China’s strict zero-case pandemic policy 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. announced today the European Chamber of Commerce in China.
European companies in China are seeking to relocate their investments to other markets and, according to a survey by the Chamber, almost a quarter of its respondents are considering relocating their current or planned investments outside China, more than double the number next 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 Chamber President Gerg Voutke.
Lockdowns have caused supply chain problems, with 92% of respondents saying they have been hit by recent port closures, declining road freight and rising shipping costs.
As of Tuesday, 43 cities were in full or partial lockdowns or controls the movement 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 poses a much more immediate challenge and has caused a significant decline in business confidence,” the Chamber added.
The survey was conducted in April among more than 370 members of the Chamber.
Nearly 60% of respondents 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, a large 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.
Source: AMPE
Source: Capital
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