Last week, we passed along word that China is considering - among other actions - shutting down large portions of manufacturing to "green up" before, during and after the games.
Along with our sources on the ground in Shanghai, Richard over at All Roads Lead To China has been on the case in regard to those issues that could impact manufacturers in all roles of the supply chain.
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The talk is heating up, and it's hard to determine exactly what will be done where, and when it's gonna go down. And while talk of pollution has been around since Beijing won the 2008 Olympiad competition, consider these reports from the past few months as evidence that swift, aggressive action is on the horizon:
- East China Province Gives Ultimatum to Polluters Before Olympics - Richard at ARLTC has posted another update, this time looking into reports that 132 plants in Shandong Province (near Beijing) have been warned to comply with pollution regulations by 06/30/08 or be shut down.
- Beijing Petrol Stations Face Olympic Shutdown - ABC News Australia reported in February that the capital would shut down 10% of its gas stations, and fit the rest with special nozzles to reduce vapor emissions. Our sources tell MFGx that there has been more recent talk of using an even-odd system for vehicles for this time frame (e.g., cars with odd numbered plates drive on odd days, even on even days).
- China's Looming Olympics Disaster - Jim Jubak at MSN Money reported in March of the potential "perfect storm" - water and food shortages to support the games, the affects of pollution on atheletes, and - yes - the forced shutdown of industries its impact on the Chinese economy. (Oddly, not much is mentioned about potential Draconian measures' impact on the world economy.)
- China's Smog Shutdown - This article, published by the Chinese government on 02/28/08, is as informative for what is DOESN'T say about plant closings. No real details are given, which means as of March 1st, Beijing was (is?) leaving their options open.
Bottom line is this:
If you're sourcing to China, you'd better be talking to your suppliers and IPOs to determine if they are in compliance, and what disruptions might occur if they aren't. Now's the time to develop contingencies.
If you're a supplier in a mature market (U.S. and Europe), now's the time to engage current and former customers to see if you can play a part in their solutions. These times of instability and uncertainty in China may present fantastic opportunities for you to get more work and develop long-term, profitable partnerships.
