat and Alipay, these are two of the most commonly used apps within China and have almost actually replaced cash payments and these enable the government to track people’s whereabouts and also prevent those infected from traveling. So each individual has its own health status code and this code either shows green, yellow or red which reflects your current health situation. So as you enter a checkpoint, for example, a railway station, even many restaurants, bus stops or any public venue, they’ll first ask you to show your health code before they allow you to enter. So it’s all very stringent and very controlled.

Danny:

Interesting. So that’s still fully active right now?

Jennifer:

That is still fully active. So even though we’ve almost recovered from COVID-19, we still have to present those health codes and actually we’re still wearing our masks anywhere in a public place. So it’s compulsory for example, on any public transport to keep your mask on and for any public events, you have to show your green QR code status.

Danny:

Okay. But like going into a manufacturing facility for example, is that a protocol that is being enforced I guess by the manufacturers? Or is that something that government’s enforcing or what does that look like?

Jennifer:

So this is being enforced by the government. So if it was the employees who are there daily, it would be probably, the standard would be a temperature check and also regarding the keeping your social distance, they wouldn’t necessarily have to show the green QR but if there was any buyers visiting that factory or anybody who wasn’t normally working there, they would be required to show that and it’s not just that it’s by law, Everybody is abiding by this because as a collective we all want the virus to-

Danny:

Be done. Right.

Jennifer:

And all of the organizations are following this.

Danny:

Yeah. One interesting thing that you mentioned in there as well, this was kind of an interesting aside, but you said that… Alipay and WeChat. So WeChat’s kind of similar to like a WhatsApp; and Alipay I’m assuming is- I’m not familiar with that- I’m assuming that it’s a cashless payment system, like a PayPal or something like that, is that accurate?

Jennifer:

Yeah.

Danny:

Okay.

Jennifer:

So they have many, many functions. It’s actually all we use in China, most of the time is our Alipay or our WeChat. So it is a form of wallet, digital wallet. So where we carry our money and it’s also a bunch of other stuff where we book tickets, where we communicate with friends, where we make phone calls, where we can read the news, a multitude of functions for both of the applications, we can send money, transfer money to a bank, transfer money to each other and yet this also has all our whereabouts inside so that also allows us to have the green QR. So if I was to go into a place that was in lockdown for any reason and I traveled there and when I came back, it would be WeChat and Alipay that show my green QR has now gone.

Danny:

Gotcha. Okay, so that’s inside of those apps. One thing that I, again, I think was interesting, you’ve mentioned that now everything is kind of, it’s gone a little bit more cashless. Was that the case before COVID or is that a result because of COVID that now things are being pushed more cashless?

Jennifer:

No, it’s been the case for years here and it’s just becoming more so as time goes on. So before, cash was still accepted in all of the shops but now for example, there’s many local shops that actually do not accept cash anymore. So if for some reason you don’t have WeChat or Alipay, you can’t actually make a purchase and there’s been times where also I’ve gone to take some public transport. Most of them do accept cash but there is some where you’re in a particular queue, for example, they will not accept your cash. So it’s not really a result of COVID but yeah, it’s been a progressive thing for the last, I say three to four years.

Danny:

Okay. Interesting. Okay, I’m just curious about that. That’s very, very, very interesting. All right. So let’s kind of move on a little bit more about looking at manufacturing, sort of globally and how companies have been affected as well. Let’s talk about a little bit of supply chain and sourcing raw materials. Obviously there’s a lot of manufacturers that go to China as part of their supply chain. They’re the big suppliers there. How has that all been affected? I mean, you kind of mentioned a little bit before as far as like buyers not actually being able to get onsite to do quality checks or whatnot. What did that look like initially? And what does it still look like now?

Jennifer:

So yeah, I mean, it has had a huge impact on buyers worldwide who would typically come to China to source their suppliers and it depends, how much of an impact depends on how much they were reliant on suppliers within China. So, first of all, the complete closure of the factories initially had a huge impact and took a huge toll on supply chains globally, Manufacturers that use components in their products that are mostly sourced from the infected areas. For example, Wuhan at the time, for example, 500 car part manufacturers operate and need to find alternative sources outside China because they actually source their car parts from Wuhan or if they can’t find alternative sources they’re forced to shut down their production. So it has impacted manufacturers a great deal and even though we’ve reopened, our borders are still closed, so nobody can come in and do any quality checking or source suppliers easily if they haven’t already got them in place.

