China Forces Major Company Factories into Coronavirus Lockdowns in Industrial Hub Shenzhen

The government of Shenzhen, China, on Monday ordered the manufacturing hub’s top 100 companies to enforce a “closed loop” system in which staff must work, sleep, and live at factories for at least one week to contain a local epidemic of the Chinese coronavirus, Bloomberg News reported.

“China has forced some of its biggest companies, including iPhone maker Foxconn and oil producer CNOOC Ltd., to operate within a ‘closed loop’ restricted system for seven days,” Bloomberg reported on July 25 citing a municipal government edict issued by Shenzhen earlier that day.

“The city government has asked its 100 biggest companies, including automaker BYD Co., networking giants Huawei Technologies Co. and ZTE Corp. and drone-maker DJI to restrict operations only to employees living within a closed loop or bubble, with little to no contact with people beyond their plants or offices,” the U.S.-based media outlet relayed.

“Authorities also asked companies to reduce unnecessary interaction between non-manufacturing staff and factory floors to reduce infection,” Bloomberg News noted.

Reuters reported on Shenzen’s factory lockdowns Monday. The news agency cited the same edict, reportedly issued by Shenzhen’s department for industry and information.

“[M]ajor companies, including BYD Co, Huawei Technologies Co, and ZTE Corp, should minimise entry and exit into the so-called loops,” the instruction read.

Shenzhen has a population of roughly 18 million. The city is located directly north of Hong Kong and is considered a “special economic zone” of China. This status allows Shenzhen to remain open to “foreign investment, technology, and managerial expertise through the establishment of foreign-owned, joint-venture, and other business enterprises,” according to Encyclopedia Britannica. Shenzhen’s global interconnectivity extends to its container port, which is the fourth-busiest worldwide.

Shenzhen’s manufacturing output will likely decrease in the coming weeks as a result of the city’s new “closed-loop” factory system. The lockdowns threaten to negatively affect not only China’s economy but also that of greater Asia and the world.

The government of Shanghai issued a similar edict locally in April that not only forced employees to work and live on-site at select factories but also shut down many others incapable of accommodating such protocol. Shanghai manufacturing plants that enforced a “closed loop” system did so at the expense of operating at full production capacity. The ripple effects of Shanghai’s factory lockdowns earlier this year continue to be felt across the global supply chain.

“Shenzhen has not ordered blanket closure of businesses or tough curbs on people’s movements but has sealed residential compounds and buildings identified as being at higher risk,” Reuters reported of the city’s evolving anti-epidemic situation on July 25.

“Many offices, restaurants and public spaces required proof of a COVID [Chinese coronavirus] test from within 24-hours as of Monday,” according to the news agency.