Warning of thousands of polluting factories face closures in China

4th October 2017

THOUSANDS of factories across China face closure under Beijing's anti-pollution drive. The shuttering of polluting factories is viewed by some in the supply chain sector as a move to push manufacturers of low value goods out of China.

"The sentiment is that these heavy polluters mainly make low value items and China is willing to allow these industries to move out of China and to India, Cambodia, etc," international director and co-chairman of the AmCham Shanghai Supply Chain Committee, Gary Huang, was quoted as saying in a report by IHS Media.

The tough enforcement of regulations enacted in 2013 is being carried out by China's Ministry of Environmental Protection. This action has already shut down thousands of factories in the north of the country. The inspectors have now switched their focus to auditing manufacturers in the southern provinces.

"We understand that Guangzhou will be under review later in the fourth quarter and going into 2018. I suggest [shippers] talk to their suppliers and be vigilant about monitoring this process. And also have a contingency plan," said Mr Huang.

Sources in China report that governmental environmental inspection efforts started to move from northern China to central China in the third week of September. "We believe this will create an impact on Ningbo shipping volumes as there are numerous small manufacturers involved in producing lower end consumer articles of all sorts," a supply chain expert was cited as saying.

He said the factory audits would scrutinise businesses involved in decorative home products, such as Christmas ornaments, as well as manufacturers involved in producing electric circuit boards. Some of the closed north China factories were expected to resume production by mid-October, after China's Golden Week holiday, but there has been little clarity on the issue.

The factory closures are spread across China's main manufacturing areas, from Jilin province in the north to Zhejiang province south of Shanghai, with increasing focus on the giant inland cities of Chongqing and Chengdu. Guangzhou factories are next on the radar of the Ministry of Environmental Protection's crackdown as inspectors begin to turn southwards.

Low value cargo is transported by ocean, and the factory closures were having an impact on container volume being exported from China, according to an APL spokesperson. He said this was particularly apparent for north China exports.