German Chamber Flash-Survey: Companies’ Production Resumption Hampered & COVID-Strategy Prompts Foreign Employees to Leave China

Beijing/Guangzhou/Shanghai, May 12, 2022 - Several months into the recent round of anti-pandemic measures, only a small number of German companies can operate and resume production in China. Foreign employees are increasingly planning to leave the country due to China’s strict COVID-strategy, a flash survey conducted by the German Chamber of Commerce in China finds. 

In areas affected by lockdowns, companies can only restart their operations under constraints. Currently, 19% of the surveyed German companies have permits to produce under adverse conditions in such areas. Of those allowed to run operations under lockdown, many only operate at less than half of their full production capacity. Logistics problems, low availability of staff and uncertainty caused by sudden changes in policies are the main reasons for hampering the increase of production capacity.

The strict anti-pandemic measures lead to expatriates leaving the country sooner than expected. Nearly one third (28%) of foreign employees of the surveyed companies plan to leave China due to COVID-19 related measures, 10% plans to do so even before their current employment contract ends. "It will be extremely challenging for German companies to substitute these employees with new staff from abroad, considering how the current COVID outbreak in China is handled", says Maximilian Butek, Executive Director and Board Member of the German Chamber of Commerce in Shanghai on behalf of all regional chapters. "The current circumstances under which German companies have to operate in China can only be short-term solutions in emergency situations. Closed loop productions are inacceptable as a long-term solution for German companies to operate in China."

Key Findings of the Flash Survey:

Companies’ Operations Status:

• 73% of the respondents’ business operations are in areas under full or partial lockdown, especially in Shanghai (98%), Jiangsu (69%) and Beijing (59%).
• 19% of the surveyed German companies have permits to produce under adverse conditions. 25% would like to resume productions, but cannot do so for various reasons, such as a lengthy and complicated application process, requirements which cannot be met, or risks which are perceived as too high.
• German companies allowed to resume production under lockdown are, on average, operating at 46% of their total production capacity. The majority produces at capacity rates between 30% to 50%.
• Respondents state that their company’s production capacity is hampered by the following factors: lack of logistics availability (69%), missing raw materials and pre-products (69%), missing transport permits (56%), additional workers cannot leave their compound (56%) or their districts (43%), and uncertainty due to rapidly changing policies (41%). 

Foreign Employees Leaving China:

• 28% of the surveyed companies’ foreign employees have plans to leave China due to COVID-19 policies.
• 10% of the surveyed companies’ foreign employees plan to leave China before expiration of their contract.
• 18% of the surveyed companies’ foreign employees plans to leave China with expiration of their contract.

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About the Survey

Between May 6 and 8, 2022, a total of 460 member companies of the German Chamber of Commerce in China participated in the flash survey on production resumption and foreign employees leaving China.  

About the German Chamber of Commerce in China

The German Chamber of Commerce in China has currently more than 2,100 members in China and is the official member organization for German companies in China. By providing up to date market information and practical advice, the German Chamber helps its members to succeed in China. It offers a platform for the Sino-German business community and represents its members' interests towards stakeholders including government bodies and the public.

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