Covid-19 lockdowns across China are shaking western multinationals’ production lines, snarling supply chains and threatening financial forecasts as Beijing steps up its effort to contain a surge in coronavirus cases.
Apple, Coca-Cola, General Electric and Pernod Ricard were among the companies to warn this week of the threat from the spreading lockdowns in the world’s second-largest economy, with many more blaming the strict measures for higher costs, shortfalls in their latest results and more cautious outlooks.
An extension of the policies designed to curb the spread of coronavirus has gathered pace in recent weeks, leaving about 345mn people living under full or partial lockdowns across 46 cities, according to estimates from Japanese bank Nomura.
The lockdown of Shanghai, China’s business hub and home to the world’s largest port, has deepened the disruption, ensnaring industries from carmakers to consumer goods and tech groups.
Although the Covid outbreak began in early March and has started to ease in those areas hit first, results in recent days from US and European multinationals are among the first evidence of the global fallout.
“There’s a huge backlog [ships waiting to unload cargo], the supply chain is very much snarled and congested,” said Shiv Shivaraman, Asia region co-leader at international consultancy AlixPartners. “It’s going to get worse, not better”.
Conglomerate GE was among those to flag the dangers, saying that both its output and demand for its aviation and healthcare products in China had been hit.
‘How [the consequences of the lockdowns] play out is not something that we have a handle on. I don’t think anybody really does,” chief executive Larry Culp told analysts.
Companies from online retailer Amazon to agricultural trader Archer Daniels Midland noted that obtaining goods from China by ship or air freight now costs more and takes longer because of restrictions at some leading ports and disruptions to internal train and trucking logistics.