China tells factories to prioritise government Covid orders

Local governments across China have begun requisitioning rapid testing kits, face masks and cold and fever medicine produced in factories in their regions, in a battle for supplies to cope with a deluge of coronavirus infections that has followed the relaxation of the country’s zero-Covid containment policy.

Ten Chinese companies, producing everything from Ibuprofen to Covid-19 testing kits, have in recent days issued statements or confirmed in interviews that all of their production would be sent to government groups rather than fulfilling private orders.

“It’s a desperate situation, but it’s every man for themselves,” said an official in the eastern city of Nanjing, where four producers of rapid Covid-19 testing kits have been asked to report their production to the government and prioritise local customers.

“We waited so long for the unbundling of Covid controls, but the relaxation was so sudden that local governments, health systems and companies in the supply chain were not prepared,” he said.

Some areas, such as China’s nimble manufacturing hub, eastern Zhejiang province, are better equipped than other provinces in the country’s interior to cope with the situation.

Xu Xiaoyue, deputy director of Zhejiang’s economic department, last week said 22 medical suppliers in the region were operating their production lines under government supervision in order to increase production and iron out issues, adding that this had helped raise the province’s production of antigen testing kits by 76 per cent in a week.

Orient Gene Biotech, a producer of testing kits in Huzhou city, is one company being supervised by government monitors: “The local government has sent officers to our factories to oversee production, ensuring that it goes smoothly and that the products get online with their centralised deployment,” said a sales representative who asked to be identified by his English name, Joey.

All of the company’s production had been requisitioned. “I feel sorry, but we have to say no [to new orders],” he said.

Nearby Chaomei Daily Chemicals was issued with a demand on December 14 by its city government to prepare production of 1.65mn face masks for “Zhejiang’s 2022 stockpile plan”, according to a notice provided to the Financial Times by a company employee.

The following day a major Ibuprofen producer in Fujian province, just to the south of Zhejiang, notified customers that it would prioritise supplying local orders. Officials have “clearly requested that we must meet the market demand in Fujian as soon as possible,” said a notice that Pacific Pharmaceutical issued to clients and was seen by the FT.

Shortages of rapid Covid-19 testing kits have become particularly acute as demand from consumers has increased for the at-home tests. China’s National Medical Products Administration has licensed the sale of kits from 42 producers, but manufacturers are concentrated in a handful of regions, leaving the majority of provinces without a local supplier.

Zhejiang’s strategy has helped ensure batches of new testing kits make it into local pharmacies. The provincial capital Hangzhou announced on Monday the distribution of kits to 2,400 local pharmacies, but residents said they were still finding it hard to get any.

“I ran through six pharmacies and waited for half an hour” to get five testing kits, said Qiu Yao, a tech worker in the city.

Qiu said she gave two away to an old man who had arrived too late to purchase any. “He was clearly very ill and had a fever,” she said. “I’m saving the rest for emergencies, as I need positive test results to apply for sick leave.”