The lockdown in Shanghai of April 2022 has already caused a lot of difficulties to foreign-invested companies. Some of these may be temporary, with certain facilities (delivery, banks) not operating and offices closed. For example:

• Many companies are unable to issue fapiao (legal invoices) or even if they can, they cannot send these fapiao to customers or clients because delivery companies are not operating.

• Some companies have temporarily suspended paying salaries – whether because the U-keys to access the company's bank account were left in the office, or because financing from abroad cannot be settled due to closing of all banks in Shanghai.

For some businesses however, the impact has been disastrous rather than an inconvenience. Companies that rely on employees to service customers on-site for example, or fashion retailers that have physical shops in Shanghai, have seen their business effectively come to a stand-still.

Preferential Policies

Shanghai has adopted various policies to support businesses in Shanghai. The deadline for declaring and paying taxes has been postponed, certain tax subsidies have been introduced, and micro- and small-scale companies that rent from state-owned landlords can enjoy rent-reductions. Commercial landlords are also encouraged to reduce rents, but this remains subject to negotiations (and the landlord's goodwill).

Strategies for Cutting Employment Costs

Unfortunately, relatively little has been done policy-wise to alleviate the labor...

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