European companies face a ‘logistical nightmare’ in Shanghai, according to a business group

Western companies in Shanghai are facing a “logistical nightmare,” according to a European business group, as they begin to reopen following a city-wide lockdown.

According to the European Union Chamber of Commerce, the problems are expected to last for several more weeks. Chinese officials announced on Friday that they will assist more than 600 businesses in the major financial centre in resuming operations.

It comes after business groups in the United Kingdom and the United States said their members had been affected by Covid measures in China.

Although some businesses have resumed operations in Shanghai by keeping their employees on-site, “many businesses continue to face labour shortages and logistical challenges,” according to Bettina Schoen-Behanzin, vice president of the European Union Chamber of Commerce in China and head of the Shanghai chapter.

“We estimate that due to the ongoing lockdowns, less than 30% of their workforce is eligible to go to work, so there’s a huge gap between policy and reality,” she added in a statement on Thursday.

Other business organisations representing companies in the United Kingdom and the United States have expressed concern about the impact of lockdowns in Shanghai and other Chinese cities.

The American Chamber of Commerce in Shanghai also stated on Thursday that officials were still coordinating the movement of workers and goods across Chinese provinces.

Meanwhile, according to a survey released on Wednesday by the British Chamber of Commerce in China, UK companies in China expect profits to fall this year as a result of local Covid restrictions.

More than two-thirds of the more than 200 businesses polled predicted lower revenue this year. Almost half of them said that the restrictions had hampered their ability to recruit and retain foreign workers.

Covid infections spiked earlier this year in Shanghai, a financial, manufacturing, and shipping hub. Authorities shut it down in late March for mass testing.

Tesla’s ‘giga factory’ in the city has recently resumed production after restrictions were eased.

Elon Musk, the company’s CEO, admitted on Wednesday that “we did lose a lot of important days of production.”

The Shanghai factories of German automaker Volkswagen (VW) and Apple iPhone maker Pegatron, on the other hand, remain closed.

VW said it was assessing the “feasibility” of resuming Shanghai operations.

Meanwhile, on Wednesday, Pegatron told the BBC that it was “waiting for further instruction from local government.”

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