A media report from Beijing says Japan has begun to encourage its companies in China to move production and distribution back home.This is a fall-out of China’s Zero-COVID policy that has been playing havoc with the global supply chains

Japan’s multinationals are impelled to undertake a broader reassessment of supply chains. They seek to move back home with tax incentives, subsidies and other benefits, Beijing Bulletin (BB) reported quoting a Nikkei Asia report.

The pandemic has changed the outlook of many countries towards their current set-up of supply chains and they are considering options to move out of China and diversify themselves.

Due to rising COVID-19 infections in China and the enforcement of the Zero-Covid policy by President Xi Jinping, global supply chains have taken a hit as Shanghai is the main export centre of China, the report said.

In 2021, the Shanghai port handled 20 per cent of China’s freight traffic but the lockdown ordered in the wake of the pandemic resulted in many companies pulling down their shutters. Changchun city which is the home to auto brands like Toyota and Volkswagen also took a hit.

The BB report quotes the plight of Chen Xin, a garment painting factory owner in Guandong province to highlight the disruptions to the China based global supply chains. Chen is unable to deliver most of his orders due to the logistics crisis. He attributes his troubles to Chinese government policies, though.

The short point is that if the lock down continues it will have a bigger impacts on the global supply chain since China’s zero covid policy has given rise to global consequences since “most of the manufacturing hubs for international brands are located in China”.