Businesses in China hit by the COVID wave are scrambling to maintain normal operations

BEIJING, Dec 13 (Reuters) – From e-commerce giant JD.com to cosmetics brand Sephora, companies in China are rushing to minimize the impact of rising COVID infections – handing out testing kits, encouraging more work from home and in some cases, procuring truckloads of drugs.

After unprecedented protests against the often draconian COVID restrictions, the world’s second-biggest economy abruptly dropped its zero-tolerance-COVID stance last week. The subsequent violent spread of the virus even meant that some shops had to close their doors for the time being.

Anecdotally, many workers and their families have succumbed to COVID in cities like Beijing and Wuhan, although official case numbers have fallen to less than a fifth from a Nov. 27 peak as China now conducts much less testing.

“More than half of our employees at the mall and hotel are positive,” said an executive at a company that manages one of Beijing’s largest retail complexes.

The executive, who declined to be identified, said the mall was still open and the remaining staff had been divided into two teams, with only one team working any given shift.

The split-shift system is also used by other companies, Chinese regulators and state-owned banks.

JD.com (9618.HK), which is headquartered in Beijing and employs more than 540,000 people, has sent antigen testing kits to its employees and is asking those who are ill to stay home, company sources told Reuters.

At Sephora China, which has 321 stores in 89 mainland cities, each store handles its staffing issues according to its situation, a spokesman for the LVMH brand (LVMH.PA) said, adding that all employees who test positive will be given paid leave and can work from home if possible.

“DEEPLY Frustrating”

At another Beijing mall, a gym owned by the US powerhouse chain announced on Tuesday that it was closed until December 25 to disinfect the premises and ensure the safety of employees and members.

“The spread of the virus is severe and there is a great risk of infection,” the gym said. It had reopened just five days ago after being closed for more than two weeks due to county-wide COVID curbs.

“It’s deeply frustrating. Businesses are being forced to close due to employee illness, although they can legally be open,” said Noah Fraser, executive director of the Canada-China Business Council in Beijing.

“The blame is starting to flow from the companies’ (overseas) headquarters to the team on the ground in China, with the headquarters asking, ‘Why can’t the Chinese operations circumvent these restrictions?’ All other markets have had to adapt and have done so successfully,” he said.

Some factories and restaurants are maintaining COVID-19 curbs, including so-called closed-loop systems that isolate employees from the outside world until they get a clearer picture of how jobs will be affected.

At Volkswagen (VOWG_p.DE), whose plants in China have been severely impacted by lockdowns this year, production is stable at the moment, but the automaker has reduced attendance in offices and is asking employees to keep 1.5 meters apart whenever possible to stay away, a spokesman said.

Chinese electric vehicle maker Nio (9866.HK) also said its production is normal although it is preparing for infections.

“We sent trucks with medicines and equipment to the factory to be well prepared,” Nio President Qin Lihong said at a media roundtable on Monday.

National health authorities have so far made few comments on working conditions, only urging that high-risk areas should be much more narrowly defined while production or business operations continue elsewhere.

Julian Evans-Pritchard, a senior China economist on capital economics, said he believes it will take quite a while for Chinese households to learn to live with the virus and it could take 3 to 6 months for consumer activity would return to “something resembling normal.”

“While moving away from zero-COVID will benefit most businesses in the medium term, it will not bring immediate relief and the next few months will still be very challenging.”

Reporting by Joe Cash, Ellen Zhang and Sophie Yu in Beijing; Additional reporting by Casey Hall and Zhang Yan in Shanghai, Martin Pollard in Beijing and Jan Schwartz in Berlin; writing by Brenda Goh; Editing by Edwina Gibbs

Our standards: The Thomson Reuters Trust Principles.

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