China Lockdowns Affect Business Fiscal Outlook

L Heslop

Companies warn that lockdowns in China are affecting operations. In March, China's mainland battled an outbreak of the omicron variant. The country is using quick lockdowns and travel restrictions to slow the spread. (source)

This approach helped keep numbers low in 2020 meanwhile, other countries struggled to combat the spread. The latest city closure is in Shanghai. The closure has gone on for more than a month. Now, Shanghai is making slight progress to production resumption. But Beijing has closed some service businesses temporarily to control spikes. (source)

This supply chain problem is one of many challenges affecting American businesses such as Apple. China is a critical market and manufacturing base for American companies, thus the lockdowns are having a significant impact. Corporations face high inflation. They are also experiencing the effects of the Russia-Ukraine war. (source)

How are businesses affected by China's lockdown?

Starbucks saw same-store sales in China fall by 23% in the quarter which ended April 3. Due to China's lockdowns, the coffee chain suspended its fiscal 2022 outlook. Other reasons cited were inflation and investments in its stores and employees. (source)

Apple does almost all its final assembly in Shanghai plants. The company has restarted production in China but says the lockdown could impact sales in the current quarter by $4 to $8 billion. (source)

Other companies like DuPont and Estee Lauder have cut their full-year fiscal outlook. (source)

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Disclaimer: This article is only for educational and informational purposes.

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