More than half of the US multinational companies in China have reduced their annual revenue projections, mostly due to a COVID-19 outbreak in Shanghai, a joint survey by the American Chambers of Commerce in Shanghai and Beijing showed yesterday.
Responses to the survey — conducted with 167 companies operating throughout China, including 76 in manufacturing — found that 82 percent of manufacturers reported slowed or reduced production due to a lack of employees, inability to obtain supplies or Chinese government-ordered lockdowns.
Fifty-four percent of the firms have cut this year’s revenue projections following the outbreak, although 38 percent said it was too early to estimate the full effects, the survey said.
Photo: AP
Some manufacturers in Shanghai, particularly in the automotive industry, have resorted to operating with a “closed-loop,” wherein employees remain confined to the premises to keep production lines running, while outside suppliers are sealed off.
Such arrangements are acceptable for a few days, but “not sustainable” in the long term, American Chamber of Commerce in Shanghai president Eric Zheng said.
“Even if your employees are within the factory bubble, your trucks have to come and go sending inputs and outputs, but that’s not possible,” Zheng said. “I hope this is only a temporary, drastic measure to stop the spread.”
Shanghai for nearly a month has been battling its largest outbreak of COVID-19 and this week most of the city of 26 million people was put under lockdown as cases continued to sirge.
Authorities have implemented the lockdown in two phases, first targeting the eastern part of the city, followed by its western districts.
The chamber said that only half of the respondents were satisfied with China’s COVID-19 pandemic control efforts, while 77 percent had expressed dissatisfaction with the length of quarantines.
A growing number of local companies also said that the Shanghai lockdown is weighing on them, ranging from suspended operations and stagnant sales, to drying liquidity and delayed financial disclosures.
Shanghai-based power transmission equipment maker Sieyuan Electric Co (思源電氣) said that the pandemic has disrupted operations, logistics and raw material supplies, affecting its first quarter and full-year performance.
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