A fresh wave of supply-chain disruption threatened by a COVID outbreak in Shenzhen, pushing 100 factories to enforce a “closed-loop” system.

Bloomberg News cited the leaked Shenzhen government as reporting that closed-loop containment systems are now mandated by China officials from the southern manufacturing hub of Shenzhen for 100 key enterprises including Apple’s Foxconn; drone-maker DJI; and automaker BYD.

Living within a closed loop means these employees have to have little contact with people beyond their plants or offices. 

The authorities insist the supply chain and exports are working just normal.

Employees now have to enter or leave the factory on Foxconn’s campus with 24-hour nucleic acid testing records.

Even though “closed-loop” systems are supposed to keep COVID setbacks to a minimum by letting companies operate while being able to keep tracking of positive cases.

Tommy Wu, the head economist for Oxford Economics in Hong Kong, says that the system will likely cause ripple effects that put more stress on essential supply chains.

In Tommy’s words, many companies cannot “host all their staff on-site…and many manufacturers can only maintain partial operation.”

There is related news and heated online discussions; netizens complain that the regime’s Zero-Covid rules with strict prevention measures have a negative impact on its economy.

According to a technology group chairman in Shenzhen, the prevention measures affect small enterprises and impact the employment of employees.

Only if small companies survive will the production and service chains of large companies not be interrupted.

For example, BYD, an electric vehicle company, can only operate normally if parts suppliers or service providers are not going bankrupt.

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