I report regularly on the market research done by Interact Analysis. The CEO provided a thorough background about methodology and analysis convincing me their reports have better data science behind them than what you might get elsewhere.
This report is unique. It’s not a market study. Rather, Jan Zhang, senior research director, lives in Shanghai. She provides an interesting local look at the consequences of the severe lockdown Chinese authorities are using to combat the spread of Covid. I do not envy policy makers who must balance reducing deaths and hospitalizations on once side and living and commerce on the other.
You can read the entire blog post here.
Many in the West will know that there have been some very harsh lockdowns in parts of China, particularly Shanghai where I live. Though restrictions have recently, and extremely suddenly, eased, we are on standby for them to be re-imposed just as suddenly again. I wrote this insight both to talk about my personal experience of these new lockdowns, and to discuss some business and manufacturing impacts that I see.
The impact of lockdown on a personal level
We were locked in our flats since the beginning of April, though after the 3rd week we were allowed to walk around our locality if infections had gone down to zero in the area. But all shops and restaurants were closed. Where support for people was concerned, things were rather disorganized, particularly at first.
People who were not allowed to work were basically living off savings. There are some policies in place, such as lowering mortgage payments, and our company has been granted free rent for six months, but so far unified central government schemes to support people in need are limited.
Shanghai: Goods piling up at the port are clogging national and global supply chains
Shanghai has strong, high value, automotive and semiconductor industries. The city is also an important logistics hub, with very large port facilities which are a global gateway for goods coming into China,as well as being a domestic logistics center for the Yangtze Delta area. The port has not been completely shut down during the lockdown, with workers being allowed to continue working, and it is also highly automated, but there has been a shortage of truck drivers to get goods in and out, so there’s a serious logjam of goods which has sent shockwaves through supply chains across the country and indeed across the globe.
Government assistance for businesses has been hit and miss There are policies coming from central government, but it’s a long chain of command filtering down through the provinces and local industries, and it takes time. When we heard about the lockdown at the end of March, we thought it would be for 1-2 weeks. But it’s been very strict, more so than in Wuhan in 2020, even though the virus is much weaker.
On a personal or business level we weren’t prepared for what was coming. In April and May, companies had to apply for permission to continue functioning and not many were granted permission – about 600 made it on to the whitelist as the first batch of enterprises, to resume work and production, which is a drop in the ocean in a city like Shanghai with a population of over 26 million. And when companies did get permission to resume working, their activities were restricted.
More companies are beginning to start up again now, but the economic impact has been severe. Shanghai has lost over 60% of GDP during the lockdown, putting a serious dent in the government’s 5.5% GDP growth plan. We are expecting more government support, but it’s all a bit uncertain what shape it will take. Here at Interact we have been fine as we can work from home, but manufacturing has been hit really hard.
Lockdown: Bad for business; bad for people.
Few positives come out of this for business, beyond making business leaders think carefully about how to maintain productionduring future global shocks. On a personal level, it has affected some people quite badly, with talk of loneliness, frustration and even PTSD. Old people who don’t understand how to use the internet have perhaps been hit the hardest.
For me, I’m just glad it mostly seems to be ending and I’m praying we don’t return to it!
