The new and strict covid closures in some Chinese regions threaten to affect the production of its factories again and, therefore, hit global supply chains again. That is why factories are beginning to create ‘bubbles’ of isolated employees for weeks at the facilities so that production does not stop.
The largest outbreak of covid-19 in the country since the disease devastated the city of Wuhan in early 2020 has made Beijing tighten its already famous ‘zero covid’ strategy and has led to harsh restrictions, leading to the closure of factories and technological poles. This new aggravation in the bottlenecks that have already existed since the outbreak of the pandemic could be the last straw for world trade, also shaken by what is happening in Ukraine.
Despite strict restrictions, some plants in southern Guangdong province got official permission to continue operating as long as workers did not leave their premises, forcing them to work in socially isolated ‘bubbles’.
The commitment of the workers has been essential to make this possible. This is the case of Bosch Unipoint, one of the world’s largest auto parts manufacturers, which has been able to maintain production at its factory in Shenzhen’s Longgang district, thanks to the fact that some 200 workers agreed to live in dormitories on the premises during a one-week shutdown this month. “Their commitment to help the company survive this week has been incredible,” Marco Morea, managing director of Bosch Unipoint in China, told the Financial Times. “People called to ask how we were still producing,” he says.
A CEO of another Guangdong-based manufacturing company tells the same newspaper that it is making sure its factories elsewhere in China have enough accommodation so that workers don’t have to leave the site in case of closure. It is also stocking up on raw materials and supplies. The omicron variant is difficult to contain and highly contagious, and the preparations highlight expectations among Chinese businesses that the harsh restrictions in the country will continue in some form at least into next year.
This situation has made manufacturers sharpen their ingenuity to maintain production without violating the harsh restrictions. One of the cited manufacturers details how he is trying to create a covid test center on the access ramp to the factory from a nearby highway. However, the global reading of this dynamic in Chinese factories is not exactly positive.
In Shanghai, where localized movement restrictions have been imposed on specific residential compounds, some workers have been forced to sleep on factory floors to ensure they can get to work and still get paid.
The reaction to some of these penalties of Chinese factory workers has not been long in coming and on the Internet not a few users have expressed their concern about the fact that employees are forced to live in poor conditions for long periods in the company’s facilities. business.
Dongguan Fuqiang Electronic, a Taiwanese supplier to Apple that has set up tents around its factory to house workers living elsewhere, has taken them down again after photos of the setup were shared online. One company worker who chose to stay in the factory has said that instead of a tent, she found herself a small space on the factory floor for six days. “We all slept on the floor with cardboard that served as a mattress,” she tells the FT.
How long will this ‘zero covid’ policy by Beijing continue? “I still don’t see any significant change in current policy until after the Party Congress, maybe not until 2023,” George Magnus, a research associate at the University of Oxford’s China Center, told Bloomberg. “Closed borders are a pain and they come with huge costs, but I’m not sure the government is so viscerally opposed to this idea.” Turning the tide will be difficult until China has effective mRNA vaccines, he adds.
On the other hand, Magnus adds, allowing some flexibility among manufacturers may not be enough, as other parts of the economy, such as the services sector, will continue to suffer as a result of the restrictions in place. The wiggle room given to factories amid lockdowns by the Xi Jinping government does not mean China is dismantling the ‘zero covid’ strategy, says Bruce Pang, head of strategy and macro research at China Renaissance Securities. “China will stick to its zero-tolerance approach,” Pang said.
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