Masks are no longer crazy after a year of “making rich”, but some people still lose millions

On January 12, Hebei Province notified that in order to prevent the export of the epidemic, Shijiazhuang City, Xingtai City, and Langfang City will be closed for management, and personnel and vehicles will not go out unless necessary. In addition, sporadic cases in Heilongjiang, Liaoning, Beijing and other places have not stopped, and areas have risen to medium-high risk areas from time to time. All parts of the country have also emphasized reducing travel during the Spring Festival and celebrating the New Year in place. Suddenly, the situation of epidemic prevention and control became tense again.

A year ago, when the epidemic first broke out, the enthusiasm of the whole people to “rob” masks was still vivid. Among the top ten products announced by Taobao for 2020, masks are impressively listed. In 2020, a total of 7.5 billion people searched for the keyword “mask” on Taobao.

At the beginning of 2021, the sales of masks once again ushered in growth. But now, we no longer have to “grab” masks. At a recent BYD press conference, BYD Chairman Wang Chuanfu said that during the epidemic, BYD’s daily output of masks reached a maximum of 100 million, “I am not afraid of using masks for the New Year this year.”

Ran Caijing found that in major pharmacies and e-commerce platforms, the supply and price of masks are normal. Even the micro-business, which has the highest olfactory sensitivity, disappeared from the circle of friends.

In the past year, the mask industry has experienced rollercoaster-like ups and downs. At the beginning of the outbreak, the demand for masks increased sharply, and orders from all over the country were in short supply. The myth of masks “making wealth” is being staged every day. This also attracted a large number of people to start to get together into the industry, from manufacturing giants to small and medium-sized practitioners. A “hurricane” of mask production.

Once, making money with masks was as simple as that: buy mask machines and raw materials, find a venue, invite workers, and a mask factory is established. A practitioner said that in the early stage, the capital investment of the mask factory only takes one week, or even three or four days, to pay back.

But the “golden period” of masks getting rich only lasted a few months. With the increase in domestic production capacity, the supply of masks began to fall short of demand, and a number of small factories that were “half way out” fell one after another. The prices of mask machines and other related equipment and raw materials such as melted cloth have also returned to normal after experiencing great ups and downs.

Established mask factories, listed companies with related concepts and manufacturing giants have become the remaining winners in this industry. In one year, a batch of eliminated people can be washed away, and a brand-new “world’s largest mass-produced mask factory” can be created-BYD has become a big winner in the mask industry in 2020.

A person close to BYD said that in 2020, masks will become one of BYD’s three major businesses, and the other two are foundry and automobiles. “It is conservatively estimated that BYD’s mask revenue is tens of billions. Because BYD is One of the main suppliers of mask exports.”

Not only is there ample supply of domestic masks, my country has also become an important source of global supply of masks. Data in December 2020 shows that my country has provided more than 200 billion masks to the world, 30 per capita in the world.

The little party masks carry too many complicated feelings of people in the past year. Up to now, and maybe even for a long time afterwards, it will still be a necessity that everyone cannot leave. However, the domestic mask industry will not repeat the “crazy” of a year ago.

When the factory fell, there were still 6 million masks in the warehouse

As the Spring Festival of 2021 is approaching, Zhao Xiu is going back to his hometown to liquidate the mask factory shares with his partners. At this time, it was exactly one year since their mask factory was established.

Zhao Xiu was one of the people in early 2020 who thought he had seized the “outreach” of the mask industry. It was a period of “magic fantasy”. Numerous mask manufacturers emerged one after another, prices soared, so there was no need to worry about sales, but it quickly returned to calm. Zhao Xiu made a rough calculation. Up to now, he himself has almost lost more than one million yuan. “This year, it’s like riding a roller coaster.” He sighed.

On January 26, 2020, on the second day of the Lunar New Year, Zhao Xiu, who was celebrating the New Year in his hometown in Xi’an, received a call from Chen Chuan, a “big brother” he met. He told Zhao Xiu on the phone that it is now available on the market. The demand for masks is very large, and the “good opportunity” is here. This coincided with Zhao Xiu’s idea. They hit it off. Zhao Xiu held 40% of the shares and Chen Chuan held 60%. A mask factory was established.

Zhao Xiu has some experience in this industry. Before the epidemic, masks were not a profitable industry. He used to work in a local company in Xi’an engaged in the environmental protection industry. His main product was air purifiers, and anti-smog masks were auxiliary products. Zhao Xiu knew only two cooperative foundries. A mask production line. But this is already a rare resource for them.

At that time, the demand for KN95 masks was not as great as later, so Zhao Xiu initially aimed at civilian disposable masks. From the beginning, he felt that the production capacity of the two production lines of the foundry was not high enough. “It can only produce less than 20,000 masks a day.” So they simply spent 1.5 million yuan on a new production line.
The mask machine has become a profitable product. Zhao Xiu, who is newly on the production line, first faced the problem of purchasing a mask machine. They looked for people everywhere, and finally bought it for a price of 700,000 yuan.

The related industrial chain of masks also collectively ushered in a skyrocketing price in early 2020.

According to “China Business News”, around April 2020, the current price of a fully automatic KN95 mask machine has increased from 800,000 yuan per unit to 4 million yuan; the current price of a semi-automatic KN95 mask machine It has also risen from several hundred thousand yuan in the past to two million yuan.

