EU firms face logistical issues in Shanghai post-lockdown -business group

China’s efforts to help businesses reopen after a COVID-enforced lockdown in Shanghai are only having limited success, with EU firms battling ongoing logistics issues and a severe shortage of employees, the European Chamber of Commerce said on Wednesday.

Beijing last week published a ‘white list’ of 666 companies it said would get priority to reopen or keep operations running in Shanghai, as the authorities seek to give businesses a boost after weeks of COVID lockdowns in China’s financial capital.

“Although we note that a significant number of our members are included in the whitelist, particularly in crucial sectors such as manufacturing, chemicals and automotive, many companies still face the challenges of labour shortages and logistical difficulties,” Bettina Schoen-Behanzin, vice president of the European Union Chamber of Commerce in China and head of its Shanghai chapter told Reuters via an emailed statement.

Lack of transportation, a 40-50% drop in access to trucks, difficulty accessing permits to transport employees, materials and goods to and from the city and beyond, are just some of the challenges facing firms, the statement said.

The dearth of trucks hurts deliveries and risks the loss of customers, the chamber said. Orders would still face delays unless a unified permit system was implemented, it said.

“Licenses should be issued across the whole region, not city by city – otherwise they are cosmetic changes only,” Schoen-Behanzin said.

Some European firms were able to maintain operations during the lockdown by using a closed-loop management system, but face a big employee shortage.

“We estimate that less than 30% of their workforce are eligible to go to work due to the ongoing lockdowns, so there’s a huge gap between policy and the reality of implementation,” Schoen-Behanzin said.

“The consensus is that this logistical nightmare will continue till mid-May.”
Separately, over two-thirds of British companies who responded to a recent British Chamber of Commerce in China survey said they expected profits to drop this year due to disruption caused by local COVID measures.

74% of the more than 200 member companies who responded to the survey released on Wednesday said recent outbreaks have seriously impacted business operations and cash flow, 69% reported an impact on attracting or retaining foreign talent and nearly half said this has decreased or delayed investment.
Source: Reuters (Reporting by Martin Quin Pollard Editing by Bernadette Baum)