March 2022 brought a sharp increase of new Covid-19 cases in numerous provinces across China. In an attempt to limit the spread of the virus, China has reintroduced lockdowns. The action has raised concerns that supply chain issues will occur, and consumers in the U.S. will likely experience late deliveries.
Zero-Covid Policy
Since the beginning of the pandemic, Chinese authorities have maintained a rigorous approach designed to minimize infection levels. While the strategy has been effective, it comes with a substantial financial risk. China’s manufacturing centers are home to about a third of the world’s suppliers, so any local disruptions can have long-lasting effects on the world economy. As the virus affects more provinces, it seems like China will stick to its strict approach.
Shenzhen Takes a Financial Hit
The city of Shenzhen, China’s most prominent port and leading tech giant, recently went into another lockdown, arousing fears of a financial downfall.
Huawei’s headquarters are located in Shenzhen, and recent Covid-19 spikes will undoubtedly slow down its operations. Additionally, Foxconn’s most important factories are also based in Shenzhen. The company has announced it will temporarily cease its operations due to the lockdown. As Foxconn is China’s primary manufacturer of Apple devices, this halt could harm European and U.S. markets.
In 2021, Shenzhen went through a lockdown that caused international shipping rates to skyrocket, and it looks like it’s experiencing a similar situation once again.
As China shows no intention of adopting a more lenient Covid-19 strategy, U.S. shoppers will have to be patient and prepare for order delays.
