Global supply chains reeling from economic impact of China’s zero COVID-19 policy

In a statement He Xiaopeng, the CEO of Chinese electric-car maker Xpeng said, automakers in China may have to suspend production in May if suppliers from Shanghai and surrounding areas do not resume work.

China’s zero tolerance policy towards COVID-19 have led to growing lockdowns which have resulted in the clogging of ports and the shut down of numerous factories sending a shockwave through global supply chains for  a wide range of goods starting from electric vehicles to iPhones.

While some Chinese authorities are trying to mitigate the situation, He, on his personal Wechat wrote, he hopes for more government departments to provide support.

He’s comments echoe those by Huawei’s Consumer Business Group CEO Richard Yu, who has also warned of huge economic costs if factories and plants in Shanghai do not resume production.

All technology and industry firms would have to stop production in May if their suppliers are in Shanghai, states a report from the official Securities Times.

Since March 28, Tesla has suspended production at its Shanghai plant leading to an output loss of more than 40,000 units. The manufacturing hub in Shanghai makes 10,000 Model Ys and 6,000 Model 3s per week, said a source familiar with the matter at hand.

Chinese carmaker Nio has also suspended production at its Hefei factory, even though there were no local-level curbs since suppliers from other areas had stopped work.



Categories: Creativity, Economy & Finance, Entrepreneurship, HR & Organization, Strategy

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