Shanghai presses the quick button to unblock the effect in June, which may affect the decision of foreign companies to leav

Shanghai lifted the lockdown on June 1

TAIPEI- Shanghai lifted the lockdown on June 1, and all walks of life accelerated the resumption of work and production to make up for the heavy losses caused by the two-month lockdown. The hardest-hit key industries, including Taiwanese and European companies, have seen about 50 to 70% of their jobs in recent days, which cannot be called full resumption of production, while some companies located in closed and controlled areas are still unable to resume work. 

Although most companies are happy to see Shanghai's rapid rebound, economists say the repeated outbreak of the epidemic and the government's insistence on the zero-clearing policy will be the biggest variables in Shanghai's economic recovery. 

He said that if Shanghai's unblocking in June is ineffective or the closure of the city is restarted, it will seriously damage the confidence of foreign companies in the authorities, and there may also be a turning point for foreign companies to move out of China.
Shanghai lifted the lockdown on June 1
The closure of Shanghai's city ended, and the fences enclosing the streets were torn down. (May 30, 2022)

Shanghai has been closed for two months, and foreign companies, including Hong Kong, Macao, and Taiwan businessmen, have been hit the hardest. According to the latest data from the Shanghai Municipal Bureau of Statistics, the industrial output value of enterprises above the designated size in the city reached 128.6 billion yuan (about 19.3 billion U.S. dollars) in April, down 60% from the same period last year.


Therefore, since Shanghai released the whitelist for resumption of work in mid-May, most key enterprises have actively resumed production.

However, according to this week's survey by Yan Suqiu, deputy secretary-general of the Electricity and Electricity Association in Taipei, Taiwan-funded enterprises in information and communication in Shanghai are still facing the challenge of labor shortages, with a job arrival rate of about 70% in early June. 

She predicted that it may take two weeks for Taiwanese businessmen in Shanghai to fully resume work and production.

Small and medium-sized Taiwanese companies worry about the risk of losing orders

She said that since Shanghai has a large working population, it should not be difficult to solve the problem of labor shortage faced by Taiwanese companies. At present, Taiwanese businessmen are rushing to place orders, and their production capacity is very tight. 

However, some companies bluntly stated that the closure of Shanghai may lead to sequelae, which will put them at the risk of losing orders in the future, especially for smaller factories, because foreign buyers now tend to place orders from factories with scattered production line layouts.

Yan Suqiu told: "What everybody is most stressed over now is the issue of dropped orders, in other words after Shanghai is completely shut and controlled, some unfamiliar manufacturers will be worried and may ask you, your Taiwanese businessman has a factory in Shanghai. Besides, do you have any production bases in other provinces or other Southeast Asian countries, or Taiwan? 

Assuming you have them, the manufacturers who place your orders will be more at ease. However, if you don’t have them today, the only one is on the mainland. If you don’t have a factory in Southeast Asia, or if you don’t have a factory in Taiwan, then he may transfer the order.”

Yan Suqiu, deputy secretary-general of the Taipei Electric Power Association

Yan Suqiu said that most of the Taiwanese businessmen in Shanghai are above-scale electronics foundries, as early as 2018 Before the start of the US-China trade war, production lines have been expanded to Southeast Asian countries or returned to Taiwan. 

Accordingly, in light of this rush of pestilences and the conclusion of Shanghai, the production network flexibility is generally high, however, it can't be precluded that some little and medium-sized enterprises have limited resources. The current production line is still overly concentrated in China.

She said that the Taiwanese factory is actively resuming production, but in order to cooperate with epidemic prevention, operators need to conduct nucleic acid tests at regular intervals every day, and adopt "liquid isolation", that is, once positive confirmed patients are found, they will be moved out of Shanghai, in order to maintain Shanghai Cleared to avoid large-scale closure and control at every turn and pay the economic price.

Compared with the 70% arrival rate of Taiwanese factories, the arrival rate of European companies this week is lower, only 50%.

According to written responses provided to VOA by the European Union Chamber of Commerce in China, most European businessmen were also busy disinfecting offices and formulating relevant epidemic prevention policies this week. 

As for the manufacturing side of factories, factories with a scale of more than 1,000 people still need to maintain closed-loop management on June 11. Therefore, the progress of resumption of work and production has been slightly delayed.

In addition, according to a recent survey by the chamber of commerce, China's stringent epidemic prevention policies have had a negative impact on the supply chain of 92% of its European business members, and 69% of members are facing the problem of lack of work.

Although the lack of work and logistics bottlenecks have improved slightly with the lifting of the lockdown in Shanghai, the European Union Chamber of Commerce said: "The epidemic prevention regulations in different districts of Shanghai are different, and traffic in some areas is still blocked, which has caused some employees to be unable to return to work in time. In addition, there are still many restrictions on international and inter-provincial travel, which also affect the direct investment and operation of foreign companies.”

Shanghai has been closed for two months, and a survey by the European Union Chamber of Commerce also found that 58% of members have lowered their revenue forecasts for this year. Among them, one-third of the companies have reduced their annual revenue by as much as 15%. 

The chamber of commerce said that the Shanghai government has launched 50 action plans to revitalize the economy, including tax cuts, rent reductions, subsidies, etc., all of which will help struggling companies survive the crisis.