According to an industry insider, the original price of the mask nose bridge supply factory in Tianjin was 7 yuan per kilogram, but the price continued to rise in the one or two months after February 2020. “The highest once rose to 40 yuan/kg, but the supply is still in short supply.”

Li Tong’s company is engaged in the foreign trade of metal products, and it also received the business of mask nose strips for the first time in February 2020. The order came from a Korean customer who ordered 18 tons at a time, and the final foreign trade price reached 12-13 yuan/kg.

The same goes for labor costs. Due to the large market demand and the prevention of epidemics, skilled workers can be described as “hard to find one person.” “At that time, the master who debugged the mask machine charged us 5,000 yuan a day, and he couldn’t bargain. If you don’t agree to leave immediately, people won’t wait for you, and you will receive an explosion all day long. The normal price before, 1,000 yuan a day. Money is enough. Later, if you want to repair it, it will cost 5000 yuan in half a day.” Zhao Xiu complained.

At that time, an ordinary mask machine debugging worker could earn 50,000 to 60,000 yuan in a few days.

Zhao Xiu’s self-built production line was quickly set up. At its peak, when combined with the production line of the foundry, the daily output could reach 200,000 masks. Zhao Xiu said that at that time, they worked nearly 20 hours a day, and workers and machines basically did not rest.

It was also during this period that the price of masks rose to an outrageous level. It is hard to find a “mask” on the market, and ordinary masks that used to be a few cents can even be sold for 5 yuan each.

The cost of civilian masks produced by Zhao Xiu’s factory is basically about 1 cent; at the highest profit point, the ex-factory price of a mask can be sold for 80 cents. “At that time, I could earn one or two hundred thousand yuan a day.”

Even if they are such a “small trouble” factory, they don’t worry about orders. In the face of a shortage of mask production factories, in February 2020, Zhao Xiu’s factory was also listed as an anti-epidemic guarantee company by the local Development and Reform Commission, and it also has a designated supply target. “This is our highlight moment.” Zhao Xiu said.

But what they didn’t expect was that this “highlight moment”, which lasted only a month, quickly disappeared.

Like them, a group of small and medium mask companies were established quickly in a short period of time. According to Tianyan Check data, in February 2020, the number of mask-related companies registered in that month alone reached 4376, an increase of 280.19% from the previous month.

A large number of masks suddenly flooded into various markets. Market supervision began to strictly control prices. In Xi’an, where Zhao Xiu is located, “market supervision is getting stricter, and the original high prices are no longer possible.”

The fatal blow to Zhao Xiu was the entry of the manufacturing giants.

In early February 2020, BYD announced a high-profile conversion to enter the mask production industry. In mid-February, BYD masks began to enter the market and gradually captured the market. According to media reports, by March, BYD could already produce 5 million masks per day, equivalent to 1/4 of the national production capacity.

In addition, manufacturing companies including Gree, Foxconn, OPPO, Sangun underwear, red bean clothing, Mercury home textiles have also announced their participation in the mask production army.

“You don’t even know how you died!” Up to now, Zhao Xiu still couldn’t control his surprise, “The wind is so fierce. It’s too fierce. Overnight, it seems that there is no shortage of masks in the entire market!”

By March 2020, due to increased market supply and regulatory price control, Zhao Xiu’s factory has basically no big profit at all. He accumulated some channels when he was engaged in the environmental protection industry, but after the big factory entered the game, he discovered that the bargaining power of the two sides is not at the same level, and many orders have not been received.
Zhao Xiu began to save himself. They once switched to KN95 masks, targeting local medical institutions. They also had an order of 50,000 yuan. But they soon discovered that when the traditional supply channels of these institutions are no longer tight, they will lose their competitiveness. “The big manufacturers can put everything from masks to protective clothing in place at once.”

Unwilling to reconcile, Zhao Xiu tried to go to the foreign trade channel of KN95 masks. For sales, he recruited 15 salesmen for the factory. During the epidemic, labor costs were high, Zhao Xiu spared his money, and the basic salary for salesmen was raised to about 8,000 yuan. One of the team leaders even achieved a basic salary of 15,000 yuan.

But foreign trade is not a life-saving medicine for small and medium mask manufacturers. To export masks overseas, you need to apply for relevant medical certifications, such as the EU’s CE certification and the US FDA certification. After April 2020, the General Administration of Customs issued an announcement to implement export commodity inspections on the export of medical masks and other medical materials. Many manufacturers that originally produced civilian masks were unable to pass the customs legal inspection because they did not obtain relevant certificates.

Zhao Xiu’s factory received the largest foreign trade order at that time, which was 5 million pieces. At the same time, they cannot get EU certification.

In April 2020, Chen Chuan found Zhao Xiu again. “Quit. We can’t do this.” Zhao Xiu clearly remembered that just a few days ago, the media had just reported the news that “BYD has received nearly $1 billion in mask orders from California, USA”.

When production stopped, there were still more than 4 million disposable masks and more than 1.7 million KN95 masks in their factories. The mask machine was pulled to the factory’s warehouse in Jiangxi, where it is still stored until now. Adding equipment, labor, space, raw materials, etc. to the factory, Zhao Xiu calculated that they had lost three to four million yuan.

Like Zhao Xiu’s factory, a large number of small and medium-sized mask companies that have “made halfway through” have undergone a reshuffle in the first half of 2020. According to media reports, there were thousands of mask factories in a small town in Anhui during the epidemic, but by May 2020, 80% of mask factories had ceased production, facing the dilemma of no orders and no sales.

Post time: Jan-13-2021