Cabin Fever

The Chinese government last week released ten new measures that herald a significant easing of the country’s strict ‘Zero Covid’ policies. For many Chinese citizens, it could mean a new lease on life. But what does it mean for businesses?

In the coming weeks and months, any companies with offices, retail stores or manufacturing operations in China need to be alert to a range of risks:

  • Rising community cases: Community cases are expected to soar and could  significantly strain the medical system this winter. The government has announced it will accelerate vaccination of the elderly and build up ICU bed capacity across the country, two key areas in which China is seemingly underprepared. With test kits and medicine in short supply, multinationals should consider buying supplies overseas and shipping them for China-based employees to use ASAP.
  • A fearful public: Rising community cases are already infecting the workforce and forcing people to stay at home. Many Chinese remain highly fearful of Covid-19 and will be extremely cautious about catching it, which may further reduce workforce availability. This could impact everything from supply chains to retail operations.
  • Knee-jerk reactions: Regional and municipal governments still hold the power to order mass testing and lockdowns—and may do so again if the number of cases become uncontrollable. As we have seen this year, some of the most stringent lockdowns have occurred in major manufacturing hubs. We are currently in a key political moment between the 20th Party Congress and the Two Sessions in March 2023 – a period when officials at all levels are in line for promotions (or demotions)–and they will be wary of doing anything that jeopardizes their positions.

Given the looming uncertainties, companies must prepare for more frequent communications with relevant stakeholders about the changes on the ground. Global teams with experience in managing reopening after Covid-19 epidemics at a large scale could share this with their counterparts in China.