Under Shanghai city’s new regulations, several Chinese companies have resumed operations. Only that they are running on closed-loop production, which was China’s latest move to restore economic activities after a lengthy stringent lockdown. However, a German commerce representative in Shanghai said those companies might have to shut down very soon due to a lack of logistics and workers.
On April 17, Maximilian Butek, chief representative of the German Business Delegation in Shanghai, wrote that closed-loop production had left workers stranded in some factories for more than three weeks with no shift changes.
Mentioning that current logistics in Shanghai are paralyzed, he added that most companies suffered a lack of raw materials and channels to deliver their products to customers.
German enterprises in Shanghai are also suffering consequences due to such restrictions. Because of the supply chain disruption, a halt in delivery has impacted their global business.
Moreover, traveling is impossible due to lockdown restrictions. Experts cannot travel back to Germany because it’s difficult to get to the airport. Even technical staff cannot travel to other parts of China for quality assessments or maintenance problems.
Although Chinese authorities have issued some relief programs, German companies could not benefit from them due to their scale.
According to Mary Lovely, a China expert at the Peterson Institute for International Economics, China’s economy faces difficulties. She said that it was partly because the regime lacked consistency in the government’s anti-COVID policies.
She expects that further supply chain disruption will emerge in the second quarter.