Despite being hit by China’s latest wave of Covid-19 cases and struggling to ramp up production amid the country’s related lockdowns, Bosch continues to view China as a hugely important market and remains committed to the country in the long term, the company’s China president said on Tuesday.
Covid-19 lockdowns have “had no impact” (our translation) when it comes to business development decision-making for the Chinese market, Chen Yudong, the president of Bosch China, told reporters during a virtual conference. Chen added that the company plans to extend its hiring spree by opening up 4,000 positions in China this year, as part of its long-term efforts to meet strong local demand and drive innovation in key technologies.
Bosch China has been running its local manufacturing sites using the so-called closed-loop system where workers eat and sleep on-site at its facilities, as government and industry groups work hard to help businesses return to normal. However, the German group has so far only achieved a partial output recovery to around 30-75% of its pre-pandemic level, with that number varying among Bosch’s different products and factories, as a result of a shortage of workers and disrupted supply chains, according to Chen.
The world’s biggest auto parts supplier is now seeing “positive signs of recovery” as the pandemic begins to ease in China, although production will take time to fully recover, according to Chen. He called for more government measures to lift restrictions on auto firms in light of a long supply chain that requires collaboration and coordination across the industry.
China’s auto industry has been dealt a major blow over the past month, as operations in some of its most important locations have ground to a halt due to restriction measures aimed at curbing a nationwide Omicron outbreak. Total passenger vehicle output in April fell 41.1% to around 969,000 units compared to the same time last year, according to figures published by the China Passenger Car Association (CPCA) on Tuesday. Sales of SAIC, China’s biggest auto manufacturer, were down 60% year-on-year to 166,600 units last month, while Tesla sold just 1,512 locally-made vehicles over the same period, down from 65,814 cars sold in March.
Some foreign businesses have scaled back plans to increase investment in China and have lowered their business forecasts for this year because of the country’s strict Covid-19 measures, CNBC reported on May 10, citing a survey released by the American Chamber of Commerce in China. Chen expected Bosch China to reach a “small” annual growth rate of less than 10% in sales for 2022 (our translation). The company reported revenue of RMB 128.6 billion ($19.1 billion) in China in 2021, up 9.6% from 2020.
Two of Bosch’s manufacturing facilities in Shanghai and the northeastern city of Changchun were temporarily closed early last month, according to a Reuters report. Production restarted a few days later, as the German parts maker was featured on an April 17 “whitelist” of 666 companies that were prioritized to resume operations by the Chinese government. Both SAIC and Tesla were also on that list, although the US electric vehicle giant was reportedly forced to suspend production for a second time as it was unable to secure enough components.
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