Danny:

Yeah, that’s a little bit of a problem. I think we’re going to get into that a little bit more, about the response on there but what of, I guess, challenges, what Chinese companies face? Obviously we’re talking about how some of the other companies are coming in and buying because they have Chinese suppliers, but what about the actual Chinese companies inside mainland China? I guess that would be Chinese companies, right?

Jennifer:

So yeah, you mean the Chinese companies themselves. Well, yeah, I mean, it’s two fold, isn’t it? Because on the one hand you’ve got the buyers who have had production halted or had their parts delayed, the lead time delayed but at the same time, Chinese manufacturers have lost a lot of business. So within China they now have a huge shortage of orders from countries who are still struggling with the virus or they have a slow drip feed of orders from countries which are in recovery from the virus. However, these orders are small and much smaller than they were compared to 2019.

So now the rest of the world is suffering from forced closure and repercussions of a lockdown or still in lockdown. So medium and small sized businesses just don’t have the capacity to make the same orders they were making before. So on that hand, Chinese companies are suffering in terms of orders, they’re more reliant on orders within China. Funnily enough, we actually conducted a study on this this year, our own firsthand research into Chinese factories and how exactly they’d been impacted from COVID and what strategies they were adopting. So it did seem that they’ve all been affected quite substantially by COVID and it just seemed the ones who were reliant on orders from the rest of the world, their ratio of orders from worldwide versus in China were more, obviously they’re the ones struggling more because now they’re fighting to get more of the mainland China market which is already quite saturated. So yeah, really tough.

Danny:

Yeah. You know, it’s interesting and it’s a big challenge because you always hear about diversification of your portfolio, making sure that your business isn’t coming from one place but then, you know, you have something like this happen, it doesn’t matter how resilient… I mean, we talked: obviously there was a big talk about resiliency of supply chain and whatnot but it’s just a very unique situation to say the least. So how are some of these companies, like what are some of the strategies they’re using to sort of adjust and pivot, to respond to the shortage? You mentioned that, hey, we’ve got a lot of companies that maybe have a big global presence, but now because of their shutdown, orders are dropping, oh hey, now let’s focus on mainline channel. Okay, well now it’s oversaturated because everyone else is doing the same thing. How have they been responding? What are those strategies?

Jennifer:

Yeah, right. Another interesting one. So from the research we conducted last month, we found there was two main coping strategies that were being used. The first one is market expansion and the second is strategic transformation. Now market expansion strategy typically focuses on marketing efforts to stabilize their existing market. So whichever market they were already in pre-COVID, they would just focus on that. So consolidating old customers and at the same time, trying to develop new customers and expand into new markets segments and also strategic transformation which is embracing new opportunities to carry out strategic transformation. For example, offline to online, we’ve seen many factories who previously were just finding their buyers offline in the traditional way, now moving digital and becoming more agile which is really necessary to respond to something that was so unexpected. So the organizational structure has changed too.

Danny:

Yeah, no, absolutely. So as far as kind of pivoting in here, we’re talking about supply chain: a big, huge topic right now. How do you see the supply chain strategy moving forward for Chinese manufacturing companies?

Jennifer:

Yeah. So for supply chain in China, the manufacturing companies, I think the impact of the pandemic within China is obviously very widely evident and though I do think that they have the resilience to move forward quickly. From our research it highlighted that business owners’ confidence was actually contributing to the results of how well that they have succeeded. So we found that companies who are more agile, who are more open to change are more likely to recover faster and I see the strategy going forward as a more online strategy. So I see most of the manufacturers now focusing on finding new customers and new market opportunities on a digital platform and just agility and actively responding to current challenges. Yeah. So I think increasing their marketing, not being stuck in the traditional ways and being able to respond to anything that they’re facing and try to expand into new markets will prove beneficial and drive them forward.

