Protests at China lockdowns spread, with supply chains looking vulnerable again
Anti-lockdown protests have broken out across multiple cities in China, and the fresh Covid-restrictions threaten ...
Foreign firms in China are bracing for a “mass exodus” of staff this summer, due to the country’s excessive Covid restrictions and lockdowns.
A flash survey by the German Chamber of Commerce in China shows nearly one-third of foreign employees plan to leave, with 10% aiming to do so before their current employment contract ends.
Maximilian Butek, its executive director in Shanghai, said: “It will be extremely challenging for German companies to substitute these employees with new staff from abroad, considering how the current Covid outbreak in China is handled.”
Indeed, despite reports of easing restrictions in Shanghai, for example, foreign workers have reported a tightening of measures in the city this week, with many still unable to leave their apartment building or gain sufficient access to basic necessities.
According to AmCham China chairman Colm Rafferty, any foreign staff travelling to China face “incredibly challenging” pre-flight testing procedures and “the world’s most extensive and unpredictable quarantine requirements on arrival”.
He added: “We are bracing for a mass exodus of foreign talent this summer, with fewer employees overseas willing to take up open positions here in China.”
At the same time, although more companies have been given the green light to restart operations, the German chamber’s survey shows businesses allowed to resume production under lockdown are, “on average, operating at 46% of their total production capacity”.
Furthermore, respondents said their company’s production capacity was hampered by “lack of logistics availability (69%), missing raw materials and pre-products (69%), missing transport permits (56%), additional workers cannot leave their compound (56%) or their districts (43%) and uncertainty due to rapidly changing policies (41%).”
Mr Butek added: “The current circumstances under which German companies have to operate in China can only be short-term solutions in emergency situations. Closed loop productions are unacceptable as a long-term solution for German companies to operate in China.
“Pressure from international clients is increasing as trust in Chinese supply chains is decreasing. Supply chains can’t be changed overnight, but they can with time, and the longer the disruptions in China last without any signs of improvement, the more supply chains will be transferred to other countries outside of China.”
Meanwhile, the main logistics challenge in Shanghai remains trucking capacity. One airfreight forwarder told The Loadstar: “There are more flights returning to Pudong, but not that many. Nationwide, at all major airports, the biggest challenge is still trucking and ground handling, which is generally slower than normal. Delivery for outbound could take a day’s waiting time, but inbound is the worst, with waiting times of up to five days for cargo checked in.”