Workers in Shanghai struggle to get back to work
Tesla’s Shanghai factory is “back up” according to Elon Musk’s statements during the quarterly earnings call. This was per StreetAccount transcript. Here is a picture of the factory in Shanghai’s outskirts, July 2021.
Getty Images| Visual China Group | Getty Images
BEIJING — Foreign businesses are struggling to bring workers back to factories after weeks of lockdowns in Shanghai, as the country battles its worst Covid outbreak since the pandemic began.
A month after Covid restrictions were implemented in Shanghai, U.S.- and U.K. companies claim that half their workers are not able to go back to work.
China has implemented travel restrictions in the economic centers of Shenzhen and Jilin since March. The Covid control measures vary from one region to the next.
Lockdowns in the southeastern metropolis of Shanghai, which began at scale in late March, have been among the most disruptive — to daily life, and to foreign businesses and their supply chains. The city accounts for about 3.8% of China’s GDP but is home to the world’s busiest port.
China’s Ministry of Industry and Information Technology said last Friday that it had sent a team of workers to Shanghai. According to the ministry, it was important that 666 large businesses such as chip manufacturing, auto- and machinery manufacturing be reopened.
Bettina Schoen Behanzin, vice-president of the European Union Chamber of Commerce, stated that a “significant” amount of Chinese members are listed on the whitelist. This is especially true for sectors such as manufacturing and chemicals.
However, she said “many companies continue to face the challenges labor shortages as well logistical difficulties” to CNBC. She also estimated that less then 30% of lockdown victims are eligible to resume work.
[The 600-plus company whitelist]It is a great first step. However, there are many factories in Shanghai that have closed.
American Chamber of Commerce in China President
Being on the list means a factory could resume operations if workers live at the production site and contact is limited to people with valid negative virus tests — what’s known locally as “closed-loop management.”
Matthew Margulies from the US China Business Council’s senior vice president, China operations, stated that some people believe the closed-loop requirements may not be possible or can only recall 30–40% of employees back to their manufacturing sites.
Foreign business organisations stated that factories are difficult to get workers into, and companies can’t easily hire new employees for shifts.
Some companies from Shanghai, and other areas subject to Covid lockdowns, were able maintain limited operations before the list was published.
Companies that try to recruit new workers will most likely “fail with their local communities, who don’t want people out,” Johan Annell, Asia Perspective partner, said. Asia Perspective works predominantly with Northern European businesses operating in East Asia and Southeast Asia.
The good news is that this situation, for all its economic and business consequences, will end soon.
Asia Perspective is a partner
Covid-related travel restrictions can also pose a problem for workers who are allowed to leave their homes. If this happens, the return to work process “usually fails,” he stated.
Parts delivery can also be affected by restrictions on transport.
There’s a “fear among truck drivers, if you risk a 14-day quarantine going to that factory maybe you skip that delivery and do something else,” Annell said.
A business being able to run at 30% in one week is “a very good outcome,” he said.
“The only thing good about the present situation is that it’s so clearly unsustainable for both the economy as well as all companies, and will soon end,” he stated. I wouldn’t expect things to get worse than they are now in May and June.
Road freight plunges
The restrictions local to a province vary and may include travel bans or driver requirements.
Different measures took a different toll on Chinese and foreign businesses.
Ting Lu from Nomura, the chief China economist, reported Wednesday that China’s highway freight transport turnover has fallen by 27.2% nationally between April 1, 2017 and April 17, as compared with a year ago.
According to the report, Shanghai’s same transportation measure fell by 82.6% in the same time frame.
China’s central Government has repeatedly called upon local authorities in China to provide support for transportation services.
Last week, Huawei Consumer Business Group CEO Richard Yu warned in a WeChat post — akin to a Facebook update — that if work and production in Shanghai cannot resume by May, all the industrial and tech companies with supply chain ties to the region will need to stop production, especially automobiles.
Huawei confirmed Yu’s content from his own account. The first Chinese media reported it. Yu’s posting was made at the exact same time as the announcement of the whitelist by the government.
The ministry of Industry answered questions about the staffing problems and warned reporters that it was only temporary. They also promised to improve the whitelist system.
“On one hand, the government seems to understand Shanghai.” On the other hand, 600 manufacturing companies — it’s a good first step but there are thousands of manufacturing companies in Shanghai that are shut down,” Michael Hart, Beijing-based president of the American Chamber of Commerce in China, said in a phone interview Wednesday.
Hart stated that while some companies from northern China had contacted Hart, key suppliers to Shanghai were not allowed to start up again.
Here are some comments from companies
Reports from Chinese foreign businesses have varied states of return to work. Shanghai reports daily Covid cases in excess of 20,000 with or without symptoms.
TeslaAccording to CEO, a factory in Shanghai was “back up” on Wednesday. Elon MuskStreetAccount transcript of’s remarks during the quarterly earnings call. They had to overcome significant obstacles due to Covid shut downs, but they were able to produce a great number of vehicles.
American chemical company is on the other side DuPontCNBC was informed late Tuesday by CNBC that most China’s manufacturing facilities were in normal or closed-loop operation, but those in Shanghai remain shut.
The company stated that “our manufacturing plants in Shanghai will resume production once we get government approval” and that our employees are permitted to leave community health management. We are currently evaluating supply chain logistics issues and looking for alternative routes to transport goods and materials in order to satisfy our customers.
Effective Monday VolkswagenIt said that it is evaluating whether it would be possible to restart production at Anting, on the outskirts Shanghai. Meanwhile its factories in Changchun (Jilin) province have “resumed gradually production.”
German chemicals giant BASFOn Wednesday, the company stated that some of its Shanghai sites have been under restrictions from local management since March. Some are producing at lower levels.
The company stated that there have been “individual raw material supply problems, logistic disruptions, and labor shortages” that had an impact on its operation, while noting that many of its China production facilities remain operational.