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| A Paris Baguette bakery store in Shanghai / Courtesy of SPC Group |
By Kim Jae-heun
Korean firms operating in Shanghai are concerned, as the city has extended its COVID-19 lockdown to the entire city of 25 million. The Chinese government had been anticipated to lift the lockdown last Tuesday, but it ended up extending it indefinitely, as the spread of the virus has not yet slowed down.
Shanghai has been restricting all residents from leaving their housing compounds since March 28. All public transportation has also stopped operating.
In addition, 230 clothing stores owned by Korean fashion company E-Land are closed, while 130 Paris Baguette bakery stores and 50 BBQ chicken restaurants in the city have also been temporarily shut. Paris Baguette is Korea's largest bakery chain, owned by SPC Group.
"Due to the lockdown, our staff cannot work at the shops and there are no customers on the streets either. We don't know when this regulation will be lifted and there is nothing we can do. We just hope that the COVID-19 situation in Shanghai gets better soon," an SPC official said.
E-Land, Paris Baguette and BBQ have already lost 30 percent of their monthly sales due to the 10 days that their businesses have been closed.
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| E-Land's clothing shop in Shanghai / Courtesy of E-Land |
Nongshim, another Korean food company, has also shuttered its production facility in Shanghai temporarily, since March 28. Orion and AmorePacific also stopped operating their factories in the city on April 1. Pulmuone's retail network in Shanghai has been blocked as well.
Nongshim said that it can hold on for now, as the company runs other manufacturing factories in different cities in China. Nongshim has been sending instant ramen products produced in its Shenyang factory to Shanghai so as to cope with the lack of supply there. Orion has been doing the same with its production lines in Beijing, Guangzhou and Shenyang.
However, Nongshim and Orion said there is a limit to these temporary solutions if indeed the lockdown continues for a longer period.
"Due to the current lockdown in Shanghai, there are concerns about business disruptions, delays in logistics, as well as customs clearances and decreases in consumption," eBest Investment & Securities analyst Oh Lina said.
"The port in Ningbozhou, Zhejiang Province, was temporarily closed last August, followed by the port in Shenzhen last month. These port closures made it difficult for Korean firms to transport their products to China. They are expecting the Chinese government to provide support, such as tax incentives, but above all, they are waiting for the lifting of lockdown in Shanghai," a retail industry official said.
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