Just as the global economy started recovering from the crisis caused by the pandemic, another wave of international problems started causing serious problems even for multinational corporations. China’s most recent lockdowns could prove to be the final blow for many.
After the war in Ukraine started, many companies faced unforeseen losses measuring millions of USD. Moreover, sanctions against Russia forced even more of them to leave Russia, which in turn meant they lost access to the vast Russian market.
Not long after, China started closing its harbors and major cities after yet another wave of COVID 19 started emerging. As millions of people stay in enforced lockdowns, the global supply and demand chain remains disrupted.
Due to the Zero Covid policy, Chinese authorities closed Shanghai, which is one of the main financial centers of their economy. This move hit companies around the world, moving markets from tech to consumer goods.
Estee Lauder is the first major company to publicly admit the problems they’re facing working in these conditions. As a result, the company was forced to change its forecasts for this year, admitting they had to do it due to ‘’two significant headwinds’’.
As the situation in the world remains as it is now, some giants stopped making any financial forecasts at all. Starbucks, for example, will not have any financial guidelines for the upcoming period of six months. Adidas, Microsoft, Gucci, and Bottega Veneta followed shortly.
It remains to be seen how China’s actions will keep affecting the global market, as it’s now clear how important their consumers are in the bigger picture. While countries around the world keep opening their markets, China remains decisive in pursuing its Zero Covid policy.
