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Licensing Logistics: Shenzhen on COVID Alert Following Outbreak

By Gary Symons

TLL Editor in Chief

The COVID-19 pandemic continues to threaten the licensing and consumer product industries, due to recent flareups in China.

Recent reports from the Chinese government indicate the outbreak is shifting to its south coast, including the massive manufacturing hub of Shenzhen, located next door to Hong Kong and Macau.

Shenzhen is a critical manufacturing zone for tech companies, but also produces a vast array of consumer products, from electronics to toys. The area is second only to the toy producing city of Shantou for that industry, but is much larger for home electronics and high tech items like smart phones and computers. Shenzhen is home to both the iPhone maker Hon Hai Precision Industry Co. and Huawei Technologies Co., among many others.

China reports there has been a flareup in Shenzhen that has triggered mass testing and a lockdown of some neighbourhoods across the city.

The nearby gambling city of Macau is also working to halt its first outbreak in eight months.

The news is a disappointment to global logistics managers worldwide. The new cases in Shenzhen come as China’s capital Beijing and its financial and manufacturing hub in Shanghai have finally eradicated their COVID-19 outbreaks after months of lockdowns and restrictions that affected trade around the world.

The outbreaks in China are actually small and limited compared to those reported even now in other countries. However, China’s government has adopted a “Zero COVID” strategy, and has imposed wide and sweeping lockdowns when outbreaks occur.

While the numbers in Shenzhen are only in the dozens right now, there have been isolation orders in the Futian and Luohu districts, which border Hong Kong. It’s believed those infections may have come from Hong Kong, which has been posting figures showing more than a thousand infections daily.

The issue for importers and licensing companies is that China’s strict COVID policies have repeatedly resulted in major disruptions to trade. Shipping times have been delayed, container prices have soared, and some products shipped to the West have been in short supply for several months.

The news from China indicates the era of COVID-19 uncertainty is far from over, according to Richard Gottlieb, CEO of Global Toy Experts.

“The Chinese government met previous outbreaks in Shanghai and Beijing with stringent quarantines, causing factories to close, trucks to stop rolling, and ports to shut down,” said Gottlieb. “Most global toy production takes place in the Shenzhen area, so that shutdowns would have a strongly negative impact during the height of the toy shipping season.

“Most nations have decided to treat COVID like the flu, something its citizens will just have to live with,” Gottlieb added. “China, however, has been determined to take a zero-tolerance policy toward the disease. These continue to be challenging times. The toy community will be talking about this time in history for years to come.”

Fortunately for the toy industry, however, the lockdowns have not recently affected other Chinese production hubs like Shantou or Yiwu, two cities that are the backbone of the toy industry in that country.

US Toy Industry Enjoys Boom Times in 2020

 

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