The strict zero case policy China’s follow-up to the coronavirus pandemic has led to a sharp drop in confidence among European companies operating in the country as supply chains run into problems, corporate revenues fall and staff leave the country, the European Trade Chamber in China.
European companies in China seek to transfer their investments to other markets and, according to a survey by the Chamber, almost a quarter of its members surveyed are considering transferring their current or planned investments outside China, more than double the number at the beginning of the year.
“Our members have coped so far, but if the current situation continues they will start looking more and more at China’s alternatives.”said the president of the Chamber Georg Voutke.
Lockdowns have caused problems in the operation of supply chains with 92% of respondents respond that it has been hit by recent port closures, declining road freight and rising shipping costs.
Until Tuesday 43 cities were in full or partial lockdown or applied controls to the movements of their inhabitants.
Beijing insists on its zero-case policy of targeted targeted lockdowns and mass diagnostic tests, although the rapidly spreading Homicron variant of the coronavirus makes it increasingly difficult.
The chamber speaks of “epic upheaval” caused by restrictive measures in dozens of Chinese cities – including the largest, Shanghai.
“Although the war (in Ukraine) has affected European companies operating in China, Covid-19 is a much more immediate challenge and has caused a significant decline in business confidence.” adds the Chamber.
The survey was conducted in April between over 370 members of the Chamber.
Almost 60% of respondents They downgraded their revenue forecasts for the current year, while about a third recorded a reduction in their staff, according to the survey.
“The Chinese market has largely ceased to be attractive to many respondents,” the report said.
According to the Chamber, the vast majority of companies surveyed agreed with the proposal to vaccinate the entire Chinese population by allowing those who test positive, whether asymptomatic or have mild symptoms, to be quarantined in their homes. He also advocates the use of mRNA vaccines.
Businesses, according to the survey, are also affected by the war in Ukraine due to logistics problems to and from Europe.
Rail freight is no longer an option and commercial aircraft have to bypass Russian and Ukrainian airspace, which increases the distance and therefore the costs.
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