Danny:

Yeah. So how does it relate to future supply chain strategy for those who are manufacturing in-house or outsourcing to suppliers?

Jennifer:

Yeah. So for those manufacturers in-house or for those outsourcing their part manufacturing, I’ll say this year has definitely taught us that just having one manufacturing stream accessible is risky and some of that risk can be alleviated by having several options to market. So they can’t rely solely on one geographical location. We’ve seen that China was completely shut down. So if those people didn’t have any other supply chains in place, they were totally stuck. So if they reach out and have more suppliers and make more connections and keep a more flexible and adaptable strategy, it will result in a more stable supply chain. So yeah, I think this is really, really important and for those who manufacture in-house or outsource, I think that stabilizing their supply chain is the key for the future and not necessarily moving their supply chain but finding different routes to mitigate risks should anything like this happen again.

Danny:

Yeah, no, absolutely. It’s a huge topic of concern right now as companies are evaluating their supply chains. There’s a lot of talk, we’re hearing about like, as you mentioned, moving it and as well as also exploring other options to be able to say, “Hey, how can we diversify this and making sure that the resiliency aspect is there and it’s strong?” relative to actually moving a whole entire supply chain. I mean, it sounds like a little bit of a challenging task there, how difficult is that or easy, I don’t know?

Jennifer:

So if the supply chain is very fixed and stable, it’s super difficult to just remove the supply chain. So it’s like what happened with some companies when China was in lockdown, it said, okay, we’re just going to up and move our supply chain to a different country. It’s not that simple that the supplier doesn’t know your parts. They’re not familiar with you. It’s hard to establish that initial relationship with them. So it requires a lot of time and planning to set up. Rather, I would recommend using an existing sourcing platform who already have supply chain networks set up in various locations and countries that the buyer could leverage as and when needed. So this will ensure supply chain resilience and stability without having for the buyer individually to find new sources to manufacture their products. So, again, going back to digital manufacturing, I believe that we will see companies worldwide turn to digital manufacturing over traditional means in an attempt to mitigate that risk and steady their supply chain.

Danny:

Yeah. So– and just another quick question as far as companies: again, we were talking about moving supply chain. Have you seen a lot? I mean, there’s a lot of talk, there’s been a lot of talk. Have you seen a lot of movement where companies are just, they have completely pulled out or they’re talking, or they’re looking? Have you seen a lot more uptick in terms of conversations that you guys are having with companies saying, “Hey, we need to adjust”? What does that look like?

Jennifer:

Yeah. I mean, we’ve had some new buyers coming from abroad, especially European buyers who have come on board because they want to prepare for the future and they know putting all their eggs in one basket is not the way of the future and so they want to use a sourcing platform like Haizol where they have all of those options. We have a database of over 200,000 suppliers and geographical spread is very vast. So it’s becoming more and more frequent that we are finding buyers who have this standpoint and who are coming to us because of the situation and likewise I have heard of some people wanting to, for example, stop manufacturing in China. Well, this was more February, March time. In the end it’s better to wait it out than try and move your whole supply chain because the time to take to set up a completely new supply chain by yourself is also, yeah, very time consuming.

Danny:

Yeah, It seemed like there was, yeah. That timeframe, lots of talk but then I think as, it seems like as China is starting to get back was back online a little bit more, it was a little easier but I think the diversification piece is probably the more active piece happening, they’re saying, “We’re not,” at least for the moment. I don’t know, nobody knows what’s going to happen in the next hour, let alone six months from now or two years from now.

Jennifer:

I know, what a crazy 2020 so far.

Danny:

Oh, it’s been horrible, nuts, but… so let’s talk a little bit about digital manufacturing. You’ve kind of talked about that a little bit there: that it’s a good practice to go from. I mean, you’re hearing about digital, digital, digital. Anyways, we’re talking about digital transformation for years before going on in all aspects of the business, from anywhere from generating sales and leads and opportunities, certainly sourcing suppliers but the actual manufacturing piece. How does it really tangibly though, from a digital manufacturing standpoint, what are the tangible aspects that help that you can employ this to really help defeat these effects of COVID-19?

