Dongguan’s New Containment Measures Amid COVID Spikes: What Do Businesses Need to Know?

(This article was originally published on March 18, 2022 and was last updated on March 21, 2022.)

Update:

• Starting from this week (March 21), factories are opening up and gradually going back to normal, sources in the manufacturing sector in Dongguan told us.
• Dongguan amended its COVID-19 prevention and control guidelines for businesses and individuals on March 18 and March 20, following President Xi Jinping’s comments for a more “targeted” approach to minimize disruptions caused by the COVID-19 measures.

The southern Chinese manufacturing hub of Dongguan has imposed strict COVID-19 control measures. Many businesses have been ordered to suspend operations or operate at a reduced capacity, factories without any prevalence of COVID-19 are required to limit their production, and those who can are required to work from home. The restrictions will have a significant impact on businesses, but compliance and maintaining a positive relationship with authorities will be beneficial in the long run. We explain what the COVID-19 measures are, and the steps businesses can take to limit their impact.

With China hit by the worst COVID-19 outbreak since the initial wave of the pandemic in early 2020, Dongguan, a manufacturing hub in the southern province of Guangdong, released several measures to contain the further spread of the virus.

In industrial parks that haven’t reported any cases, factories can maintain basic production by committing to follow stringent epidemic control measures as the government tries to minimize economic disruption while maintaining its “zero-COVID” policy. Nevertheless, such measures will still take a toll on China’s manufacturing industry and global supply chains.  

In this article, we introduce the current pandemic control measures implemented in Dongguan, briefly explain the rationale behind them, and offer some advice to businesses based on our on-the-ground experiences.  

What are the current COVID-19 containment measures implemented in Dongguan? 

According to the recently released Circular No. 55 and No. 56, the below measures by the Dongguan epidemic prevention and control authorities have been adopted to contain the spread of Omicron in the city:

• Production under conditional operation: Towns and streets (or industrial parks) without locally transmitted COVID-19 cases should take multiple measures to solve the actual problems of enterprises and make every effort to ensure the normal production and operation of enterprises.
• Resuming Transportation: The towns and streets (industrial parks) reporting local epidemic outbreaks will be subject to specific epidemic prevention and control measures. The remaining towns and streets (or industrial parks) without locally transmitted COVID-19 cases will resume buses and subway operations from 6:00 on March 18.
• No leaving Dongguan: Only those who have special needs can leave Dongguan with a negative nucleic acid test from the last 48 hours. Those who arrive in or return to Dongguan must have a negative nucleic acid test from the last 24 hours and a green health code if their travel code has an asterisk “*”.
• No offline teaching: Apart from Grade 3 students that board at school, no students (including children in kindergartens) in all levels of schools in the city can attend in-person teaching. All kinds of training institutions and custodial institutions must suspend offline training and custodial services.
• Control gatherings: Large-scale meetings, activities, forums, performances, exhibitions, and sales promotions should be suspended unless for necessary reasons.
• Businesses and stores: KTVs, cinemas, theaters, chess and card rooms, Internet cafes, bookstores, bars, museums, libraries, and other business in closed places continue to be suspended. Other businesses can restore operation on the premise of strictly implementing COVID-19 prevention and control measures, such as strict temperature measurement, “site code” scanning (for track monitoring), and mask-wearing check at entrances and exits of shopping malls, supermarkets, farmers markets, hotels, restaurants, transportation stations and other public places, and limiting operations to no more than 75 percent of their maximum capacities.
• Reopening parks: Parks and tourist attractions will be opened in an orderly manner. The number of tourists received shall not exceed 75 percent of the maximum carrying capacity.
• Take-away only: Restaurants are only allowed to provide takeaway services. No dining on-premises is allowed.

The above COVID-19 prevention and control measures took effect on March 20, 2022, and are subject to further adjustment according to the epidemic situation.

How can factories maintain basic operation amid COVID-19 spikes? 

