How Shanghai Industrial Enterprises Can Navigate Lockdown and Resume Work

As COVID-19 cases decline in Shanghai, the Chinese government is seeking to accelerate resumption of work and industrial production among key enterprises in the Yangtze River Delta region, which collectively make up the bulk of production in the country. We address key questions on how Shanghai enterprises can navigate the city’s COVID-19 restrictions and apply for industrial and work resumption.

After a month of stringent lockdown measures, the epidemic emergency in Shanghai has gone into remission. Subsequently, the government has encouraged businesses to resume operations, as people will be progressively released from the lockdown based on the epidemic situation in their residential areas, in line with the city’s current regulations.

In order to facilitate this process, on May 3, 2022, the Municipal Commission of Economy and Information Technology issued the second edition of the Guidelines for Epidemic Prevention and Control for Industrial Enterprises in Shanghai (the Guidelines). In comparison to the first edition of the Guidelines, the latest version contains a new section about strengthening services for enterprises resuming work and production. In addition, there have also been further updates to the five sections published in the first edition, covering issues like site zoning and employee management.

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By far, Shanghai has approved two batches of key companies that are allowed to resume work and production in the form of “white list of key companies”. The first batch includes 666 companies while the second batch includes 1,188 companies. The majority of the companies on the white lists are auto manufacturing, semiconductor, pharmaceutical, petrochemical, mechanics, and logistics companies. According to reports, 90 percent of the first batch whitelisted companies and 70 percent of the second batch whitelisted companies have been resume work as of May 5, 2022.

Below we walk you through the updated Guidelines by referring to the official FAQs released by the Shanghai Municipal Government.

Conditions and arrangements for resumption of work and production in Shanghai

What types of companies are eligible for the resumption of work and production?

Currently, the five categories of businesses that can apply to resume work are those essential for regular city operations, anti-pandemic supplies, critical function assurance, continuous manufacturing, and supporting infrastructure. The local government is also giving full support to large industrial-chain enterprises that have major influence on the Yangtze River Delta and national industrial and supply chains.

My company is not on the white list while our clients are. Under this condition, when can we resume production to avoid losing orders?

In the early stages, Shanghai’s resumption plan focuses on leading companies like SAIC, Tesla, SMIC, Huahong, and related supporting enterprises. The Shanghai government hopes to provide support for upstream and downstream businesses in supply, industrial, and logistics chains, and thus extend work resumption to related industries in the Yangtze River Delta region.

Going forward, all three provinces (Zhejiang, Jiangsu, and Anhui) and the Shanghai Municipal City will continue to optimize the white list and promote cross-provincial list sharing and mutual recognition. They also intend to promptly establish a “white list pool” system in the Yangtze River Delta for key industrial chains and supply chains as well as their supporting suppliers in other places on a trial basis, so as to jointly ensure the coordinated resumption of work and production of all industries in the region.

Which construction sites can resume work and production?

According to the pandemic situation, construction sites are classified into three categories: red, yellow, and green. Within each type, there are different control measures, with red sites having the most stringent ones, and green areas the least.

Red construction sites are the object of strict supervision, with a comprehensive shutdown and closed-off management. Living, office, and construction areas should be isolated separately, and movement is allowed only for personnel delivering supplies. In addition, the entire site must ensure comprehensive disinfection and sterilization every six hours.

Sites in yellow areas, shall arrange operation according to shifts, and minimize personnel interaction.

Green sites can authorize employee shifts under close supervision. Employees must provide negative nucleic acid test results taken within the previous 48 hours or the “returning-to-work code” at site entrances, in addition to taking an antigen self-test at the entrance. New personnel, as well as those returning to the site, should undergo a two-day isolation with individual accommodations in sanitary conditions before they can resume work in an orderly manner in line with relevant policies.

On May 3, 2022, the Shanghai Municipal Commission of Housing and Urban-rural Development released a white list of 24 major construction sites in Shanghai that can resume work, following the second edition Guidelines.

How to apply for resumption of work and production in Shanghai?

What is the application process like? Who is supervising the application process?

The process for resumption of work and production involves five steps: preparation, application, inspection, notification of work resumption, and resumption of work and production.

• Enterprises should adequately get personnel involved in production and operation and living conditions prepared for resumption, according to the Guidelines, coming up with their own COVID-19 prevention and control plan, completing the application form for resumption of work and production, and submitting it to authority of the business park or town where they are located.
• Upon receiving applications from enterprises, the authority in charge of the business parks or towns will make a series of assessment regarding the implementation of principal responsibility, classification management of the premises, employee management, logistics management, and stock of anti-pandemic materials, and an emergency response plan. After verifying the situation, approvals can be made directly.
• Once approved, enterprises will be included on the white list for resumption of work and production.

How long does it take to complete the whole process?

Businesses applying for resumption of work and production must strictly implement the “one company, one plan” policy on pandemic prevention and control, submitting their epidemic control and prevention plan to the respective district, street, town, or industrial park for review. The time for the process depends on the specific review situation.

How can the company apply for the electronic pass for employees’ return to work?

To strengthen the health management of the staff returning to work, the city’s big data center has launched an “Electronic Pass for Workers Returning to Work” (复工复产人员返岗电子通行证) on the page of Suishenma ( 随申码), an official QR code integrating multiple points of information, including the health code that can be checked in multiple apps.

Employees of the companies on the white lists can apply for the electronic pass if the buildings in which they reside did not have any positive case in the seven days prior to the request. Eligible enterprises can then apply to relevant departments of the districts where they are located.

