Ongoing disruption of production in China and the supply chain through its ports causes problems for the global leather industry, says leatherbiz's "Market Intelligence" report. Jing Daily writes, that anger grows under the seemingly endless lockdown of Shanghai and the demands for emigration by Chinese entrepreneurs have soared. According to the Financial Times, wealthy people fleeing the country have increased because the recent wave of Omicron has left 26 million residents trapped in their homes and economic activities have stalled.
The latest Leatherbiz Market Intelligence newsletter says that, on top of the human suffering that the war in Ukraine has caused, the wider world is feeling the effects of increased food and energy costs. However, the report also makes it clear that lockdowns in China are probably having a more immediate and direct effect on the leather pipeline now.
A strict lockdown because of new cases of covid-19 has been in place in Shanghai for more than three weeks; lockdowns have also begun in other cities, including Tangshan in Hebei province.
Ongoing disruption to production in China and to the shipment of raw materials into the country and of finished products out of its ports could cause substantial problems for the leather sector, the Market Intelligence report says, in the absence of a strong increase in demand from brands and consumers.
It adds that a “dangerous situation” with increased risk is building up, at least in the raw materials markets. The war, inflation, logistics problems and the pandemic situation in China are not a good basis for optimism about the volume of orders that might come from retailers in the second half of this year, it points out.
“As things stand, we see an increasing risk that leather manufacturers might run into liquidity problems. Lack of sales combined with skyrocketing costs and the need to pre-finance them are a real threat to many small and medium-sized businesses. It does not seem to us that the market can return to balance in the next few weeks”, it says.
COVID restrictions lead entrepreneurs to leave the country
Three weeks into Shanghai’s harsh lockdown, China’s rich have had enough. According to the Financial Times, inquiries from wealthy individuals trying to flee the country have surged at more than a dozen consultancies, as the recent wave of Omicron has left 26 million residents trapped in their homes and businesses screeching to a halt. Immigration consultants noted that clients who had canceled plans to move before over fears of contracting the virus abroad have now revived their efforts to leave. Meanwhile, searches related to “immigration” on WeChat have jumped seven-fold since the beginning of April.
Although Shanghai’s official death toll is low (three fatalities were announced on April 18), leading state media and the government to laud its zero-COVID strategy, many Chinese are growing increasingly frustrated with the extended confinement. On top of food and medicine shortages and poor conditions at quarantine facilities, the extreme measure of separating infected children from their parents (which has since been eased) has ignited public anger in particular. And efforts to express these concerns online continue to be scrubbed.
So, where is the best place to run away to? Apparently, not North America. From the racist rhetoric under the Trump administration to the hard stance on Xinjiang-made cotton, deteriorating relations with China has made the US lose its luster. Instead, the Financial Times noted that countries like Singapore and Ireland have gained popularity thanks to better diplomatic ties with Beijing. In fact, more affluent Chinese have already begun looking to Singapore to store their wealth following President Xi Jinping’s call for “common prosperity,” attracted by the island’s Mandarin-speaking community and lack of wealth tax.
For China’s wealthy, gaining residency in a second country would not only allow them to ride out pandemic uncertainties — especially if other Chinese cities end up in a similar situation as Shanghai — but also safeguard their financial assets amid Beijing’s crackdown on entrepreneurs. But for the middle class, work and financial restrictions make it unlikely to become a trend. Nevertheless, the rising immigration inquiries reflect the mindset of Shanghai today: there is zero patience for zero-COVID.
