Shanghai's lockdown hits Korean retailers, factories

An Eland store in Shanghai [ELAND]

Korean retailers who expanded in Shanghai are regretting it after a Covid-19 lockdown forced them to shutter hundreds of shops.

Shanghai began a city-wide lockdown on March 28 after a big wave of Covid-19 cases. The city of 25 million reported 3,450 new asymptomatic cases on March 27, 67 percent of China’s total asymptomatic cases on that day. It reported 50 symptomatic cases out of a nationwide total of 1,219. China reports asymptomatic and symptomatic cases separately.

The lockdown was supposed to end April 4, but was extended indefinitely as cases continued to rise.

Non-essential businesses are closed and public transport has been suspended, making it impossible to operate manufacturing plants and stores.

All 230 stores run by apparel retailer Eland in Shanghai are temporarily closed. Paris Baguette, the bakery franchise run by SPC Group’s Paris Croissant, closed its 130 branches in Shanghai. Fried chicken franchise BBQ had to close its 50 branches as well.

Pulmuone doesn’t operate stores, but faced a huge drop in sales after Sam’s Club and Freshippo, wholesale discount stores they supply to, closed.

“Going outside is prohibited, so there are no employees to work at the stores or customers that will come and make purchases,” said a spokesperson for a retail company.

Confectionery maker Orion and cosmetics company Amore Pacific closed their factories in the city April 1. Nongshim’s Shanghai plant, responsible for manufacturing over 350 million packs of ramyeon annually, has been temporarily closed since March 28.

Although Shanghai plants are closing, it doesn’t mean the companies are unable to manufacture in China.

Nongshim has another ramyeon plant in Shenyang, which has boosted production since the Shanghai lockdown. Orion is depending on its plants in Beijing, Guangzhou and Shenyang to meet its regular production goals.

“There are concerns that the lockdown will disrupt operation of stores and logistics systems, delay customs and decrease consumption,” said Oh Lina, an analyst at eBest Investment & Securities.

Covid disrupted operations before in major port cities in China.

“We had trouble with shipping when China temporarily shut down a key terminal Ningbo-Zhoushan port in August last year and the Shenzhen port last month,” said another spokesperson working at a retail company. “We hope the Chinese government can give support for affected companies such as tax reductions, but we are most looking forward to an end to the lockdown.”

BY CHOI HYUN-JU [lee.taehee2@joongang.co.kr]