The Hong Kong-headquartered company felt the effects of the COVID-19 outbreak immediately as its manufacturing facilities are located in China.
Patrick Leung, VP of business operations told CosmeticsDesign-Asia that the company has had an “interesting” few months since the outbreak in China.
“At the time, our UK and US customers were chasing us as they were afraid products would not get shipped out on time. A lot of companies considered not putting so much reliance on China in the future.”
However, Leung said he was doubtful that these companies would be able to re-direct their manufacturing back to their country of origin.
“I don’t feel pessimistic even with governments are telling companies to consider moving their supply chain back to their home countries. Making the change would be a huge challenge.”
He explained that it would take a lot of effort and many years to build up a supply chain network that is as well established as the ones in the Southern and Eastern parts of China.
“You can’t just move. A factory takes years to build and you have to work with many difficult suppliers for packaging, components and paper… The supply chain already very established here. To move it back to a country like the US does not make sense economically.”
Leung added that companies must also consider how much consumers would be willing to pay.
“If these brands are looking to move back and have their main supply chain in Europe and the US, they have to consider the consumers. Will the people be willing to pay a premium? Can they accept the new price when they are so used to buy products for cheaper?”
In the few weeks since the outbreak hit Europe and North America Leung has observed companies returning to China for their manufacturing needs.
“We were impacted in the beginning but now with the virus affecting the US and Europe, they are coming back to Chinese suppliers because the supply chain there is affected. It’s been a rollercoaster.”
He added: “I believe that in the long-term, post-pandemic, things should be back to normal.”
Shifting gears
Traditionally, Global Cosmetics have relied on producing seasonal products for companies. Since the virus hit, many of its projects were placed on hold, causing the firm a loss in terms of opportunities and investments made on certain projects.
“A lot of things are on hold at the moment. Many of our customers have said they will revisit the projects after summer. Even Christmas project will be revisited near the end of the year. For comparison, we usually get the briefs for Christmas in the middle of the year.”
In light of this, the company has shifted to producing hand sanitisers.
“We are very lucky that we have the right facilities to make hand sanitisers. A few years ago, we invested in a perfume factory, so we are able to produce alcohol-based products like sanitisers today.”
Leung believes the demand for hand sanitisers will continue to be high for a while.
“Even though people staying home, there are companies preparing for when cities reopen. Retail stores, warehouses all have to provide personal protective equipment, including hand sanitisers for their staff.”
The requests for hand sanitisers are not just coming from brands but suppliers too.
Leung said the firm was currently working with some prestige packaging suppliers to produce hand sanitisers.
This has allowed Global Cosmetics to tap into a new clientele in exchange for its expertise.
“We’re not just getting request from brands, but other suppliers like those in premium packaging. Everyone is shifting their gears.”
Moving forward, Leung believes this will be the new normal for the company and its fellow manufacturers.
“I think for us, producing sanitising products is the way to go. It will be the new norm at least until the vaccine comes out.”