New corona lockdowns are a burden for corporations in China
In China, rising corona numbers and the government’s zero-Covid policy are taking an ever heavier toll on the economy. In addition to the Apple supplier Foxconn, the electric vehicle manufacturer Nio and the restaurant chain Yum China are also affected by the strict measures. Nio suspended production at its plants in eastern China’s provincial capital, Hefei. Yum China, operator of KFC and Pizza Hut, said Wednesday that 1,400 of its roughly 12,400 branches in the country were temporarily closed or only able to offer limited services in October. On average, only 400 branches were affected in July and August.
China is currently struggling with the largest outbreak of the virus since the summer. At that time, millions of people in several large cities were forced to stay at home or go to central quarantine facilities as part of the strict corona measures. Authorities on Wednesday imposed a new lockdown on an industrial park in the city of Zhengzhou, where a key Foxconn plant is located, which is to remain in effect until November 9.
Apple is threatened with production losses because Foxconn produces 70 percent of all iPhones worldwide – most of them in Zhengzhou. Foxconn employs around 200,000 people there. The industrial park did not disclose to what extent the latest measures affect the company. According to Foxconn, the plant continues to operate in pandemic mode, with workers living and working on site in isolation from the outside world. But there is growing dissatisfaction among employees, and several workers fled the site over the weekend after complaining on social media about their treatment and care. Foxconn then quadrupled bonuses to appease employees.
China’s zero-Covid policy is getting more and more out of whack compared to the rest of the world. But it was only at the Communist Party Congress in mid-October that Head of State Xi Jinping reaffirmed the strict course with which larger outbreaks are contained at all costs. More than 80 percent of major Chinese cities reported new cases over the past month, with the spread fueled by vacation travel and new sub-variants. On the stock markets in Shanghai and Hong Kong, prices rose again on Wednesday, as there was speculation that the corona measures would be relaxed despite new lockdowns. That had already boosted the courses the day before.