As mentioned earlier, factories are allowed to maintain basic production in towns and streets (or industrial parks) without local COVID-19 cases, on the premise that they strictly implement epidemic prevention measures. According to the Guidelines for Industrial Enterprises in Dongguan for Epidemic Prevention and Control (Third Edition), to maintain production, enterprises are required to conduct closed-loop management. Among other measures, the Guidelines require that factories:

• Make plans in advance: Enterprises should make plans for COVID-19 prevention and control and emergency plans for the reporting and handling procedures should there be a COVID-19 outbreak and appoint a specific person to deal with the COVID-19 prevention and control matters.
• Impose strict entry-exit rules: In principle, only one entrance and exit can be used in each factory area, and a 24-hour security guard must be on duty. Workers living in the factory are not allowed to go out.
• For those who live outside the factory area: Workers not on the production line should work from home, while those working on the production line should be arranged to live in a centralized manner. A negative nucleic acid test from the last 48 hours is required when entering and leaving the factory area, and enterprises should make health monitory ledgers for these workers.
• Implement strict epidemic prevention and control measures in public areas: The factory cafeteria should only provide take-away services and avoid on-premises eating, Sterilization products should be provided in public areas. Cleaning and disinfection of public areas should be managed by specific persons, adequate medical service should be arranged, and garbage must be properly disposed of.
• Adhere to strict enterprise logistics management:  Each incoming and outgoing vehicle should be equipped with a GPS positioning system to ensure full traceability and be bonded with one driver. A maximum of one crew can accompany the vehicle, on the premise of registering their identification information and signing a personal undertaking to comply with the epidemic prevention and control measures. Both the truck driver and the accompanying crew are subject to strict closed-loop management measures. The truck drivers and those in contact with goods must also hold a negative nucleic acid test certificate from the last 24 hours.
• Strengthen management in the workplace: Enterprises should strictly control the number of people in the workplace and ensure that the distance between people reaches at least 1 meter (3.28 feet). The movement and gathering of people should also be reduced within the factory.
• Strengthen the epidemic prevention and control of imported goods: Enterprises should arrange relatively fixed personnel for unpacking imported mail express and handling cross-boundary cargoes. The nucleic acid testing should be conducted twice a week for workers who have frequent contact with imported mail express or cargoes. The unpacking area of imported goods should be separated from other business areas and be operated under closed management. Workers doing unpacking work must have received full vaccination and the third-dose booster shots.
• Properly handle and report suspected cases: When suspected cases are found among workers, the factory should set up an isolated observation area and report the situation to the local epidemic prevention and control office in a timely manner. The working area and dormitory of the suspected cases must be disinfected. The factory must also suspend production until the epidemic is under control again.

The management measures will be adjusted according to the epidemic situation.

How can enterprises deal with the COVID-19 containment measures? 

Despite the government’s improved effort to minimize disruptions to production, many of the factories in Dongguan are still badly affected by the lockdown measures.  

Even if production can be maintained, enterprises may find it difficult to ship their products to customers.  Logistics capacity has been heavily curtailed due to truck delays as drivers wait to get tested. The shipping rates have also risen considerably since the start of the pandemic and will be further exacerbated by continued lockdown measures. All of these could worsen the already fragile global supply chains. 

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However, before China shifts from its “zero-COVID” policy, there is very little room to argue with the authorities about the current COVID-19 prevention and control measures. Rather, those who actively cooperate with the competent authority and adopt effective COVID-19 prevention and control measures as required will be better positioned to preserve their businesses.  

Below we outline some suggestions for maintaining operations based on our on-the-ground experience: 

• Enterprises are advised to staff a minimum business operation unit and implement closed-loop management for the on-duty employees. 
• Enterprises are advised to adopt a strict entry-exit policy in the workplace. Most importantly, no visitors should be allowed to enter unless they hold a negative nucleic acid test from the last 24 hours.  
• Enterprises are advised to take precautionary measures for all employees and for the workplace to avoid COVID-19 risks. 
• Enterprises should arrange for their employees, including those in closed-loop management, to take regular nucleic acid tests, and report to the competent authority in a timely manner if there any cases are detected. 
• Enterprises should arrange for employees that are outside of the closed-loop management system to work from home until the epidemic situation improves. 
• Most importantly, enterprises are advised to keep close contact with the competent authority and pay attention to the COVID-19 policies, which may vary from day to day as the situation develops.  

To some foreign investors, as stated in a New York Times report, “the outbreak itself may be less unnerving than the unpredictability of government measures”. However, before China gets ready to “live with COVID”, such lockdown measures can be expected whenever there are significant flareups. With Omicron being harder and more complex to control than previous variants, businesses are advised to optimize their supply chain management and develop corresponding plans in advance in order to adjust to this new normal.

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