From Apple to Disney, China’s Covid Restrictions Hurt Business Again | CNN Business


New Delhi
CNN Business

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

Top global and Chinese companies, from automakers to tech giants, have faced massive disruptions to their businesses in recent days as the world’s second-largest economy doubles its zero-covid stance after Xi Jinping began his third term in power. with resounding approval of the policy.

On Wednesday, authorities imposed a seven-day lockdown on the area where China’s largest iPhone assembly plant is located, in the central city of Zhengzhou.

Run by Foxconn, one of Apple’s largest suppliers (AAPL), the facility has struggled 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 employees are among those who walk miles on the highways to flee the factory.

The lockdown and exodus are putting enormous pressure on Foxconn just before the main Christmas shopping season and could hit assembler production and shipments.

The Taiwanese manufacturer is not alone in dealing with Covid-related chaos in the workplace this week. On Monday, Disney’s (DIS) Shanghai resort abruptly suspended operations to comply with Covid-19 prevention measures. Visitors are locked in the park until they test negative for the virus.

Automakers are also being hit as cases rise across China and authorities impose lockdowns, mandatory quarantines and repeated impositions mass testing.

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

“Vehicle production and delivery were limited by operational challenges in our factories and supply chain volatility due to the 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 results.

“In October, about 1,400 of our stores were temporarily closed or only offering takeout and delivery services,” the company said on Tuesday. “Nationally, consumers travel less and reduce spending,” it added.

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

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