(Bloomberg) — Apple Inc. supplier Foxconn Technology Group has resumed partial operations in the Chinese tech hub of Shenzhen, deploying a system that will allow some production to restart while the city remains locked down to curb a virus outbreak.
Foxconn’s two Shenzhen campuses, one of which makes iPhones, will partly resume activity, according to a statement Wednesday. The Taiwanese company, also known as Hon Hai Precision Industry Co., said it won approval from authorities to restart after adopting a “closed loop” management process across the sites, a system that seeks to insulate employees from infection.
Operations were halted on Monday after an increase in Covid-19 cases saw Shenzhen put into a one-week lockdown, the first time China has deployed such restrictions in a city of its scale and importance to the economy. Restaurants and public transport have been shut down, and people told not to leave their homes and the city for non-essential reasons, as authorities race to trace infections and suppress the outbreak.
The closed-loop system “which can only be done on campuses that include both employee housing and production facilities, adheres to strict industry guidelines and close-loop management policies issued by the Shenzhen government,” Foxconn said in the statement. “The company is also closely following and applying the government’s pandemic prevention measures.”
Shenzhen said earlier in the week it would allow factory bubbles — where workers travel only from company housing to plants and are tested regularly — as a way of limiting the fallout from the lockdown for business. Foxconn is the most high-profile company to say they’re taking advantage of the policy, which is similar to measures put in place in Wuhan as that city emerged from its months-long lockdown at the start of the pandemic.
The shift shows China is trying to find a balance between its Covid Zero policy of quashing outbreaks and avoiding disruption to the world’s second-largest economy.
READ: World Economy Faces Supply Hit as China Battles Covid Again
After months virus-free, the country is seeing regular virus flareups as the more contagious omicron variant evades once-successful curbs. With infections nationwide at a two-year high, China has imposed more lockdowns over the past week than at any point in the pandemic, with Shenzhen, Langfang City near Beijing, the city of Changchun in the northeast and then its surrounding province, Jilin, all put under movement restrictions.
Banks including Nomura Holdings Inc., and Morgan Stanley say China’s resource-intensive approach to containing Covid — a strategy that has delivered one of the lowest death tolls globally — damp the country’s growth outlook.
China Locks Down More Than 45 Million People as Covid Returns
Officials vowed earlier this month to adjust Covid Zero so as to minimize disruptions. The closed-loop arrangement for factories appears similar to a bubble system China adopted during the Beijing Winter Olympics in February, where athletes and Games-related personnel were kept separate from the general public, only allowed to travel between sporting venues and their hotels via designated transportation. The system was successful in preventing any Covid spread from the Games within China.
There have been discussions about replicating the Olympic bubble for some events, Bloomberg News has reported, particularly as a way to allow foreigners to come into the country without the need for hotel quarantine, which is currently mandatory for all incoming travelers.
No Disruption
While most countries are shifting to living alongside the virus, Beijing continues to repudiate that approach, amid speculation authorities are concerned China’s less effective vaccines and under-resourced hospital system would buckle under the wave of infections and deaths that would ensue if measures like border curbs and mass testing were relaxed.
The country is anxious to avoid such disruption in an important year politically for President Xi Jinping. The Communist Party is due to hold its 20th congress in the second half of 2022, with Xi expected to secure a precedent-breaking third term as leader at the event held once every five years.
Apple’s primary iPhone assembler, Foxconn has resumed some production at both its China headquarters in Shenzhen and the Guanlan campus, according to a person familiar with the matter, who asked not to be identified disclosing non-public information. The company, which produces the majority of its iPhones at a plant in the central Chinese city of Zhengzhou, reported better-than-expected earnings on Wednesday.
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(Updates with more on the closed-loop system and China’s Covid outbreak throughout.)
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