On Monday, Foxconn halted its production in the Shenzhen region of China. The pause came because of a new COVID-19 lockdown imposed by the Chinese government. Now, under new guidelines, the iPhone assembler can partially resume its operations in the city. The company will be operating under a “closed-loop” system after getting approval from authorities.
The Month-Long Shenzhen Lockdown Due to Growing Infections
The Chinese government imposed the lockdown amidst a growing number of COVID-19 infections in the area. This is the first city-wide lockdown in China since the pandemic started two years ago. During this lockdown, restaurants and public transportation must remain closed. Officials instructed Chinese citizens to stay home and leave only for essential purposes. The lockdown will remain as the government trace infections and prevent the wide-scale spread of the virus.
How Foxconn Gets to Resume Operations in Shenzhen
Foxconn got the approval to resume operations of its two Shenzhen campuses, including the one that manufactures iPhones. As a condition to resume operations, the company will adopt a “closed-loop” system. Under this arrangement, employees stay insulated from infection. Only companies providing housing and production facilities in a campus setup can adopt the “closed-loop system”. In addition, the company must strictly follow industry guidelines and policies issued by the Shenzhen government.
The Shenzhen government earlier announced that it would allow factories to resume operation under a “bubble” setup wherein workers travel directly from company housing to plants through company service vehicles. Employers must regularly test employees under a “bubble” setup for COVID-19 infection.
Foxconn Expects More Uncertainties
Foxconn, one of the largest contract manufacturers globally, has tens of thousands of employees housed in the nearby Longhua and Guanlan districts of Shenzhen. The company forecast significant growth in its components business starting in 2021. But with the continuing pandemic and the glooming global political landscape, Foxconn is expecting more uncertainty this year. Foxconn Chairman Young Liu said that although they have not seen any cancellations in orders yet, the company will continue to be more conservative and monitor the market dynamics.
We expect a lot of uncertainties to remain for 2022, as the pandemic is still not ending, while there is increasing inflation as well as more international geopolitical tensions.
To date, Foxconn is the most high-profile company to take advantage of the government’s “closed-loop” policy. The same policy was effective in Wuhan, ending a month-long lockdown during the earlier days of the pandemic.