One of the more important words in the Chinese language, especially if you're in business, is "guanxi."
It can be translated as “connections.” As in, “Does he have good guanxi?”
The vocabulary may not be the same, but the concept is universal. In Chicago, they might call it “clout.” In New Jersey, they would simply observe that “he knows a guy who knows a guy who knows a guy.”
In Atlanta, two denizens of the state Capitol have been living in the world of guanxi for the last two weeks, helping Georgia hospitals chase down protective equipment that has become scarcer and more expensive by the minute during this pandemic.
Masks, also called respirators, have become an instant specialty. It’s a volatile market in which buying carries a risk, but not buying may be even riskier for health care workers and first responders you’re trying to keep safe from the coronavirus.
So buyer beware, but be quick, too.
“It’s the wild West. We can confirm that,” said Chuck Clay, a former state senator and former chairman of the state GOP. “I feel we’re walking encyclopedias on a subject that a week or two ago I never would have heard of.”
Six feet away from him, in their Peachtree Street office in downtown Atlanta was Brad Carver, the chairman of the 11th District GOP and a longtime Republican activist.
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Both are attorneys in the 250-lawyer firm of Hall Booth Smith, an outfit that works with an assortment of hospitals in Georgia and across the nation. Carver is a partner in the firm.
Carver and Clay are not brokers. They’re not in the import-export business. But Carver knows a guy who knows a guy who knows a guy. Literally.
“One of my best friends from law school called and said, ‘I have a buddy who lives in New York City and is in the Chinese import-export business,” Carver said, later identifying the best friend as Atlanta attorney John Ayoub. The “buddy” is an unnamed Georgia native who still has affection for his state. As of mid-week, Carver and Clay had helped him send 100,000 or so masks to Georgia – including 20,000 to the Shepherd Center and 40,000 to Emory University Hospital.
I talked to Carver and Clay by phone, first on Tuesday then again on Wednesday. “The situation has changed dramatically,” Carver said on the second day. “Our manufacturer was making these things for $1.56 a mask – that was the sell price. Now it’s hovering at $2. That’s a 30% increase in 24 hours.”
Worldwide, over-centralized manufacturing has put the health care industry in a bind that’s been exacerbated by the coronavirus pandemic. China is a major manufacturer of both masks and pharmaceuticals. Production of both was cut while China dealt with its own coronavirus problems.
“It’s a fast-moving target. First, there are issues with availability. Two, there are issues with transportability. Three, there are geopolitics involved,” Clay said. China could decide to put a hold on exporting medical products while it takes care of its own. India, for instance, has curbed its export of some pharmaceuticals to do just that.
American automakers are offering up their factories to help solve the shortage of both ventilators and masks – but that will take time.
“The point we’re getting at is Georgia is competing with 49 other states and every country around the world,” Carver said. “Our manufacturer and this export-import business, they are supplying 25 million of these masks to New York, and 200 million of them to Germany.”
“Two million to Sweden,” Clay injected.
“And 1 million to Detroit,” Carver answered.
“All KN95s, and everyone’s been thrilled to get their hands on them,” Clay added.
Which brings us to the technical side of this story. N95 respirators, so named because they filter out 95% of particulates, are deemed medical grade because they carry the approval of the National Institute of Safety and Health.
N95s have become more than scarce – in part because they are used in other professions, too. House-painting, for instance. On Wednesday, Atlanta-based Home Depot ordered all 2,300 of its stores in North America to stop sales of N95 masks, redirecting them to health care workers and first responders.
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Carver and Clay have been dealing in KN95 masks – the Chinese alternative to the N95, made in factories that have not been inspected by the U.S. government. The U.S. Centers for Disease Control and Prevention lists the KN95 as an acceptable alternative to the N95, but the U.S. Food and Drug Administration has yet to do so.
Hospitals and other institutions are ordering the KN95 anyway —because they anticipate eventual FDA approval, or figure that doing without isn’t an alternative.
“They recognize that no one can get the medical grade anymore. The NIOSH medically certified masks are on a 45-day backlog at this point. So now you have to use the consumer grade,” Carver said. “We have to get them on the faces of as many medical personnel and first responders as we possibly can.”
The pandemic is forcing compromises that we otherwise might not have to make. There will be more.
“You’re going to have to put aside many protocols to get quality masks. Yes, you’ve got to have quality control. Yes, there have been problems in the past with certain Chinese products and goods. We have our crooks and goblins here, too,” Clay said. “But we can’t also just say, ‘Heck no,’ and wait another six weeks for America’s manufacturing and supply capacity to catch up.”
I have known Chuck Clay for four decades now. One of the more interesting parts of his biography is that he is the grandson of Lucius Clay, the Army commander who orchestrated the Berlin Airlift after World War II, when the Soviet Union sealed off the Western-occupied portion of the city.
The airlift is considered one of the more amazing logistical feats in modern history. At its height, one plane carrying food, fuel and medical supplies landed at the Berlin airport every 45 seconds.
A modern version of that would mean patching things up with China and sending a fleet of jetliners to make the nonstop round-trips, loaded to the gills with masks on the way back. Maybe Delta could spare a portion of its idled fleet? “I hope that’s occurring, but if it’s not, it should be,” Clay said.
The question is whether we have the guanxi to pull it off.
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