China Restricts Movement Across iPhone City

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by Tyler Durden
Wednesday, Nov 23, 2022 - 08:44 PM

Update (1100ET):

China's Zhongzhou, home to Foxconn's massive iPhone factory, will begin to enforce mobility restrictions across eight districts in main urban areas on Friday. The reason, well, authorities blame it on 'rising Covid infections,' though we should note that the new restrictions come as massive unrest has erupted at the factory of more than 200,000 workers. 

Zhongzhou authorities posted a statement on its WeChat page on Wednesday about mobility restrictions from Friday through Sunday. 

"At present, the epidemic situation in our city is still severe and complicated," the statement said. Health officials will conduct daily mass PCR tests and request that residents in high-risk areas stay within their homes. 

You can find more about the chaos unfolding at the iPhone factory below... 

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On Wednesday, unrest broke out at Foxconn's massive iPhone factory in Zhengzhou, central China, reported Bloomberg. Videos on social media showed hundreds of workers, if not more, clashing with security personnel after a month of strict Covid restrictions. 

Manufacturer Foxconn confirmed the outbreak of "violence" and said it would work with local authorities to quell further violence. It released a statement that said workers were furious about pay and living conditions. 

"Regarding any violence, the company will continue to communicate with employees and the government to prevent similar incidents from happening again," the world's largest producer of iPhones wrote in a statement. 

As Covid infections increased across Zhengzhou and iPhone factory, Foxconn adopted a "closed loop" system for employees in October. Workers were forced to live on campus and were prohibited from physical contact with the outside world – including family members.

Then by late October, strict Covid restrictions for workers sparked minor unrest at the facilities of about 200,000 workers -- all were banned from eating in public and forced to eat meals back at their dorms. 

By early November, while Beijing ramped up its zero Covid policy by locking down the surrounding metro area -- workers began to flee the factory

Now in videos posted on Weibo and Twitter that AFP and Reuters have verified, all hell appears to have broken out as hundreds of workers clash with security guards and people in hazmat suits. 

According to Reuters, delayed bonus payments triggered Wednesday's protest. Workers were heard chanting, "Give us our pay!"

Escalating unrest at the factory added new uncertainties for iPhone production. Weeks ago, Apple said it had reduced iPhone 14 production because of the Covid restrictions at the plant. The latest round of unrest could dramatically impact output. 

A source told Reuters that Foxconn would be unable to achieve production targets. They said much of the unrest is centered around recruits hired to replace a gap in the workforce. 

"Originally, we were trying to see if the new recruits could go online by the end of November. But with the unrest, it's certain that we can't resume normal production by the month-end."

Wednesday's protest underscores how President Xi Jinping's zero Covid policy that requires factories like the iPhone one in Zhengzhou to operate as "closed loops" can backfire. 

"It's really a mess," Barry Naughton, a professor at the University of California San Diego who specializes in Chinese economics, told Bloomberg. "They've created a situation where the local decision-makers are under intolerable pressure," he said. 

Besides backfiring zero Covid policies, mounting trade conflicts and geopolitical tensions have forced Apple to review its global supply chain, primarily centered in China. Some iPhone 14 production has been shifted to India as Apple begins to diversify away from China.