Shanghai continues its tight zero-COVID policy, but on April 19, China’s business hub released a list of companies allowed to resume operations to reduce stress on the supply chain.

However, as the South China Morning Post reported, only 70% of the 666 designated firms have activated part of their production on Sunday, April 24.

Tu Le, Manager at Sino Auto Insights, said, “A supply chain only works if all the links are acting equally in unison. That includes workers at the manufacturers and suppliers [and] truckers on the inbound and outbound side … if any one of those links fails, the entire system may run slowly or not at all.”

Shanghai allows companies to continue their businesses so long as they operate under closed-loop management, with staff staying on-site 24/7.

Production is allowed. Still, many companies face some issues behind the ‘closed loops.’

Even though companies can afford dormitories, they are still challenged by the logistics blockade. An integrated circuit sales manager, Lei Bai, said “What can be produced can’t be shipped out.”

Rokid’s CEO Zhu Mingming said that lockdowns in Shanghai have hampered its AR glasses delivery. However, the company is situated in Hangzhou, the capital of eastern Zhejiang province, approximately a two-hour drive from Shanghai.

He added that it’s hard to tell when logistics would turn normal.

Operations for most companies are also curtailed as they cannot ensure facilities to host the entire workforce. One example is Tesla’s Shanghai electric vehicle plant, which only runs 50% of its capacity.

According to the Washington Post, Ananyeva, a spokesperson for Bosch Huayu, said only a third of its 3,000 production employees in the Shanghai plant is working.

Company leaders are also thinking about how the closed-loop system may affect workers.

Michael Hart, president of the American Chamber of Commerce in China, said, “Any companies that have workers in a closed-loop — they say these workers are under immense pressure. Because they can’t go home … there is concern about mental health and just safety in general.”

As residents’ needs and complaints are rising, supermarkets and logistic companies in Shanghai are stepping up efforts to improve supply.

80% of Walmart stores have resumed online business operations. Alibaba’s subsidiary Cainiao has delivered and distributed 15,000 tons of materials for Shanghai.

Still, Executive Zheng Yang of logistics firm Cainiao said they are launching a tough battle daily on each street and community to speed up delivery recovery.

Zhang said that the service area exceeds more than half of the streets in Shanghai and that two-thirds of the delivery service is operating normally.

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