Looming lockdowns in Guangzhou, China could trigger supply woes

Supply chain issues, lockdowns feared amid surging cases in China

It looks like things are going back to normal since the pandemic first started. Yes, the virus is still here but unlike before, it’s now under control as there are fewer surges happening. Even the perceived threat of the monkeypox virus appears to have been dealt with globally.

In China, however, there has been a recent increase in active cases, particularly in Guangzhou. This doesn’t bode well for automakers and other manufacturers as this is a huge warning sign. That’s because Guangzhou is a major production hub and has been dubbed the “factory floor of the world”.

The global manufacturing hub is becoming the country’s latest epicenter of the virus and is currently testing the city’s ability to avoid a Shanghai-like lockdown that happened earlier this year. According to a report by Reuters, new locally-transmitted infections climbed to 7,475 cases last November 7. This is up from the 5,496 cases which were tallied the day before, with Guangzhou accounting for nearly a third of the new cases.

The uptick may be seen as small by global standards. However, this is significant for China due to the country’s “zero case policy”. And with cases continuing to surge, many of Guangzhou’s districts have started imposing varying curbs and lockdowns to control the spread. For now, Guangzhou has been able to avoid adopting strict lockdown measures like the ones that were imposed in Shanghai last May.

In review, the lockdown in Shanghai caused a parts shortage that affected the production of several Japanese automakers. These included Honda, Mazda, and Toyota.

With the People’s Republic adamant about its zero case policy, it will test both the country’s ability to control a possible resurgence, as well as challenge the expectation of investors that wish for the country’s borders to ease amidst the pandemic.

The next time you’re wondering why your package or vehicle has yet to arrive in the country, the resurgence of cases, fear of possible lockdowns, and China’s zero-case policy is making it hard for manufacturers to meet production demand.