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China’s zero-Covid policy has some manufacturers asking, ‘Should we stay or should we go?’
- China’s zero-Covid policy has made supply chain decentralisation a priority for manufacturers who have endured months of disruption
- Some are even looking to move from China altogether to more ‘pro-business’ countries in Southeast Asia, despite the extra costs
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Months of production delays and lockdowns in major industrial centres have taught manufacturers in China one thing: have an alternative supply chain ready.
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The realisation has become acute for Norman Cheng, the owner of global helmet maker Strategic Sports, whose business has been hit by lockdowns since an Omicron outbreak began sweeping China in March.
“The recent disruption to the supply chain has had a very big impact on our production – very tough,” said the American businessman who is based in Hong Kong. “For example, each of our safety helmets has a buckle as a core part, and this buckle was 100 per cent made in Shanghai, so our production lines had to be shut down for weeks.”
About 373 million people in 45 Chinese cities, including Shanghai, have been under some form of lockdown since April, according to Nomura.
If China does not change its policies in the next one to two years, we will be under a lot of pressure to leave
Beijing’s zero-Covid policy has restricted the mobility of people and goods, suspended manufacturing, led to mass lay-offs, and losses at small companies and in the private sector.
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