More Thoughts On China Factory Closures

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Via jacobyount.com

China’s factory closures are hot topic.

Since this past summer up until now the environmental checks are a cause for concern and delay.

What I’m Currently Seeing on Factory Closures

One factory salesperson  gave me their firsthand take:

  • Before the inspectors are in the area, her factory and others like them, were just shutting down. Notice that BEFORE the team of inspectors arrived, they closed.
  • So when a factory you work with is closed, it’s not cause they were necessarily shut down. It may be the case of a factory being proactively “careful”. There are real shutdowns and there are proactive shutdowns.
  • Once the inspectors leave the area, they simply open back up. Thus the factory closures still seem to be tinged with “dog and pony” show theatrics. That’s normal with China. Smoke and mirror theatrics until something is fully instituted across the board. Businesses and individuals play “cat and mouse” seeing how far they can get away with things. Notice I used 3 pairing cliches in this 1 bullet point: dog & pony, smoke & mirrors and cat & mouse…wow.

I think it’s great that China’s getting more serious in protecting their resources, thus protecting people.

As long as this is a real effort and not a PR move, then more power to them.

Although many factories and shops open back up once the “team” leaves the area, the government seems to be further defining rules and requirements.

Some garbage vendors are weeded out and this is a good thing. Hopefully over time, this will increase more and more.

What’s next?

Caspar ter Horst has a good article on LinkedIn that shows the flow of these inspections.

What if your supplier has to close due China’s Ministry of Environmental Protection (MEP) cracking down on polluters?

It looks like that Guangdong manufacturers can expect the wave next month, after the Chinese Holiday.

The closures are causing a vendor’s market

For some vendors, because of closures, the world is their oyster.

  • If vendors are shutdown, it’s causing vendors in that same industry, who remain rockin’ n’ rollin’, it’s causing them to be more confident in naming their price and pick up more business.
  • Prices and materials are going up. Shutdowns restricted access and flow. Whoever is still open and actively has reach to material is able to increase their prices. Be ready for this possibility.
  • Some vendors will use these shutdowns to increase pricing and delay orders whether it affected them or not. They’ll use it as some form of excuse. Be watchful of this.

Factory Closures and My Business

Currently, it’s no longer affecting my business.

We pivoted away from trading for the promotional product industry and are establishing our own product lines. These products will be sold via e-commerce. If all goes well, via Amazon.

Since starting our own product lines, this has become a non issue. That may be coincidental. But that’s what’s happening to me and I’m sticking to it.

I realize this may change once we add accessories or processes.

But that’s also the beauty in being master of your own product line. We’re working to eliminate additional processes and accessories.

It’s funny, but even back as recent as August and early September, when finishing some old cases for the promo industry, we were faced with multiple reports on closures.

As we’re doing our own product line, focusing on sustainable items and proper factories, there’s been no concern.

Sourcing quickie promotional items from low-cost factories was a concern.

Long-term sustainable products for our own product line, no concern.

Not yet anyway.

Interesting, huh?

Wrong approach

I was a bit bummed when reading in one promotional product publication about the factory closures.

The article wasn’t encouraging buyers to work with more sustainable items and higher-end manufacturers.

Instead they were encouraging buyers to pivot to other nations such as Bangladesh.

Do you see my disappointment?

Instead of urging stewardship, it’s “let’s keep doing what we’re doing and avoid these inconvenient interruptions”

 

 

 

This article was written by jacoby and published on JacobYount.com. Original Post: http://jacobyount.com/thoughts-china-factory-closures/

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