Surging Covid infections delay Chinese exporters’ deliveries

THE surge of Covid-19 across China is preventing exporters from delivering orders on time because their workers are falling sick.

The missed deadlines show how China’s Covid policy is again disrupting foreign trade, this time due to illnesses rather than lockdowns and other restrictions.

Exporter Bilateral Trade Asia America had been scheduled to send out two containers’ worth of goods to overseas customers on Dec 23, but had to postpone delivery because seven suppliers did not deliver their own products on time due to local Covid outbreaks, said the company’s manager, Xu Fangpeng.

Suppliers in the Guangdong province cities of Guangzhou, Dongguan and Foshan said they have had to push back deliveries until the middle of January, Xu told Caixin. Suppliers from other cities such as Zhengzhou, Wenzhou, Qingdao and Suzhou also have sick employees, which has disrupted production to the point that they aren’t sure whether they can make their deliveries by the end of the year.

A Zhejiang-based cross-border e-commerce firm selling mother and baby products said some of its own suppliers have failed to deliver on time because of sick staff. One supplier in Changzhou, in east China’s Jiangsu province, has allowed sick staff to continue working to make sure orders are delivered, the company’s manager said.

Lots of home appliance manufacturers are running at 20 per cent to 50 per cent of capacity because of Covid disruptions, Yu Xuehui, head of a services provider in the industry, told Caixin.

A wave of Covid infections has spread across the country in recent weeks, accelerating after Chinese policymakers abruptly ended the “zero-Covid” policy earlier this month.

Reliable figures on the extent of China’s current Covid outbreak are unavailable. Now that people no longer need a negative nucleic acid test result to access most public places, few are opting to get tested. Meanwhile, much of China’s vast Covid testing infrastructure has now been dismantled.

On Dec 25, the National Health Commission announced it would no longer release daily national case figures after almost three years of updates.

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For all the Chinese companies struggling to meet their obligations, there are also those whose dearth of orders has led them to dismiss workers early this year for the Chinese New Year holiday, which officially runs from Jan 21 to Jan 27 in China.

One furniture merchant said multiple suppliers have allowed workers to take off early for the holiday, with some offering more than a month off.

Many Chinese exporters have received fewer orders than usual over the past two months as overseas demand has slumped due to inflation and slowing economic growth abroad. In US dollar terms, Chinese goods exports shrank 8.7 per cent year on year in November, according to data released by the General Administration of Customs.

“We expect exports to shrink at a similar pace in December and the export contraction to continue well into 2023, weighed on by a high base, a global slowdown, the post-Covid demand shift to services and a reversal of bullwhip effects,” Nomura Holdings analysts led by Lu Ting said in a note on Dec 7. CAIXIN GLOBAL