How To Source Personal Protective Equipment (PPE) From China?
As the number of global novel coronavirus (Covid-19) cases continues to grow at an unprecedented pace, healthcare facilities around the world are struggling with an increasing crush of patients, and are desperately looking for the equipment they need to better protect themselves from catching and spreading the virus.
The ongoing pandemic has skyrocketed the global demand for personal protective equipment (PPE). Although a few countries manufacture and supply these medical gear locally, China remains the biggest player in terms of global market share. No wonder why we are seeing thousands of foreign companies and private buyers scrambling to procure large quantities of protective gear from China. The biggest issue with this, though, is that global supply chain procurement is complicated, and buying and importing medical gear from China comes with its own set of unique challenges. In this blog, we have put together some general steps and tips that we hope will help you to safely and legally procure personal protective equipment from China.
Step 1. Define the Target Medical Gear.
Personal protective equipment includes a wide array of medical gear. Therefore, the first item on your agenda should be to identify the specifications of each protective equipment to source clearly. In China, personal protective equipment is categorized into the following seven categories:
- Coronavirus Testing Kits
- Medical Protective Clothing (e.g., surgical gowns, isolation gowns, and coveralls)
- Ventilators
- Respirators
- Surgical Masks
- Disposable Face Masks
- Non-Contact Infrared Thermometers
Different countries have different regulatory requirements for personal protective equipment. Therefore, you must conduct thorough research to determine whether or not the medical gear you are considering buying from China can be imported into your home country.
Step 2: Find Qualified PPE Manufacturers.
As a foreign buyer of personal protective equipment from China, you must make sure that the manufacturing company you are considering buying from is permitted by the Chinese Government to export PPEs in the first place. Make sure that the shortlisted manufacturing companies have all the necessary permits and licenses in China as well as your home country to confirm that the personal protective equipment will be permitted to be exported from China and into your country. These permits and licenses shall include:
- Medical Device Manufacturing Enterprise License (MD License) issued by the State Food and Drug Administration (SFDA)
- Medical Device Products Registration Certificate from the SFDA for every product to be sourced
- Food and Drug Administration (FDA) Verification of the Exportation Destination Country
- Export License
- Export Health and Quarantine Permit (EHQP) issued by the SFDA
You must also keep in mind that the global demand for personal protective equipment is growing by leaps and bounds, and that most Chinese production facilities are already overburdened with domestic orders. It is, therefore, necessary to evaluate the production capacity and turnaround time of the manufacturer right from the start – this will help you avoid wasting your time on trade talks with suppliers who may not be able to fulfill your order request in a timely manner (or at all). You would also need to consider volume projections at the outset to make sure that the manufacturer can continue to deliver your orders on time, even in the future, when the global demand for personal protective equipment soars.
The present reality of the personal protective equipment manufacturing industry in China is that very few manufacturing companies are actually capable of handling bulk purchases, as most of them are still swamped by orders placed locally. This is why large orders are often delegated to subcontractors. And this is why it is important to ensure that the subcontractor who will be working on your orders is legally authorized to manufacture and export PPEs.
Step 3: Conduct Factory Audit.
There have been numerous reports in the local Chinese media evidencing that PPE manufacturing companies are now employing questionable methods to acquire their export permits or even using “borrowed” permits to export medical equipment manufactured in sub-standard facilities. Though the Chinese Government is doing its best to eliminate such unfortunate practices, a few manufacturers are bound to slip through the cracks. Therefore, you must contract a private company to carry out a factory audit to ensure that the facilities and plants where the protective equipment is manufactured comply with the quality standards. This is all the more important if you are considering ordering large quantities of PPEs and making long-term business commitments. Even if the manufacturer shows you a report from a recent factory audit, you might want to check the authenticity of that report.
Step 4: Place Your Order.
Owing to the high demand for personal protective equipment in the present Covid-19 timeline, many PPE manufacturers are demanding an upfront payment of anywhere between 30% and 50% and the remainder to be paid upon completion of the order or upon shipment. We strongly recommend using letters of credit issued by either a Chinese bank or a foreign bank with a footprint in China. However, due to the rising demand for protective gear, manufacturers seem to have more leverage to dictate terms of how they would like to be paid.
Step 5: Sample Inspection Before Shipment.
While licenses and permits do indicate that the manufacturer can produce high-quality personal protection equipment, you are still responsible for making sure that your particular order complies with quality standards. Therefore, you must employ a professional third-party independent quality assurance/control company in China to inspect the protective gear against the required standard during production, upon completion of the order and before delivery.
Keep these five steps in mind when buying large quantities of personal protective equipment from China and we are sure that you will get high-quality equipment delivered to you in a safe, timely manner. For additional help, contact our team of experienced professionals at IPO PANG. We can help you during every stage of the sourcing process. We can help you articulate a clear Request for Quotation (RFQ), find approved PPE manufacturers, review the manufacturer’s permits and licenses, and a lot more.
Peter C. Pang* is Chairman and Managing Partner of IPO PANG XINGPU LAW FIRM., His expertise includes corporate law and formation, franchising – inbound and outbound, mergers and acquisitions, real estate acquisitions, private placement, technology transfer, joint venture formation and business alliances, and trade secrets and intellectual property protection. Mr. Pang’s over 35 years of law practice in the People’s Republic of China and the United States places him amongst a handful of US-China lawyers with Asian International Expertise and in-depth appreciation for both the Western and Asian cultural and business differences and sensitivities. Mr. Pang is an attorney who “not only knows, but knows how” to close a deal, litigate vigorously and represent clients zealously. We don’t sell time, we sell solutions.