Companies have struggled to keep production going in China due to Covid restrictions and weeks of lockdowns…reports Asian Lite News
Apple and Tesla stocks have tumbled over growing concerns about delays in their production lines in China, BBC reported.
Apple shares hit their lowest point since June 2021. Tesla’s stock has dropped 73 per cent from a record high in November 2021.
Companies have struggled to keep production going in China due to Covid restrictions and weeks of lockdowns, BBC reported.
Now they are facing a staffing crunch as China battles a Covid wave after lifting years of restrictions.
Global investors are being cautious ahead of additional interest rate hikes, a global economic slowdown and the ongoing war in Ukraine.
Apple supplier Foxconn says its revenue in November was down 11 per cent compared with the same month in 2021, following unrest at its Zhangzhou plant known as “iPhone City.”
This week, media reports said Tesla’s Shanghai manufacturing plant had cut production as Covid infections rose in China. The company declined to comment.
But analysts say the company’s sluggish sales are evident in the fact that it has offered discounts to both Chinese and North American customers, BBC reported.
Investors have also raised concerns about Tesla’s chief executive Elon Musk, who has repeatedly made controversial headlines. He took over Twitter in October after a drawn-out legal battle and since then Musk has focused a significant amount of his time on running the social media platform. Some have cited his alleged distraction during this time as another reason for the fall in Tesla’s share price.
China is now at a critical point if it wants to defend its position as the world’s major supplier of various materials, according to The South China Morning Post.
“China is racing against time to stabilise its workforce and domestic production, as widespread Covid-19 infections test the country’s capability to fulfil overseas orders and threaten its status as the world’s pre-eminent manufacturing hub,” the report mentioned.
The country is now planning to reopen borders on January 8 and abandon quarantine after it downgrades its treatment of Covid-19.
Strict control measures including compulsory quarantine for travellers coming to China will also be removed after the downgrade.
According to the report, the country’s chaotic reopening comes amid falling overseas orders and forecasts of global recession next year.
“Major Western economies are also encouraging reshoring or near-shoring to ensure supply chain security,” it added.
Local authorities have stopped publishing official estimates of Covid-19 infections or the impact on supply chains.
Some coastal authorities in provinces like Guangdong are “scrambling to keep as many workers as possible to fulfil overseas orders”.
Many industries have reported lower output, partly because of the infections but also because of the slower winter season.
Automaker BYD said last week that its December output will decrease by about 8 per cent.