End To Zero-COVID Policy In China Causing Workforce, Supply Chain Issues Again: Invidis

December 20, 2022 by Dave Haynes

China’s decision to abandon its long-running zero-COVID policy may have eased public unrest, but had other consequences – overburdened hospitals and weakened supply chains for the technologies that drive businesses like pro AV and digital signage.

Our German language content partners Invidis have an interesting post up about the implications of China’s big shift, noting how seeing the virus rage through that country might hasten China getting back to normal. One prominent US epidemiologist called the situation in that country “thermonuclear bad” – predicting 60% of the Chinese populace will pick up the virus, and that millions will die.

From the invidis post:

After almost three years, China is opening faster than observers and experts expected. The pressure of the population and an unstoppable wave of Omicron forced the communist leadership to make a radical change in policy. The effects on the population and the economy are immense.

Chinese companies are being hit by a wave of coronavirus that is crippling workers, threatening to shut down factory lines and throwing supply chains into chaos as truck drivers contract COVID-19. While the disruptions are painful for China and global trade in the short term, analysts say, they are accelerating China’s exit from pandemic isolation.

The sudden reversal from the strict zero-COVID containment policy has caused the Omicron variant of the virus to rage across China, particularly in the major metropolitan areas. In Beijing, it is estimated that more than half of the 22 million inhabitants are infected. This has an impact in particular on the manufacturing industry and logistics, which in the meantime have to make do with fewer and fewer healthy workers. 

The Financial Times reported on a printed circuit board factory boss, whose workforce had only 20 percent clocking in last Friday. The rest called in sick with COVID.

By mid-January – after the western Christmas break and the Chinese New Year celebrations – the peak of the wave of illnesses should be over. The global economy had already adjusted to a quiet January, so the factories could start up again at full capacity at the end of January and the production of digital signage displays, LED modules and media players could start up again. With a few weeks of delays, the full availability of goods in Europe would then be guaranteed by spring. Not bad news after three years of pandemic-related production and logistics difficulties.

The trend reversal can also be seen in business trips. Board members and managing directors of Chinese suppliers in the digital signage industry have been back in Europe for the first time in three years. The ISE trade show at the end of January can also benefit from Chinese exhibitors and experts being able to visit the world’s leading trade fair for pro AV and digital signage.

According to media reports, the demand for international flights has multiplied since the lifting of the zero-COVID measures in China. The coming year 2023 could return to pre-crisis levels in terms of product availability. 

Not a bad omen, even if demand in Europe will be dampened by the energy crisis and what is likely to be a weak recession.

The counter-opinion, of course, is that while this may work out in some respects, there will be a lot of human collateral damage inside China. Many of that country’s 1.4 billion people are  vulnerable to the virus because of limited exposure, low vaccination rates and what has been termed poor investments in emergency care.

Leave a comment