After nearly two and a half months of confinement, the Shanghai authorities have finally announced that the city will slowly begin its return to normal. This should ease the pressures this situation has placed on the supply chain of the global technology sector.
The lockdown in Shanghai has had major repercussions
Indeed, the very restrictive policy “ zero covid » of China, which consists in imposing a very strict containment from the first cases, was put in place in mid-March. Since then, almost all the inhabitants of the city have been stranded at home without the possibility of leaving, resulting in a very worrying situation concerning the mental health of Shanghainese.
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As a result, many factories had to shut down; in addition to causing a drop in production, this has also confronted logistics operators and exporters with great difficulties. As reminded the McKinsey firm nevertheless, some factory employees, as well as those at the Shanghai container port, continue to work and in order to achieve this, they never leave their workplace, as was the case with the electronic chip manufacturer SMIC. So while the global supply chain is slowed down, it is not entirely halted either.
Despite this, the consequences are numerous. The giants Foxconn, Tesla and Toyota have thus been forced to stop or slow down their production. For its part, Apple has taken the decision to accelerate its withdrawal from China to transfer the majority of its factories to India and Vietnam.
Economic life is restarting in the metropolis
Shanghai authorities recently announced that they have controlled the spread of the virus. Districts that have not recorded any new contamination for 14 days will therefore reopen and be subject to some restrictions. In this context, local shops and malls are slowly reopening, and many public transport services have also resumed service, reports The Register.
Factories are reopening in Shanghai, a key location in the global supply chain. Photography: Photoholgic / Unsplash
City leaders explained that 1,700 key production-oriented enterprises in the region have resumed work and production, as have 450 key financial institutions and 580 enterprises important to foreign trade. Similarly, 88% of factories dedicated to the local e-commerce sector have reopened; companies like Alibaba and JD.com have been greatly affected by the lockdown in Shanghai.
Finally, the authorities have also announced subsidy programs for industries, including software development. Moreover, they hope that containment will have accelerated the adoption by companies of digital management tools, considered more effective than what was used before the pandemic.
If Shanghai begins to reopen, the effects of the lockdown on the supply chain should still be felt for some time, especially as they come on top of the shortage of semiconductors as well as the war in Ukraine, which is also causing major supply problems around the world.