Workers in Shanghai struggle to get back to work

BEIJING — Foreign businesses are struggling to bring workers back to factories after weeks of lockdowns in Shanghai, as the country battles its worst Covid outbreak since the pandemic began.

Nearly a month since Covid restrictions began in earnest in Shanghai, U.S. and U.K. businesses say that less than half of their employees are able to return to work.

Since March, mainland China has imposed travel restrictions and stay-home orders in economic hubs from the southern city of Shenzhen to the northern province of Jilin. The extent of Covid controls has varied by region.

Lockdowns in the southeastern metropolis of Shanghai, which began at scale in late March, have been among the most disruptive — to daily life, and to foreign businesses and their supply chains. The city accounts for about 3.8% of China’s GDP but is home to the world’s busiest port.

Last Friday, China’s Ministry of Industry and Information Technology announced it sent a team to Shanghai. The ministry called for prioritizing resumption of work at 666 major businesses in industries such as chips, biopharma and auto and equipment manufacturing.

A “significant” number of members of the European Union Chamber of Commerce in China are on the whitelist, particularly in sectors of manufacturing, chemicals and autos, said Bettina Schoen-Behanzin, the chamber’s vice president and Shanghai chair.

But “many companies still face the challenges of labor shortages and logistical difficulties,” she told CNBC in a statement, estimating that less than 30% of members’ workforce are eligible to return to work due to lockdowns.

Being on the list means a factory could resume operations if workers live at the production site and contact is limited to people with valid negative virus tests — what’s known locally as “closed-loop management.”

“Some estimate that with the re-opening whitelist, the requirements to achieve closed-loop status may not be attainable, or maybe can only recall 30-40% of staff back to manufacturing facilities,” Matthew Margulies, senior vice president of China operations for the US-China Business Council, said in an email.

The difficulty of getting workers into factories means companies cannot easily bring in new staff for other shifts, foreign business organizations said.

Before the list was released, some companies in Shanghai and other regions subject to Covid lockdowns were able to maintain minimal operations under the closed-loop protocols.

When companies try to bring in new workers, it will usually “fail…