Staff members work at the producing workshop of face mask in a medical devices company in Nan'an District of southwest China's Chongqing, Jan. 27, 2020. In order to ensure the supply of face masks on the market, some mask manufacturers in Chongqing resumed work during the Spring Festival holidays, working overtime to help with the prevention and control of the novel coronavirus.Photo:Xinhua

Just as the incident involving BYD's face mask exports to the US was settled, another personal protective equipment (PPE) supplier from China, Kingfa Sci & Tech Co., is being faced with its US client seriously delaying payment for nearly $1 billion worth of KN95 face masks.

In a statement filed on the Shanghai Stock Exchange on Thursday, Kingfa claimed that its US client — whose name remains unknown — submitted an order for $975 million worth of KN95 masks on May 17, and should have paid 40 percent of the total before May 21, but the supplier remains without reimbursement.

The US company had claimed it planned to pay Kingfa via trust fund, but because large payments need to undergo legal compliance investigations, the payment has been delayed, in a statement issued by the company.

"As the US client hasn't made its initial deposit payment, we [Kingfa] are faced with great uncertainty regarding the rest of the contract," the Guangzhou-based company said, noting that it's difficult to predict its potential damages as a result of the failed payment.

Kingfa said it's the first time doing business with this particular US company, which refused to provide detailed financial information about itself due to business secrets, as well as any financial guarantee measures. Kingfa refused to provide any additional details about its client when contacted by the Global Times on Friday.

Kingfa's main operations involve the research and development, and manufacturing of new chemical materials. 

In March, the company started to shift its operations toward producing face masks, with 56 automatic face mask production lines being constructed since then. 

In fact, following the US company's significant order, its shares soared 7.83 percent from May 18 to June 1.

The company's plight comes after Chinese carmaker BYD's face mask exports to the US encountered similar problems. In April, BYD and the government of California in the US reached an agreement to supply $1 billion worth of surgical masks, including 300 million units of N95 masks.

However, reports showed that BYD had to refund $247 million that the US state paid, because the company failed to meet a deadline for the masks' certification, granted by federal officers. In response, BYD said its N95 masks have passed all physical tests for NIOSH certification, but its problems were concerned with the country's paper certification.

BYD's incident was eventually settled on June 8. California Governor Gavin Newsom later said that California-based BYD North America had been granted certification from the National Institute for Occupational Safety and Health to produce N95 respirators for the state, according to a statement on the government's website.

The contract stipulated that BYD will produce and ship 150 million N95 masks to California, in addition to the 110 million surgical masks that the state had already received from BYD and distributed to help its businesses reopen safely.

"This new supply of N95 masks, as well as the surgical masks this contract has already provided, are game-changing, and will play a crucial role in our state's public safety and reopening strategy," said Governor Newsom.

Global Times