A vast majority of U.S. firms in Shanghai are cutting revenue forecasts for 2022 in the wake of “zero-Covid” policies that left much of the international business hub of 26 million people locked down in April and May, according to a new survey by the American Chamber of Commerce in Shanghai.
Some 93% of respondents have lowered their revenue projections for the year. A quarter of respondents expect revenues to be more than 20% lower than originally expected, AmCham said.
A quarter of consumer and services companies have decreased their investment plans, as have 20% of manufacturers, AmCham said. “Just one respondent plans to increase their investment in China,” it noted.
“Although our member companies are resuming operations, the impact of the Shanghai lockdown on their business has been profound,” AmCham Shanghai President Eric Zheng said in a statement.
Only 35% of manufacturers said they were operating at full capacity, while a quarter are operating at or below 75% capacity; 3% have not resumed operations, the survey found. Among consumer and service sector companies, only 27% are fully operational.
“To restore confidence, the Shanghai government must act quickly to ensure unhindered supply chains, logistics and worker mobility and to accelerate the provision of financial support to businesses. Shanghai should return to its pro-business mindset while dealing with the pandemic.”
The survey was conducted June 7-9 and answered by 133 member companies, with 69 respondents from the manufacturing and 64 from the consumer and services sectors. American firms active in Shanghai include Starbucks, Novartis, Microsoft, Tesla, GM and Citibank, to name a few.
Foreign business groups and leaders have been unusually blunt in their criticism of China’s “zero-Covid” approach, a lack of transparency and policy uncertainty. (See post here.)
Among manufacturers surveyed, 26% are accelerating the localization of their China supply chains while moving production of global products out of the country, AmCham said. Another 23% of manufacturers said that the Shanghai lockdowns had not impacted their supply chain strategy, it said.
The World Bank this month lowered its forecast for China GDP growth by 0.8 percentage points to 4.3% and warned that the country faces downside risks from new disruptions from Covid.
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