China orders shutdown of factories ahead of G20 summit 2016

Date: August 2, 2016
Subject: China orders shutdown of factories ahead of G20 summit 2016
Source: riskmethods

This year’s G20 summit may have a global industry-wide impact. China issued temporary closure orders on 255 factories in Shanghai, fourteen days ahead of the G20 summit to be held in Hangzhou on September 04–05, 2016, according to a China post report, quoting a document issued by the Shanghai Environmental Protection Bureau.

The document, issued by the Shanghai Environment Protection Bureau, has ordered a wide range of companies from power and petrochemical plants to logistics firms to shut down between August 24 and September 6 for the upcoming G20 meet in Hangzhou.

Authorities in neighboring Zhejiang and Jiangsu province are set to issue similar orders to limit air pollution and safety hazards within a 300 km radius from Hangzhou, according to industry and government officials.

Other areas, including the port city Ningbo, have also issued lists of factory shutdowns ahead of the G20 summit in addition to the closures set for Shanghai, according to an official at the Ningbo Environmental Bureau.

Possible impact on supply chains

This approach is not unusual. China has undertaken similar efforts to achieve a temporary smog lift in advance of other high profile events such as, the 2008 Olympics, the Shanghai World’s Fair in 2010, and the Asia-Pacific Economic Cooperation Summit in 2014.

These types of shutdowns can have a huge impact on supply chains which make immediate actions mandatory. Not all factories make an effort, or make their contracting partners aware of the situation. This event is expected to begin causing supply chain disruptions as early as this July.

News that production could be idled as soon as July has been circulating since June 2015, but has since been dismissed by most local officials as nothing more than a rumor.

If you are not prepared or have any means of supply chain risk management practice in place, here is what you can do now:

5 tips to minimize impact on supply chain disruptions:

  • Check if your suppliers are within the region of the factory shutdowns
  • Contact your suppliers and clarify if they are affected by the shutdowns
  • Check to see which of your suppliers are receiving goods from the affected region (especially from chemical, electro mechanical, building material, and pharmaceutical industries)
  • Monitor all suppliers which could potentially be affected in case of further shutdowns or increased regulations from the Shanghai government – we recommend on a daily basis
  • Leverage this increased visibility to proactively secure your supply before your competitors do

Additional information may be obtained by contacting your local Delmar representative.

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