China is currently facing the biggest outbreak since the first wave. It has caused a massive problem for automakers Toyota and Volkswagen and Apple supplier Foxconn, making them push back some of their operations. This has caused a great disruption in the supply chain creating a grave concern in the market.
Many Chinese cities and provinces have taken strict measurements to curve the infection. Beijing wants to suppress the new outbreak as quickly as possible. The southern Chinese tech hub of Shenzhen is also under those restricted places.
Shenzhen is known as China’s Silicon Valley. A huge number of new Covid-19 cases have been reported in that area. Public transport has been suspended in the area and local people are urged to work from their homes in the current week.
On Monday the press secretary at the White House, Jen Psaki stated in a press conference that the Biden administration was observing the current lockdown in Shenzhen very closely.
She revealed on Monday afternoon that they are keeping a close eye on the impact on some of the ports around the affected areas of China. The current reported number of symptomatic Covid-19 cases in China so far this year is a lot greater than all the reported cases in 2021.
Foxconn, earlier known as Hon Hai Precision Industry Co Ltd, said that they will be postponing their Shenzhen operations until further notice. The company will be deploying the backup plants to avoid disruption.
According to Reuters the operations of Foxconn and its subsidiaries in Shenzhen would be stopped for the first half of this week. As per another source, the government will give companies permission to function if they establish a closed management system. In this scenario, the workers would have to live and work in a bubble. It was practiced during the Beijing Winter Olympics.
Other Taiwan companies that have also suspended stopped their Shenzhen operations are Unicron Technology Corp and Sunflex Technology Co Ltd. Sunflex has announced that it will keep its plant closed until Sunday.
While Apple did not offer a reply to the request for comment immediately, Intel refused to make a comment on the matter.
Manufacturing consultancy Victure Industrial Co., Ltd in Shenzhen that is run by Paul Weedman has given a warning that the restrictions imposed by the government are going to have a huge impact beyond Shenzhen and to the greater Guangdong province.
Weedman said, ‘Imagine you have a factory of 100 people and all of a sudden you can’t do anything – you can’t fulfill your existing orders, you can’t accept new orders. The impact is not 2 or 3 weeks, but 3-6 months.’
Yantian International Container Terminal in Shenzhen is one of the busiest ports in China. The port stated in a WeChat announcement that the port is operation currently even though two companies that have warehouses in the port have suspended their operations temporarily.