What impact does the strict lockdown in China have on cooperation with Chinese partners?
Even 2 years after the start of the Corona pandemic, the virus still strongly influences our lives, especially the regulations and restrictions have a great impact on our lives. So also on international business. Because the restrictions make business trips more difficult and thus the direct contact between business partners.
Lockdown in big Chinese cities
At the moment, the business relationship between China and other countries has even worsened due to the pandemic. This is because many major Chinese cities are in lockdown altogether. These regulations arise from the Chinese government’s so-called zero-covid strategy, the goal of which is to have no Corona cases in all of China. With such a large country as China, this strategy requires drastic means, such as lockdown for entire cities. Shanghai, the largest city in China and an important trading center, where besides our Kaiserberg office also one of the most important ports in Asia is located, is currently in a complete lockdown. Shortly before, a 7-day lockdown in Shenzhen had already ended.
Impact on companies
These lockdowns in important trading areas of China have major implications for many European or American companies. For example, for Tesla, whose own production in Shanghai has already been at a standstill for several days. Many German companies have their headquarters in Shanghai; however, most of their production facilities are located outside the city limits in the surrounding area, which belongs to Jiangsu Province. Some large industrial parks are affected, such as the Caojing Chemical Park in the west of Shanghai, where BASF, for example, produces.
This is the situation of many companies and factories around Shanghai, because the people there are in quarantine or cannot enter the city area from outside due to the lockdowns, and that is why the assembly lines in the factories stop. For these reasons, the government has been trying to avoid this lockdown for a long time, but without success. In recent weeks, however, Shanghai has become the country’s Corona hotspot with over 60% of all new infections in all of China, and so the city of 26 million people is in a gradual lockdown. First, the lockdown begins east of the river and then in the west. All businesses in the locked down areas have to close and people are supposed to work in home offices as much as possible. But in many areas, unfortunately, this is not possible. Some companies have organized the lockdown so that employees are on the company premises the entire time, working there, receiving meals and a bed. In these production facilities, production can continue as usual.
If you are currently looking for Chinese business partners or offers from Chinese companies, then you should allow more time than usual, because it may take a while until you receive an answer or an offer. Also the start of production of your goods may take longer than usual in China for some production facilities. In general, it is important to be patient when contacting China at the moment, as long as many cities and regions are in a lockdown.