An outbreak of COVID-19 has just hit the factory of Apple’s largest supplier, Foxconn, in Zhengzhou, the capital of central China’s Henan province. Foxconn has not released the exact COVID workload inside the complex, which houses about 200,000 employees. However, the situation was apparently serious enough that many migrant workers chose to walk hometravel tens or even hundreds of kilometers along country roads and fields.
According Reuters, iPhone production at the factory could drop 30% next month. This will have a huge impact on the retail sale of these items worldwide since Foxconn contributes approximately 70% of global production, with the majority coming from the Zhengzhou plant. This outbreak highlights the uncertainty faced by China-based supply chains under the country’s zero-Covid policy.
The exodus has captured national attention with viral videos appearing online. And many localities in Henan notice issued ordering those returning from Foxconn to report to local authorities for quarantine, with some sending vehicles to pick up returnees halfway. On Weibo, the hashtag “Several localities in Henan reach out to returning Foxconn workers” won 940 million views. There was also acts of kindness: supplies with free snacks and bottled water have been set up by local residents.
Despite the initial chaos, there are signs that the situation is being brought under control. Henan authorities have sent designated individuals to oversee enhanced pandemic response efforts within the plant. On October 30, Foxconn declared that the epidemic “stabilizes” and that the canteens have reopened. It is also coordinating with the government for an “orderly return” of employees who wish to return home. Reports revealed that Foxconn distributes daily cash grants to those who choose to stay at the facility.
Fashion or tech houses that rely on continental manufacturing should prepare for the potential impact of a Foxconn-like scenario on their supply chains. Major production facilities have adopted “closed-loop systems” under Beijing’s “Dynamic Zero” policies, meaning workers live and work on site to minimize interaction with the rest of society. However, factories are ill-equipped to provide food, basic necessities and medical aid to workers affected during internal outbreaks. Labor retention will also become an issue if the outbreak is not well managed, as this case has shown. Brands should have a plan B in place in case of disruptions.