For Li Hua, who since June has worked at a Covid testing booth in Shanghai, the abrupt end of Covid Zero has been a struggle.
(Bloomberg) — For Li Hua, who since June has worked at a Covid testing booth in Shanghai, the abrupt end of Covid Zero has been a struggle.
The company she worked for, which ran a network of booths where thousands of people would line up for near-daily testing back when China had zero tolerance for virus spread, decided last month that most employees would be fired on Jan. 8 — the day the country’s downgrade of Covid management took effect. Even worse, she and her colleagues have not been paid since November, she said. The workers are now refusing to leave their dormitory, but the company says it has no money as the government hasn’t paid their invoices.
“We are so helpless now,” said 50-year-old Li, who plans to go to the local labor arbitration commission next week if the issue hasn’t been resolved. “It’s such a messy situation, the government just has no credibility at all.”
Li and her colleagues are some of the millions of people across China — including those known as ‘big whites’ for the personal protective suits they wore through the pandemic — who enforced Beijing’s Covid Zero diktat for three years but now face an uncertain future. The sudden end to the policy also signals a reversal of fortunes for companies that benefited from the boom in demand for testing and food distribution during lockdowns, while the immense cost of the world’s strictest virus controls has strained local government coffers.
Read more: China’s Lockdowns Meant 70% Profit Margins for Food Distributor
Workers at the manufacturing site of Covid testing product maker Zybio Inc., located in the sprawling southwest metropolis of Chongqing, launched protests over the weekend, according to footage on social media platforms. The workers were objecting to the sudden layoff of thousands of workers and unpaid wages, Sing Tao Daily reported.
Angry workers smashed machines, threw objects and clashed with police, the Daily reported, citing videos circulating on social media. Employees who answered Bloomberg News’ phone calls to the factory in the Dadukou district of Chongqing declined to comment. The company makes products including nucleic acid test equipment and antigen assay kits.
Incidences of pushback and protests, once a rare occurrence in China, became increasingly frequent the longer Covid Zero dragged on. In November, hundreds of workers at Apple Inc.’s main iPhone-making plant in Zhengzhou clashed with security personnel, as tensions boiled over after almost a month of tough restrictions intended to quash a Covid outbreak.
Read more: Violent Protests Erupt at Apple’s Main IPhone Plant in China
The same month, protests against harsh virus rules broke out across China in the country’s most widespread demonstrations in decades. While they’ve been widely credited with prompting the official shift away from Covid Zero in December, China has said it was already making changes to the policies before the clashes.
Testing companies have proved an early indicator of the financial toll of Covid Zero, with diagnostic firms saying for months that their finances were being drained as customers took longer-than-usual to pay them. There’s a growing risk some yet-to-be-paid bills will be written off as bad debt, a major testing company warned back in September.
Eight of the largest listed virus-testing firms reported a combined 14.1 billion yuan ($2 billion) increase in accounts receivable as of mid-2022, up 73% from a year earlier, according to Bloomberg calculations.
Read more: Unpaid Bills Surge by $2 Billion at China’s Covid Test Providers
While large listed companies may be better equipped to weather the drop in revenue and pivot to other businesses or foreign markets, the vast number of smaller firms that emerged specifically to cater to China’s Covid Zero needs face difficulties.
“Those small companies, particularly local ones with single or just a few services related to Covid-19, probably cannot afford their costs,” said Mia He, a health-care analyst at Bloomberg Intelligence. “They may just lay off people and close the door. For them, this is a one-off thing, it’s not a sustainable business.”
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