China's COVID Policy Swayed by Foxconn Letter

People on scaffolding in front of a building with a Foxconn logo

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A letter from the founder of Foxconn Technology Group, the world's largest iPhone assembler, may have played a big part in China’s decision to ease its “Zero-COVID” policy.

Terry Gou wrote to government leaders last month to plead for fewer restrictions after thousands of workers at Foxconn's plant in Zhengzhou fled, fearing infection, because the plant went on lockdown, the Wall Street Journal reported. On November 3, shortly after Gou sent the letter, a Party-run health publication described virus symptoms as short-lived and mild, a reversal from previous depictions that called it so severe that it merited quarantines.

Health officials and government advisors used the letter, and subsequent nationwide protests over pandemic restrictions that rivaled unrest that led to the Tiananmen Square massacre, to bolster their case to relax the rules, the Journal said, citing people familiar with the matter. The government did just that this week, saying it would loosen lockdown protocols and allow small businesses to stay open.

Key Takeaways

  • Foxconn wrote a letter to the Chinese government that had a major impact on its choice to ease up COVID-19 restrictions.
  • On Wednesday, China announced it would scale back its 'Zero-COVID' policy after weeks of protests.
  • Foxconn has been performing below expectations due to chaos at its main production hub in Zhengzhou over quarantine restrictions.

A statement from Gou’s personal office denied the existence of the letter, without providing elaboration, the newspaper said. Foxconn, Apple, and China’s State Council Information office didn’t respond to its requests for comment.

The pandemic restrictions have hurt business for Apple Inc. (AAPL), which estimated it would produce 6 million fewer iPhones this year, and Foxconn said revenue fell by 29% in November from October. The unrest prompted concern that Apple and other overseas companies would move production out of China.

Foxconn is trying to restore production to pre-pandemic levels by filling open positions. The Zhengzhou facility has between 40% and 50% of the number of workers it had at full production capacity.

“In addition to reallocating the production capacity of different factories, we have also started to recruit new employees, and are gradually moving in the direction of restoring production capacity to normal,” the company said earlier this week.

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  1. Wall Street Journal. "Letter From Apple Supplier Foxconn’s Founder Prodded China to Ease Zero-Covid Rules."

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