Shenzhen companies scramble to cope with seven-day lockdown

Companies in Shenzhen are bracing themselves for a seven-day lockdown, the longest since the early days of the Covid-19 pandemic.

They are rushing to export, asking for loan extensions and calling on employees to pick up their laptops and computers from their offices to work from home.

Only those providing essential services will be allowed to go to work.

On Sunday night, the authorities in China's tech and manufacturing hub ordered the southern city's 17.5 million residents to stay indoors until March 20. Three rounds of mass screening are under way.

Subway and bus services have been cancelled and only private car transport, including ride-hailing services, are allowed on the roads. Shenzhen Yantian Port, one of China's busiest, remains open as well, albeit with tighter Covid-19 measures in place.

The curbs in Shenzhen follow the worst surge in Covid-19 cases in the country since the early days of the pandemic in 2020 after the coronavirus was discovered in Wuhan, the provincial capital of Hubei in central China.

Shenzhen reported 75 confirmed local cases and 26 imported ones on Sunday, with 24 of those from Hong Kong.

Mainland China recorded a total of 2,343 new cases, of which 906 are asymptomatic infections, on Sunday, according to official data released yesterday.

Officials at several companies told The Straits Times that they were surprised by the extent of the new measures, given Shenzhen's pro-business policies and the fact that the city had been coping with sporadic flare-ups in the number of cases since the start of the new year.

Previously, business operations were not disrupted for more than three days and curbs were not as extensive to include stoppages on public transport services, they added.

Yesterday, Foxconn, a major supplier and assembler for Apple, said in a statement that it was suspending operations in Shenzhen to comply with the new restrictions. The Taiwanese firm said it would institute backup plans to minimise disruptions to production.

"Due to our diversified production sites in China, we have adjusted the production line to minimise the potential impact," said Foxconn, which is formally known as Hon Hai Precision Industry.

At Shengang Renjia, which sells food specialities from Shenzhen on e-commerce platform Taobao, a customer service employee told The Straits Times that the firm was rushing to export its products to meet the deadline set by the authorities.

"We are not allowed to send out our goods after 2pm today," the company staff said, adding that goods could only be exported again "after a few days".

Mr Ric Koh, founder of Matricx Singapore in Shenzhen, has requested an extension of his company's loans, adding that this was meant as a backup, given that the lockdown may last beyond seven days. The firm makes ergonomic furniture such as standing desks and wooden foot rests.

Country manager for Ninjavan, Ms Han Peiyi, said that workers were told to pick up their laptops and computers from their offices by noon yesterday to comply with the new measures.

Some companies were less surprised by the latest turn of events as they had been preparing for a worsening of the Covid-19 situation in Shenzhen, given the on-and-off outbreaks since the start of the new year.

Mr Bernard Lim started urging more of his workers at his factories to live on-site, when he first noticed the number of Covid-19 cases rising during the Chinese New Year period. Eleven new cases were reported on Feb 1, the first day of the new year, with a seven-day average of six cases, according to Johns Hopkins University.

The majority of his staff, or about 80 workers, have complied with his request, Mr Lim, who works in the steel industry, told The Straits Times. "I saw how the number of Covid-19 infections kept growing ... in Hong Kong (which borders Shenzhen), and I thought it was better to be prepared in case the pandemic spread to the mainland," he said.

Mr Koh also said that he had taken steps to protect his firm by diversifying his supply chain.

"For all our products, we have at least two to three sources," he said.

"When we heard news of the pause on Sunday, we... informed all our suppliers from other cities to beef up their production."