Singapore consumer businesses in anxious limbo under Shanghai lockdown

SINGAPORE consumer businesses in Shanghai expect it could take 2 more weeks before they can reopen, and longer yet for normalcy to return, with the city's first prolonged large-scale lockdown having already hit operations hard - though not necessarily hurting longer-term optimism.

China's financial hub had aimed to stop the community spread of Covid-19 and ease lockdown restrictions by Wednesday (Apr 20). Yet only supermarkets and factories are gradually reopening so far, with the future uncertain for shopping malls and retail brands.

Sharon Wong, founder of baby product retailer Motherswork, does not expect Shanghai's malls to receive the green light for reopening any earlier than May 1. All of Motherswork's 3 outlets in the city have been closed since Mar 23.

Jumbo Group executive director and group chief executive officer (CEO) Ang Kiam Meng is optimistic that malls will be allowed to open in 1 or 2 weeks, but expects that it will take at least another 2 weeks after that for the crowds to return.

"The households need to get their lives organised first, so I don't think business will be back so soon," he said.

The delay follows an already-protracted lockdown, which Ang described as "quite devastating".

"The past lockdowns have always been a few days to a week at most - they are very localised and controlled, and recovery is fast. It's rare to be shut down for such a long time," he said. The group's 4 restaurants within Shanghai malls have been shut since early April.

Shanghai's 25 million residents have been locked down for weeks, causing public anxiety and food supply pressures.

On Wednesday (Apr 20), Shanghai met its reported aim of having no new Covid-19 cases outside quarantined areas, and registered 18,901 new cases that day, down from last week's daily average of more than 20,000 - raising hopes for an imminent reopening.

Yet even after any retail reopening, it will still take at least a month for things to normalise and stabilise, and return to "business as usual", said Deborah Krish, global head of communications at fashion retailer Charles and Keith, which operates 18 outlets in Shanghai.

Unlike Singapore, where tightened measures were announced ahead of time so that businesses could prepare, many companies in China were caught completely off-guard this time, said Arsh Chaudhry, CEO of design consultancy Space Matrix.

Operating in China for 4 years now, Space Matrix has 80 staff across Shanghai, Beijing and Shenzhen. But unlike retail firms, it has been able to avoid the worst effects of the lockdown. "Learnings from the circuit breaker in Singapore and other countries in Asia where we operate helped us in China," said Chaudhry. "All our processes and platforms are digital and cloud-based hence we could very easily and quickly pivot our entire team to work from home."

In contrast, Motherswork has been unable to fulfil any online orders in Shanghai in the last few weeks as it cannot access its master warehouse, Wong said. Shanghai's lockdown has also disrupted the supply chain across other cities, with Motherswork's outlets in Beijing, Chengdu and Wuhan running low on stock as some of their suppliers are likewise unable to access their respective warehouses in Shanghai.

While the reopening of supermarkets and factories in Shanghai appears to pave the way for a fuller recovery of the economy, Wong is cautious about expecting a return to business normalcy in China.

"It has been very tough to operate in China since the pandemic. Home quarantines by neighbourhoods have been happening intermittently everywhere; foot traffic has been hovering at 50 per cent. People are weary and they don't come out," she said. "With China's policy of trying to achieve zero-Covid, it is impossible to even look forward to anything. Is there even going to be an endemic state? I don't know. There's no clarity, so let's not bet on it."

Others remain more optimistic. BreadTalk, which operates 26 outlets in Shanghai, said it is hoping for the situation to improve, and will continue to monitor the market from its China headquarters in the city.

Chinese restaurant chain Putien's 7 Shanghai outlets have been shut since end-March, with food delivery services also being impossible as the kitchens were closed, said founder and CEO Fong Chi Chung. Even before the lockdown, Putien's overall business in Shanghai was down 35 per cent from pre-pandemic levels. But though it was "a wishful dream" to reopen soon after Wednesday, Fong is not giving up: "It is important to have dreams, because there remains a possibility for Shanghai to fully reopen."

Citing the bounce back in other Asian economies, Space Matrix's Chaudhry remains positive about China's recovery, and believes the government will most likely announce a stimulus package.

"China is the largest economy in Asia and offers a huge total available market for us. We plan to not only continue to do business in China, but also look to grow it as it reopens," he added.

Meanwhile, Charles & Keith is already preparing for reopening with new product launches and marketing. "We remain confident and actually started the year with some exciting initiatives including an impactful collaborative capsule collection with Shanghai designer label Shu Shu Tong, which was incredibly well received," said Krish.