Amazon orders, other online deliveries might see delays from China lockdowns

The moves are disrupting the production and delivery of goods sold on online marketplaces such as Amazon.com. PHOTO: REUTERS

BEIJING (BLOOMBERG) - Orders placed with global e-commerce platforms like Amazon and Walmart may be delayed by Covid-19 lockdowns and restrictions in some of China's key manufacturing hubs, according to an industry body.

Shenzhen, home to around half of all the online retail exporters in China, was locked down for at least a week on Sunday (March 13) to try to contain a spreading Covid-19 outbreak. Its 17.5 million residents were told to work from home, with all non-essential businesses and public transport shut.

In nearby Dongguan, a key Chinese hub for the manufacture of shoes, toys and textiles, factories in areas where there are virus cases have been told to close, and schools and restaurants are effectively shuttered.

The moves are creating significant disruption to the production and delivery of goods sold on major online marketplaces, including those run by Amazon.com and United States retail giant Walmart, said Ms Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association.

"Shenzhen now has pressed the pause key, with operations halted for almost all sectors, and we are no exception," said Ms Wang, whose organisation represents about 3,000 exporters in the city, China's main tech hub.

The association's members include purveyors of some of the biggest-selling online products in the West, including smartphone accessory maker Shenzhen Tomtop Technology and Sailvan Times, maker of lounge wear apparel brand Ekouaer.

Most production has been suspended in Shenzhen due to the lockdown and deliveries are snarled because logistics firms and warehouses are not operating or are doing so at a reduced capacity, Ms Wang said in an interview on Monday.

Chinese sellers have become ubiquitous on global shopping platforms, often specialising in cheaper versions of everyday goods such as phone chargers and sneakers. The country's cross-border e-commerce industry grew by 25 per cent to 1.4 trillion yuan (S$300 billion) last year, building on a 40 per cent surge in 2020 due to the pandemic.

Thanks to China's integrated supply chains, some companies have become top sellers globally, with fast-fashion juggernaut Shein and Anker Innovations Technology, which retails US$1.5 billion of smartphone accessories and other consumer electronics every year, now household names.

Amazon said it was diverting freight to warehouses in parts of southern China that are not subject to lockdowns or pandemic restrictions.

"We do not anticipate a significant disruption to our business," Amazon spokesman Maria Boschetti said via e-mail.

Representatives from Walmart did not immediately respond to emails seeking comment about potential delivery delays. Chinese logistics firm 4PX said on its website on Monday that it has stopped picking up parcels from Shenzhen due to the Covid-19 restrictions.

Ms Wang said the association is "actively negotiating" with the Shenzhen authorities to try and at least get some parcel deliveries resumed soon. The disruption comes at a particularly tricky time, with Amazon cracking down on multiple top sellers in China last year over fake consumer reviews.

While authorities have said some factories in Shenzhen and Dongguan will be still be allowed to operate if they test workers daily and operate bubbles, Ms Wang said her member companies have been required to halt all production, with one even fined earlier this week because they hadn't complied.

"Even if you're not in the areas with serious cases, you're not allowed to do anything," she said.

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