Why China’s Latest COVID-19 Lockdowns Could Delay Amazon Orders in the U.S.
Orders placed with global e-commerce platforms like Amazon and Walmart may be delayed by virus lockdowns and restrictions in some of China’s key manufacturing hubs, according to an industry body.
To contain the spread of the Covid-19 epidemic, Shenzhen was shut down for at most a week. The 17.5 million inhabitants were instructed to stay at home and all other businesses closed.
Nearby Dongguan is a major Chinese manufacturing hub. There are many factories that are closed in the areas affected by virus. Schools and restaurants have also been shut down.
According to Wang Xin (head of Shenzhen Cross-Border E-Commerce Association), the moves have caused significant disruptions in the supply and delivery of products sold on online marketplaces such as Amazon.com Inc. and Walmart Inc.
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“Shenzhen now has pressed the pause key, with operations halted for almost all sectors, and we are no exception,” said Wang, whose organization represents some 3,000 exporters in the city, China’s main tech hub. The association’s members include purveyors of some of the biggest-selling online products in the West, including smartphone accessory maker Shenzhen Tomtop Technology Co Ltd., and Sailvan Times Co Ltd., maker of lounge-wear apparel brand Ekouaer.
Most production has been suspended in Shenzhen due to the lockdown and deliveries are snarled because logistics firms and warehouses aren’t operating or are doing so at a reduced capacity, Wang said in an interview Monday.
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Chinese sellers have become widespread on the global marketplaces, often selling cheaper versions of daily goods like shoes and chargers for phones. The country’s cross-border e-commerce industry grew by 25% to 1.4 trillion yuan ($220 billion) in 2021, building on a 40% surge in 2020 due to the pandemic. Thanks to China’s integrated supply chains, some companies have become top sellers globally, with fast-fashion juggernaut Shein and Anker Innovations Technology Co., which retails $1.5 billion of smartphone accessories and other consumer electronics every year, now household names.
Amazon said it was diverting freight to warehouses in parts of southern China that aren’t subject to lockdowns or pandemic restrictions.
“We do not anticipate a significant disruption to our business,” Maria Boschetti, an Amazon spokeswoman, said by email.
Representatives from Walmart didn’t immediately respond to emails seeking comment about potential delivery delays. Chinese logistics firm 4PX said on its website Monday that it’s stopped picking up parcels from Shenzhen due to the Covid restrictions.
Wang said the association is “actively negotiating” with the Shenzhen authorities to try and at least get some parcel deliveries resumed soon. This disruption occurs at an especially difficult time. Last year, Amazon cracked down on several top Chinese sellers due to fake reviews.
While authorities have said some factories in Shenzhen and Dongguan will be still be allowed to operate if they test workers daily and operate bubbles, Wang said her member companies have been required to halt all production, with one even fined earlier this week because they hadn’t complied.
“Even if you’re not in the areas with serious cases, you’re not allowed to do anything,” she said.