From Apple to Disney, China’s Covid brakes are hurting business again

New Delhi
CNN Business

It’s been nearly three years since Covid-19 first struck China, but the country’s relentless adherence to lockdowns continues to hamper business and the economy.

Major global and Chinese companies, from automakers to tech giants, have experienced major business disruptions in recent days as the world’s second-largest economy doubles down on its zero-Covid focus after that Xi Jinping began his third term in power with a roaring endorsement. of politics

On Wednesday, authorities imposed a seven-day lockdown on the area home to China’s largest iPhone assembly factory in the central city of Zhengzhou.

Run by Foxconn, one of Apple’s ( AAPL ) biggest suppliers, the facility has been struggling since mid-October with a Covid outbreak that has sparked panic among its migrant workers.

Videos of people leaving Zhengzhou on foot have gone viral on Chinese social media in recent days. State media have said many Foxconn workers are among those walking miles on roads to escape the factory.

The lockout and exodus are putting huge strain on Foxconn just ahead of the key holiday shopping season and could affect the assembler’s production and shipments.

The Taiwanese manufacturer isn’t the only one dealing with Covid-related chaos in the workplace this week. On Monday, Disney’s Shanghai (DIS) resort abruptly suspended operations to comply with Covid-19 prevention measures. Visitors have been locked inside the park until they show a negative test for the virus.

Medical workers test tourists for Covid-19 at Shanghai Disney Resort on October 31, 2022 in Shanghai, China.

Automakers are also being hit as cases rise in China and authorities impose repeated lockdowns, mandatory quarantines massive tests

On Wednesday, Chinese state media National Business Daily said that electric car maker Nio (NIO) closed two factories in the eastern city of Hefei due to Covid slows down. In a statement on Wednesday, the company said its production was affected by the pandemic last month.

“Vehicle production and delivery were constrained by operational challenges at our plants as well as supply chain volatility due to Covid-19 situations in certain regions of China,” Nio said .

Yum China ( YUMC ), the Shanghai-based company that owns the KFC, Pizza Hut and Taco Bell chains in China, also painted a bleak picture in its quarterly earnings.

“As of October, approximately 1,400 of our stores were temporarily closed or offering takeout and delivery services only,” the company said Tuesday. “Nationally, consumers are traveling less and spending less,” he added.

There is little sign of relief in sight. Authorities have increased Covid restrictions after Xi’s sweeping power grab at the Communist Party Congress last month, and cases are on the rise. China reported 2,755 local infections on Tuesday, the highest daily number since August.

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