China’s manufacturers left to count the cost of zero-Covid exit, but outlook ‘looks brighter’
- Businesses are seeing various levels of operational disruptions, with many unprepared following the abrupt and extreme policy change
- ‘Some companies are reporting that half of their employees are on sick leave and only 5 per cent of office workers are physically present’
China’s rapid exit from its zero-Covid policy and subsequent unprecedented Omicron wave took most manufacturers by surprise, leaving many unprepared for the initial impact of high numbers of employees being sick, but the overall outlook “looks brighter”, according to industry insiders.
“Many factories have been closed for holidays in advance, [many are] unable to continue production,” said Steve Xie, who manages a textile export company in eastern China’s Zhejiang province.
Due to a large number of workers falling sick, Xie’s factories are unable to operate at full capacity and are unable to meet delivery deadlines.
China’s ongoing exit from zero-Covid has taken the market by surprise because of how rapidly it is happening
A manager from an electric machinery manufacturer in Guangxi province said the backlog at downstream factories is causing already strained factories further up the supply chain to shut down due to a lack of orders.