As the shutdown eases, Shanghai business owners are carefully tracking costs

As the shutdown eases, Shanghai business owners are carefully tracking costs

Lockdowns imposed early in the pandemic helped Chinese factories resume operations within months and be able to fulfill overseas orders. But the same strategy worked less well for the more infectious omicron variant. In Shanghai, the coronavirus lockdown has weakened supply chains and logistics.

A city-wide lockdown in Shanghai continued into April and May; officials began easing restrictions in June. So far, only a third of Chen’s clients have returned.

Colin Zhao, boss of medical supplies maker Suntop, said there had been “a spike in shipping rates” over the past two years. “Typically, it costs $2,000 to $3,000 to ship a container to Europe. Now, it’s about $15,000 to $20,000.”

Challenges before lockdown
Even before the closure of Shanghai, many companies were feeling the pressure.

Story Highlights

  • China is due to release second-quarter gross domestic product figures on Friday, which are expected to show the impact of a two-month lockdown in Shanghai, the country’s financial, transportation and manufacturing hub.

  • Those restrictions force Chen to do things that bosses are usually reluctant to do. He asked his clients – mainly golf courses in other parts of China – to buy from his competitors during this period.

These additional costs will undoubtedly affect end consumers in Europe and the United States. Manufacturers are also dealing with rising costs of raw materials and cardboard packaging. Zhao said he finally raised the price by 10% last year.

“But then, because of the war in Ukraine, the euro depreciated against the yuan,” he said. “So, our margins actually went down.”

Lockdown Dilemma
Perhaps restaurants have been hit the hardest. During lockdown, they are usually the first to close and the last to reopen. Wang Ying runs a mutton hot pot restaurant. In May, he had been out of work for at least two months and was in low spirits.

“I’m frustrated. I can’t do business during the lockdown, but I still pay for all my workers. I’m losing money every day,” he said. Public gatherings are not allowed, so Frank Tsai of China Crossroads, who organizes the public lectures, has not had much income since Shanghai began a rolling lockdown in March.

Also, his girlfriend has a mental health emergency requiring hospitalization. Getting to the hospital during the lockdown has been a challenge as most public transport has been stopped. “We had to wait three hours to call an ambulance. There were no taxis to the hospital,” Cai said.

At public hospitals, waiting lists are long during the lockdown. In the end, Tsai Ing-wen found a private international hospital for his girlfriend. However, the cost of treatment is much higher than in public facilities, and the results are not satisfactory.

“The staff there said, ‘Under normal circumstances, you would get a bed because [my girlfriend] Obviously in very bad shape.but not now, because [there was] Such a huge waiting list,’” Cai said. At one point, they were cycling around and when they arrived at one of the best public mental health hospitals, they couldn’t find a bed.