Why resuming work has been a struggle in China

February 25, 2020 11:19
A factory with 100 workers is allowed to restart work only if has an inventory of at least 3,000 face masks for the workers, according to Chinese media reports. Photo: Bloomberg

China Economic Weekly, a magazine run by the People’s Daily, has published an in-depth investigative report on six main obstacles stopping Chinese companies from restarting work after operations were suspended in the wake of the coronavirus outbreak.

First is the difficulty in getting approvals. Some companies revealed that they need to submit as many 21 documents to local authorities for resuming work, including how they plan to contain potential infections in canteens, dormitories, etc.

Another problem is the lack of transportation. Many workers are unable to return to work as several governments continue to impose strict quarantine and keep public transport networks shut.

Meanwhile, business owners are struggling to find surgical masks for their employees. A factory with 100 workers is allowed to restart work only if it has an inventory of at least 3,000 face masks.

The next concern is responsibility. Employers could face heavy fines running into hundreds of thousands of yuan if their workers are infected.

Logistics is compounding the problem, too. A truck driver often needs to go through dozens of checkpoints these days. Factories need to be able to get materials and components in. And even if they can do that, there is no guarantee that the finished products can be shipped out.

Finally, liquidity is a serious challenge. Having stopped operations for a month, many companies are close to depleting their cash, and it is hard for them to come up with money to pay their staff and suppliers if they want to resume work.

As a result, the story revealed that Dongguan, a manufacturing powerhouse in South China, only saw less than 2 percent of factories resume operation. An industrial park in eastern China’s Jiangsu province has around 4 percent of companies restarting work.

It is said that local officials, whose political careers on the line, are being overly stringent with the virus prevention measures, even at the risk of choking local economies.

Now, we have to see if Beijing can think of a way to give the local officials a push.

This article appeared in the Hong Kong Economic Journal on Feb 25

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist