China has been reshaping its Zero-Covid policy, ending its draconian methods of mass testing, quarantine and lockdown, at least for now. For the first two years of the pandemic, Zero-Covid worked quite well. While other countries struggled to remain factories. In operation, China’s main challenge was dealing with congested logistics on primary industry routes to North America and Europe as its exports exploded. But with the more contagious omicron variant, all that went out the window. chains, it will be necessary to first perceive the implications of this Zero-Covid exit for the productive model of “factory city” of the country.
One explanation for why Chinese production is so effective is the preponderance of “factory cities”: autonomous campuses that feature factories, warehouses, offices, and housing within a fenced perimeter. These campuses sprang up in the 1990s in coastal provinces such as Guangdong. , Zhejiang and Jiangsu, with personnel recruited from inland provinces such as Shanxi, Henan, Hubei and others. At first, coastal provinces made large investments in infrastructure that supported export trade, adding roads and container ports. All this has helped make China the workshop of the world.
A typical campus would likely have 10,000 employees living in high-rise apartments, called dormitories, as well as separate control rooms. It was not unusual to see more than 50,000 on a singles campus. Driving through Dongguan in the early 2000s, a city adjacent to Shenzhen, I saw that the campus of 10 to 15,000 other people was common. You can also see them mile after mile. Where one ended, the next began.
The factories had a very high staffing density. Six years ago, I took a course to stop at a cell phone meeting factory in Dongguan. 15,000 employees competed to gather 100,000 smartphones per day. On those campuses, staff eat in company and have dining halls, and proximity to their homes means shift adjustments are crowds of other people crossing the campus. There are no large masses of parking or traffic, like you might find in American factories.
The high population density was also a feature of the dormitories. Not so long ago, you can find another 12 people per room, with 4 triple bunk beds and a bathroom according to the percentage. While many industrial cities have moved another 4 people per room, with space, businesses are generally not consistent with the percentage of this information or do not allow you to see parts. Six or more according to the space is still common.
When Covid-19 first appeared in Wuhan, China, in late 2019, each and every factory manager in China knew the implications of a highly contagious respiratory infection affecting their factory – they could immediately become hosts of a super-spreading event. They had experienced this before with SARS and H1N1 in 2009, so they temporarily implemented masks and temperature checks at their entrances. If I were a plant manager living in the middle of peak population density, I would jump on those measures.
Now let’s upload the impact of one of the wonderful seasonal migrations of other people around the world: the Lunar New Year in China. Most migrant workers living in dormitories return home only once a year during this specific period. Factories have officially closed for seven days, but for two weeks or more, and millions of employees flock to long-distance trains and buses to embark on the adventure of seeing their families again. It’s about seeing young people raised at home through grandparents, or families they help with remittances from their factory income. For them, it is the maximum vital holiday of the year.
In 2020, I was in China and South Asia for the first two weeks of the year, and the Covid challenge had already taken center stage. The Lunar New Year began on January 21 of that year, and with quarantines and shipping closures starting in February. It was transparent that many employees would find it difficult to return to their factories and jobs. As the New York Stock Exchange hit new highs, I was investigating why I thought Covid was happening to have a massive impact. Well, it’s done. Initially, it was because the staff could not return to the factories, so the factories suffered to restart. This has led to shortages of many portions in the chains of origin.
Eventually, factories restarted, just as global demand collapsed, and then demand for replacement when house paints took root. But at this point, China has controlled to break the contagion and keep its economy and factories running. has the reliable exporter, while other countries such as Vietnam, Malaysia and India have suffered waves of infections. Through all the geopolitical turbulence and industrial wars of the Trump administration and post-Covid, many Western corporations have maintained confidence in China.
An employee dressed in protective gear next to the lockdown barriers in Jing’an District in Array. [ ] Shanghai on March 31, 2022. (Photo by HECTOR RETAMAL/AFP via Getty Images)
While the accuracy of reports on omicron infection rates in China is likely to decrease, there is no doubt that this highly contagious variant will spread among the country’s population as the government necessarily abandons Zero-Covid. We deserve to take a look at the calendar.
The Lunar New Year begins on January 22, 2023. If omicron infection rates start to rise just earlier, China will have a big challenge on its hands. It turns out to be lifting a lot of restrictions, but having more than a hundred million other people. Being at the height of a pandemic may not be a fair scene. Chinese staff have already spent several years in which many New Year’s travel houses have been abandoned, so there will have to be massive pent-up demand. A lot of travel can be expected.
The big challenge will be when those personnel return. It is possible that localized locks simply return, preventing movement. Or if staff are sick, there may not be enough space to quarantine you. China is entering uncharted territory. Zero-Covid worked until that was no longer the case. We are now at stage zero, and the possibility of causing more challenges to the supply chain is huge.