But the chamber hopes to see more measures to stimulate the economy. , and called for the relaxation of entry restrictions on international business people as soon as possible to stabilize business confidence and stimulate foreign investment.

Cross-regional and inter-provincial mobility of personnel is a big challenge

Ker Gibbs, the former chairman of the Shanghai branch of the American Chamber of Commerce in San Francisco, also said in an interview with VOA that the flow of people across regions and provinces will be the biggest challenge Shanghai faces after the lockdown is lifted.

He said that after Shanghai lifted the lockdown in early 2020, many American companies were still unable to relocate their employees to other factories to resume work, causing great problems. But he believes that with the experience of the last time, Shanghai can handle it faster and better this time, including in the management of the epidemic.

Ji Kaiwen (left), president of the Shanghai branch of the American Chamber of Commerce, attended the 3rd China International Import Expo and took a group photo with the participating American business representatives.

Ji Kaiwen said: "The reopening of ports and transportation hubs will be the key, but it will also generate a lot of risks related to the epidemic. Therefore, this must also be well controlled."

Ji Kaiwen said that the Omicron virus is highly contagious, and Shanghai will be released after the lockdown is lifted. It is difficult to predict that the epidemic will not recur. But he hopes Shanghai can speed up vaccination rates for the elderly and weak to achieve herd immunity as soon as possible and avoid any more economically costly containment measures.

He said industries such as restaurants and entertainment, as well as small and medium-sized enterprises, have suffered heavy losses in the past two months of Shanghai's lockdown, but as the lockdown is lifted, the retail sector may rebound as pent-up demand emerges. He also said that migrant workers and low-end industries were severely hit, but the Shanghai government should introduce relief measures to help companies and employees survive the crisis.

Most of the local companies in Shanghai are optimistic about the unblocking, and expect Shanghai to restore economic vitality as soon as possible

, said Jin Lei, head of brand marketing of Shanghai Yuyuan Tourism Mall Co., Ltd., during the closure of the city, the Nanxiang Steamed Bread Store and Ningbo Tangyuan Store under the brand's Because it is a civilian production industry, it has not completely stopped work and maintains revenue through takeaway and home services. 

He said that on the first day of unblocking on June 1, the arrival rate has almost recovered. Jin Lei told VOA: "It's almost 80 or 90 percent. It must be a process, but it will be very fast, because everything has recovered now, and the subway and traffic have recovered."

Jin Lei was reluctant to talk about the losses during the lockdown period, he just said bluntly: "There must be" losses.

Guo Yongjian, general manager of the intelligent manufacturing exhibition and sales platform of Shanghai Waigaoqiao International Trade Operation Center, also said that after pressing the pause button in Shanghai for two months, his company and other industries have been affected the same way, but he hopes to recover from from from gradually after the unblocking. normal.

Guo Yongjian told VOA: "Every aspect of the impact of the past two months is gradually recovering, and this requires a process."

Compared with companies that are actively resuming work, some companies in Shanghai are still unable to start work. A Miss Sun, who switched from tourism to retail, said he was still waiting for the start of construction because the company was in a controlled area. Miss Sun declined to give her full name due to the sensitivity of the issue.

As for Shanghai Heyi Network Technology Co., Ltd., it chose to start work after the Dragon Boat Festival holiday. CEO Hu Peng said that the company is not involved in manufacturing and belongs to the high-end technology service industry. 

Therefore, during the epidemic, personnel can flexibly work from home and deal with long-term problems. Order. But she said that after resuming work, intensive business trips are required, so she hopes that traffic restrictions around Shanghai can be completely loosened.

Hu Peng told VOA: "In the resumption of work, there will be some more intensive business trips because I couldn't travel before. This is the very thing I anticipate, it is difficult to say right away, turn on the PC, everything is back, now is the ideal time to visit (Customers), what ought to be examined, then you still have to do this. 

Therefore, we will expect the demand for business trips for a period of time.” Economist: The effect of unblocking in June affects the decision-making of foreign companies to leave.

One is delicate to the issue A financial expert in Shanghai, who would have rather not been named, said in that frame of mind with VOA that Shanghai has recently taken the first step of unblocking, and it is too early to say the strength of the future economic recovery, especially since Shanghai has not yet fully unblocked. 

Because once confirmed cases were discovered in recent days, many communities were immediately closed. He said that the repeated outbreak of the epidemic and the government's insistence on the reset policy may be the biggest variables for Shanghai's economic recovery because reset and the economy are difficult to balance. 

He said that Shanghai's auto industry, high-tech industries such as chips and electronics, and other manufacturing industries, as well as foreign companies, have been hit hard during the two months of lockdown. Lines moved to other Southeast Asian countries. However, the economist believes that most foreign companies should still wait and see, because June will be a very critical month. 

If Shanghai's unblocking effect is not satisfactory, the policy announcement for resumption of work and production is discounted, or the city restarts due to the epidemic. , it will seriously damage the confidence of foreign companies in the authorities, and also contribute to the pessimistic atmosphere of foreign companies, and there is a fear that there will be an inflection point for foreign companies to move out of Shanghai and even China.

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