Jennifer:

Sure. I mean, personally for me, digital manufacturing is definitely the future. It’s a sphere which allows companies anywhere in the world to source their manufacturing parts and components from the comfort of their own home. So now with obviously remote working becoming the norm and also lockdown becoming a norm and a loss of geographical locations, the relieving the need to travel and vet out new suppliers yourself is a huge advantage. So the digital platform does this on your behalf. So essentially they have sourced and verified their suppliers already in terms of capacity, capabilities and quality and put them all together into this database which can be accessed worldwide. So a buyer anywhere can just hop on and have the access to manufacturers across the globe in a very transparent manner. So they can see all the capacities of the factory, the certifications, what kind of parts and jobs that they’ve made previously. So you can see if they’ve done something similar to what your project is. So extremely transparent and extremely convenient.

Danny:

Yeah, absolutely. I mean it makes sense. It seems like it’s a good answer, especially if you can’t travel and you’re in lockdown. it’s a little bit of a challenge. So what has Haizol’s response been through all of this?

Jennifer:

Yeah, so we’ve tried to be very, very customer centered. So from the beginning we focused on our buyers obviously and we wanted to protect our buyers. We wanted to protect the lead time as much as possible and we wanted to have the minimal disruption possible on their supply chains and obviously they want to then sell to the end user or user product. So we know how important that is. So what we did was we made sure that customers were at the forefront of the strategy. We took a step back. We brainstormed what issues they’re facing pre, during and post-COVID and how our strategy needs to change to be able to fit and accommodate the new needs and the new demands. So we found that our customers were really looking for reassurance and to have a reliable supplier.

Again, someone who’s not restricted by geographical location, that they can produce their parts and they can have their parts produced without that risk of the factory that they’ve chosen closing down. If it did so, their production will be halted or stopped. Whereas if they use Haizol, we would shift that production very fast to another geographical area or factory that would also be well suited to that project. So, as I’ve mentioned briefly before, we are lucky enough to have a wide network of partner factories spanning not just throughout mainland China but also in South East Asia. So this gives our buyers a kind of safety net. If for one reason, a supplier was unable to do their job, it will be shifted.

So supply chain disruption was at a minimum, and that was the main concern we found from our buyers was messaging us, contacting us to say, “Will you still be able to produce? Will my lead time change? Can I still give you a request for quotes?” And so we tried to keep it as stable as possible. We pushed for our factories to reopen as soon as possible under the health and safety requirements of course and we leveraged on our supply network and our existing suppliers as much as possible to ensure minimum delays.

Danny:

Excellent. Well sounds like you guys were set up very, very well, I think from the beginning to be able to help to adjust to this and be able to help to really solve a lot of these very unique but very critical challenges for a lot of these manufacturers globally. So, and Jennifer, I really thank you for spending some time with me today on IndustrialSage. for those who would like to learn more about you, your website, we’ll put in the show notes, what is that real quick?

Jennifer:

Yeah. So you can hop onto our website at www.haizol.com and from there it’s free to open an account. You just submit your RFQ very fast. Actually they can submit a request for the quote within one minute, so super fast and then they can get quotes from verified suppliers who fit their project.

Danny:

Excellent. Well Jennifer, again, thank you again. Thank you so much for spending time with us, kind of sharing your insights and your experiences and Haizol’s what was going on and what is currently going on in China. I think our viewers will find that very, very valuable. So thank you.

Jennifer:

Thank you very much for having me, Danny. It’s been a pleasure. Thank you again.

Danny:

Thanks. All right, well that wraps up today’s special new segment on IndustrialSage. I’m Danny Gonzales. Thank you for watching or listening if you’re on the podcast. Hey listen, real quick. If you are not on our email list, you need to go to industrialsage.com right now and you need to subscribe. Why? Because you’re missing out on all kinds of great content like this special new segment that we just did right now. So go do yourself a favor, do that so you can learn about what other companies are doing. You can be on the leading edge of what’s going on, especially right now when we have things that are changing at a drop of a hat. So that’s it. That’s all I’ve got for today. Thank you so much. I’ll be back next week with another episode on IndustrialSage.

 

 

 

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