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As China's COVID Lockdown Extends, Issues for Multinationals, in and out of China, Expand

As China’s new COVID lockdown extends into its second month, multinational corporations in China face increasing challenges on operations and staffingAdditionally, the ongoing lockdowns across the world’s second largest economy threaten to further strain an already delicate global supply chain.   

The COVID-19 situation in China continues to be the primary concern of the nation’s government with partial or comprehensive lockdowns continuing in the important hub cities of Shanghai and Beijing. The extended lockdown, which reports from global news sources have characterized as extremely strict, has created a very pressing set of issues for multinational corporations in China and beyond due to the repercussions on the global supply chain.   

  1. Business continuity issues are front and center – in China and down the supply chain:  Chief Human Resources Officers and employee relations professional responsible for China may be adept at transitioning to remote work within China after over two years of the COVID-19 pandemics. For companies where remote work is not possible, challenges are abundant despite the Chinese government’s urging companies to resume productionCompanies seeking to have in-person work may find themselves with a very hesitant workforce in fear of exposure and subsequently facing being placed in a quarantine facility even a “closed-loop” model is applied. 

    For companies within China and for those without, the supply chain issues stemming from the lockdown present potentially larger problems. First, with the lockdown, particularly in Shanghai, the global shipping capacity has slowed dramatically. Second, even if you are not manufacturing within China, chances are you have a supplier within the country which is dealing with the lockdown thus impacting your manufacturing capacities.   

  1. Employee relations and wellbeing issues are a growing concern: During lockdown, global companies have provided food and other supplies to their employees who are trapped in their apartments. However, special attention is also needed with employees in China due to the tremendous stress of lock down and intensive testing, the uncertainty of future, and the distress of social isolation. Therefore, employers should actively provide mental health support and effectively engage with their employees. 

  1. Expat management becomes a complicated issue with entry conditions onerous: Expatriates are required to remain for extensive time, increasing from 14 days, in quarantine centers when they travel from other countries, despite negative tasting. For those who will be working in China, employers should also help them understand China’s COVID protocols once the location goes under lockdown.  

Meanwhile, China’s Premier Li Keqiang stressed over the country’s employment situation, calling it “complicated and grave” according to a report in Bloomberg.  Mr. Li issued instructions to local government and regions to help businesses maintain employment. Specifics as to what that might entail insofar as relief or support for businesses have not been detailed.   

Henry D. Eickelberg

Chief Operating Officer, HR Policy Association

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Contact Henry D. Eickelberg LinkedIn

Wenchao Dong

Director, Global Affairs, HR Policy Association

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