From Estee Lauder to Apple, big companies say China’s Covid restrictions are hitting business

Gadgets

SUQIAN, CHINA - MAY 2, 2022 - Employees prepare to enter a tent to rest at a production workshop of an auto parts manufacturer in Suzhou, East China's Jiangsu Province, on the evening of May 2, 2022. Since the company resumed work and production on April 16, 478 employees who have been on duty have been fully closed management in the factory to ensure stable order production. (Photo credit should read CFOTO/Future Publishing via Getty Images)

Several international corporations warned in the last week the drag from China’s Covid controls will hit their entire business.

Since March, mainland China has battled an outbreak of the highly transmissible omicron variant by using swift lockdowns and travel restrictions. The same strategy had helped the country quickly return to growth in 2020 while the rest of the world struggled to contain the virus.

Now the latest lockdown in Shanghai has lasted for more than a month with only slight progress toward resuming full production, while Beijing has temporarily closed some service businesses to control a recent spike in Covid cases.

International corporations have a host of other challenges to deal with, from decades-high inflation in the U.S. and a strong dollar, to the Russia-Ukraine war. But China is an important manufacturing base, if not consumer market, that many companies have focused on for their future growth.

Here is a selection of what some of the companies have told investors about China in the last week:

The coffee giant suspended its guidance for the rest of the fiscal year, or the remaining two quarters.

“Conditions in China are such that we have virtually no ability to predict our performance in China in the back half of the year,” interim CEO Howard Schultz said on an earnings call, noting additional uncertainty from inflation and the company’s investment plans.

Starbucks said it still expected its China business to be bigger than the U.S. in the long term.

[“source=cnbc”]