Most Japanese factories in Shanghai and several European enterprises remain closed down, while Beijing claimed that most of them are “back-to-work.”
According to a survey published by the Shanghai Japanese Commerce & Industry Club on May 05, nearly two-thirds (63%) of Japanese factories in Shanghai have not resumed any production yet.
Meanwhile, 28% of factories have only restored less than 30% of their capacity. The combined two figures make up the majority, accounting for 91%.
The survey polling 100 Japanese-funded companies, conducted from April 27 to 30, also shows that no company among 54 manufacturing companies with Shanghai-located factories has returned to its original-output status.
The report further revealed that 80% of factories were forced to suspend production during the Shanghai lockdown. However, Beijing has allowed only 37% of these factories to resume production.
Stagnated logistics have become the biggest challenge for those permitted to resume production, and 56% of these enterprises said it is almost impossible to manage the logistics in Shanghai.
The Communist regime has only issued city passes to some enterprises to control the infection spread, resulting in port congestion and severe supply chain problems. This prevents factories from obtaining raw materials and necessary components and supplying finished products.
In addition, Beijing requires these enterprises to manufacture under “closed-loop” conditions. Without dormitories in factories, arranging places for employees to live on the production site even burdens these enterprises more.
Japanese factories are not a singular case that undergoes these types of difficulties.
According to the European Union Chamber of Commerce in China report published on May 05, more than 90% of polling companies said that Beijing’s zero-covid policy had hurt supply chains. 85% of them have difficulties obtaining raw materials or necessary components. Nearly 60% of European companies said they were lowering their 2022 revenue forecasts by 6% to 15%.
According to a Bloomberg report, Maximilian Butek, the German Chamber of Commerce (AHK) chief representative in Shanghai, stated that many German companies operating in Shanghai struggled to apply for permission to restart.
What these foreign enterprises confront is entirely inconsistent with the Chinese authorities’ official claim. On May 04, Shanghai claimed that the resumption rate of more than 1,800 key enterprises had exceeded 70%, and more than 660 enterprises in the first batch had exceeded the 90% resumption rate.
According to Maximilian, the long-term lockdown has badly affected companies, and several international customers have been looking for new suppliers outside China.
He said, “The majority of investments are put on hold—new investments are difficult to justify as long as the zero case policy remains the strategy for the authorities, “
The chief representative further added that even if the lockdown is lifted, “it will take some time for companies to be fully able to return to normal operations.”