The longer the extended lockdown in Shanghai goes on, the more likely a series of aftershocks will prevail across a number of fronts, including global mobility. This is a fluid, unfolding situation with some unique complexities involved, and is likely to continue to evolve in the days and weeks ahead.
The lockdown has been in place across all 16 districts of this city of 25 million residents since April 5. Prior to this, authorities quarantined only certain compounds. Then, as the virus spread, they implemented a phased lockdown, splitting the city into two with separate measures. Virtually every resident, except for emergency and health workers, has been confined to their homes or place of work since April 5. Many have been in lockdown for far longer, depending on where they live and when they were first subjected to lockdown. Transportation is banned (except for emergency and health related services and permitted delivery services). Every shop, school, outdoor venue is closed. The streets of this major commercial metropolis are deserted.
The on-the-ground situation is pretty dire in several districts, with real privation for local citizens especially, where many cannot even step outside the doors to their apartments if the COVID case count in their compound or apartment block is significant. Access to food and basic household items is uncertain. Expats are somewhat better off, simply by virtue of the more upscale compounds or apartment blocks they tend to live in, but their patience with the strictures of the full-scale lockdown, now well into its second week with no end in sight, is clearly wearing thin.
There are numerous reports of assignees in Shanghai, alarmed by the situation, enquiring about their options to leave Shanghai or China altogether. A particular trigger for US assignees in Shanghai was the US state department order on April 12 for non-essential workers to leave its consulate in Shanghai. The consulate further advised US citizens against travel to China due to “arbitrary enforcement of local laws and COVID-19 restrictions”, drawing a furious response from Chinese authorities.
As of now, no companies we are aware of are encouraging anyone to leave Shanghai, not least their assignees. A very pragmatic reason for not encouraging people to leave would be the simple fact that the logistics of being able to leave are exceedingly difficult to impossible right now, in the midst of lockdown. Theoretically, you can book a flight (if you can get a seat); but getting from your Shanghai compound to the airport will be a major challenge, with general transportation effectively banned.
An equally pragmatic driver for company caution against any blanket encouragement to their assignees to leave is that it’s already hard enough to get new or returning assignees into China with the severely restrictive COVID-impacted China immigration processes in place. Assignees who leave now would more likely be effectively repatriating, rather than temporarily returning home, since who knows whether or when it will be possible for them to return?
And then there is also the question of company equity and inclusion; to their fellow employees, the optics of assignees leaving Shanghai could easily translate into a perception of “cutting and running” at a time when they have no such option available to them. At this point, companies are focused on trying to help alleviate one of the primary hardships of lockdown, namely access to food, other groceries, and daily necessities for their staff. Working with internal resources and local authorities wherever possible, local HR/company admin are doing the necessary online ordering directly so as to leverage their scale/buying power to place bulk orders which are likely to be expedited more quickly than smaller or individual orders. And companies are deploying this “hardship alleviation” measure for all staff in Shanghai, not just assignees. Regardless however, neither they nor anyone else can guarantee the actual timings of delivery since not all residential compounds are permitted to accept delivery, depending on their COVID numbers.
Currently, Weichert in Shanghai is supporting clients and assignees by fielding any concerns, queries or requirements from assignees under our charge and sharing these with our clients. We then collaborate closely with client companies on the follow-up. As stated earlier, this is a fluid, unfolding situation likely to continue to evolve in the days and weeks ahead.
A key driver for any assignee with a family in Shanghai expressing a desire to leave the city right now, or as soon as possible, is the potential for separation of parents from children in the event someone in the family gets COVID. This would mean that, by law, the COVID patient will be taken into isolation in a government designated COVID treatment center: an especially fearful prospect for any parent, regardless of whether they are an assignee or not. Authorities did recently relax measures to allow for instances where both young child and parent test positive for COVID, they can receive an exemption to be treated/isolated together.
Then there is the potential near and long-term business ramifications of the lockdown, not least as it relates disrupted operations at the world’s busiest container port, causing delays to key exports of a vast variety of goods, and factories across multiple key industries shuttered and not producing anything at all. With almost everything in Shanghai at a standstill these past 10 days and rising, and the seeming determination of the Chinese government to hold to the “Dynamic Zero COVID” policy, no one can say how quickly the current COVID wave will end or how soon another one might rear its head.
A survey released April 11 by the Swiss Chamber of Commerce in Shanghai found the majority of participating Shanghai-based companies stating that they believe that they can return to normalcy by June (61%), while 20% believe this will be the case in the third quarter of this year. Seventeen percent think normal business will only be possible again in 2023. This means that there is a distinct possibility that companies operating in Shanghai might well need to conduct a full recalibration of business plans for Shanghai (not to mention Suzhou and Hangzhou, whose proximity to Shanghai makes their businesses almost as hard hit as Shanghai itself, such is their dependency on their connection with Shanghai). Changes to assignee policy in China therefore could well flow from overall workforce planning changes – in this instance, driven by the consequences of the lockdown in particular and the government’s COVID policy framework in general.
Uncertainties abound in the current COVID situation in Shanghai. One thing that is certain is that however this plays out, we will see significant consequences in economic, social and global mobility terms in the near term.