How can employees return to work from their communities?

Employees returning to work can contact the neighborhood/village committee where they live and show the “Electronic Pass for Workers Returning to Work ” on the “Suishenma” page to them.

According to the city’s epidemic prevention and control requirements, neighborhood/village committees shall allow the employee to pass after checking the ID card and the Electronic Pass for Workers Returning to Work, confirming the building where they reside is free of positive cases in the previous seven days, and obtaining a negative result of the on-site antigen self-test. The process should be properly archived.

Enterprises under closed management can consult the authority in charge for resumption of work and production in their districts to apply for the rotation of staff who have resumed work and production. Relevant personnel must present a negative nucleic acid test within 48 hours before entering the community. The management and transport of employees will be handled in a “point-to-point” manner, from the epidemic-free community to the epidemic-free work area, and employees can commute by shuttle bus.

How to address transportation and cross-province logistical problems?

Passes will be issued for the intra-city and cross-provincial movement of freight vehicles, and a digital pass on the Suishenban (随申办) APP has been launched to facilitate real-time verification of traffic management authorities.

Enterprises can download the Key Material Transportation Vehicle Pass application form (重点物资运输车辆通行证) and submit it along with relevant application materials via e-mail to the respective authority in charge of cross-provincial transportation. For example, commercial goods and household material enterprises should apply to the city’s commission of commerce or commercial district authorities, and so on.

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After examination and approval, the enterprise, vehicle, and driver information shall be included in the white list database for transportation, which is subject to dynamic update.

Drivers included in the white list can then apply for the pass for each transportation task via the Suishenban APP or its mini program on WeChat or Alipay.

Those eligible can get a digital pass and a PDF version for printing out, as both digital and paper certificates are officially recognized.

The pass, driver, and vehicle must match, and each pass can only be used for one transportation route. For repeated business on the same route, the pass can be used repeatedly within the period it is valid. If the route changes, the driver must cancel the current pass before applying for a new one.

When the driver’s and passenger’s health code turns to yellow or red, or the nucleic acid test results exceed the 48 hours of validity, the pass will immediately become invalid and reapplication is needed.

Enterprises are hereby responsible for the proper management and use of passes. In case of violations, they will be blacklisted, notified, and given corresponding penalties.

Epidemic prevention requirements for resumption of work and production in Shanghai

What are specific requirements for site and health management?

Companies can now set up different areas, classified by colors based on their level of risk. Accordingly, they can arrange green zones (normal production), blue zones (observation of new entrants), yellow zones (close or sub-close contact), red zones (infection), which must all be separate from one another.

Areas with the same level of risk should be divided into smaller management units to reduce the flow and contact between employees in other areas. Different epidemic prevention standards will be implemented in each area, according to the degree of contact with the external environment.

Employees who work in medium and high-risk areas must wear N95/KN95 masks, while those in low-risk areas can wear disposable medical surgical masks.

While enforcing physical isolation between areas, enterprises will follow the point-to-point management of workplaces and residences, where all personnel will be required to work and live within designated positions, to minimize direct contact between employees in different areas.

In the case of handover areas (such as entrances and exits, loading and unloading yards, warehouses), production and operation areas (such as workshops, conference rooms, office areas, etc.), living areas (such as canteens, dormitories, gyms, etc.), public health areas (such as toilets and waste disposal), public spaces (such as roads, outdoor venues), etc. – classified management will be put in place.

Finally, enterprises are required to implement nucleic acid testing and antigen screening in accordance with the corresponding management requirements of each area:

• Enterprises in the sealed and controlled area shall adhere to two tests a day, that is, antigen testing in the morning and nucleic acid testing in the evening.
• Those in the control area shall adhere to daily antigen testing plus one nucleic acid test every two days.
• Businesses in the prevention area shall conduct antigen testing every day, with one nucleic acid test every five days.

During closed-loop management, how to get in materials needed by the company?

Special routes and fixed places shall be set up for production and living supplies to enter the factory, and they shall be isolated from other areas. Drivers and passengers shall be required to enter the factory strictly in accordance with the requirements of epidemic prevention.

Fixed personnel should be arranged to receive, load and unload, store, unseal, and disinfect the supplies. The driver and passenger of the logistics vehicle must have a negative nucleic acid test report within 48 hours or antigen test negative report within 24 hours. The driver of the vehicle should wear masks and gloves among others to ensure protection.

What should be done if employees have abnormal results in nucleic acid test or antigen test?

Enterprises shall set up temporary isolation observation areas in proportion to the number of employees, and enterprises with a large number of employees shall set up makeshift hospitals in the factory area. In case of abnormal antigen test or nucleic acid test, the employee shall immediately report to the responsible person of the unit and the local center for disease control and prevention and immediately arrange the person to the temporary isolation observation area. At the same time, relevant close contacts should be arranged to stay in another temporary isolation observation area that is separate from the area containing the person with abnormal results.

The Guidelines are pivotal for the management and day-to-day running of the companies that have been allowed to resume work and production. Although the number of companies that are allowed to resume work is still small compared to the total number of enterprises registered in Shanghai, enterprises not on the white lists can use the Guidelines as a good reference to prepare for resumption of work and production in the near future.

In addition to the guidance mentioned above for industrial enterprises to resume work and production, the Shanghai government has released a series of supportive measures to help enterprises resume production and get through the difficulty, such as rent reduction, social insurance deferment, tax incentives, and financing supports, among others.

For more information or support for your business in Shanghai, please feel free to contact our China offices for assistance or email us at china@dezshira.com.

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