Reasons behind Guangdong factories sudden shutdown

Monday January 2nd, 2017 | Yasmine Bachraoui | Industry News

Factories in Guangdong Temporary Closed Due to Pollution Inspection

Air pollution coming from factories has always raised a big dilemma in China. Recently, after talking with suppliers in China, we confirmed that many factories in the Guangdong province have been shut down for this controversial issue. Indeed, on the 21 December 2016, Guangdong Provincial Environmental Protection Industry Association has explained in mandarin the situation. In fact,the government closed more than 700 factories  making it hard to get quotes and causing delays in some production lines.

Due to governmental inspection of pollution levels, factories in the Guangdong province are shutting down for few days or weeks. The pollutants coming from these factories are rising fiercely. They are causing severe health problems for the citizens living there. To have control over these emissions, governmental authorities are sending out different teams. those team have to check and measure the pollution level released from each factory. The factories are closing their businesses voluntarily beforehand in order to avoid complicated bureaucracy and potential complexities with the government.

The shutdown of these factories is affecting several industries. It is including printing and dyeing industries, painting and aluminum related industries and also steel and the heavy industry. The most affected areas by the event are: Zhaoqing, Huizhou, Guangzhou, Chaoshan, Qingyuan and Foshan which are all cities in the Guangdong province (see the green province in the map below).



Map of Chinese Provinces

Source: China-Mike


According to reports, over a total of 147 cases for infractions have been handed over in Foshan for inspections and investigations. Around 35 persons were accused of turning a blind eye to environmental violations of these factories. The reason was to protect valuable sources of revenue and jobs and they have been condemned to different degrees of punishment. Between November 18th 2016 and december 11th 2016, around 11,865 law enforcement officers were spread to five different districts. They checked 5,323 different enterprises. The inspection lead to the shutting down of around 793 companies and a  monetary penalty of 3.48 million Yuan ( 500 395 US$). There is no information about whether the penalty is in total or for each company.



View of power plant near Hengshui in Hebei province

Source: South China Morning Post


The chinese article also asserts that this sudden environmental campaign launched by the government have other hidden intentions. They consist mainly in reconstructing the industry in China by ruling out the companies who are whether breaching the anti-pollution legislation enforced by Environmental Protection Department or operating illegally by having a really poor and unhealthy working environment and unqualified raw materials. The other cause of this incident can be explained because there is a keen competition in price between companies. It is leading them to lower the product quality and service by using really cheap unqualified raw materials. However due to this new and huge installment and implementation, it is hard for small factories to make profit by buying qualified machinery and using good materials and this consequently lead to their bankruptcy and shutdown.

The uncertainty of the steel industry is disturbing the supply chain of many companies worldwide. However, economic growth should not be at the expense of the environment and the health of the people. After COP21, on which China promises to cut their pollutant emissions by 60% by 2020, the government is finally tackling the issue. The government is trying to find a better sustainable approach in order to protect the environment while maintaining economic competitiveness worldwide.

For more information check the website here.


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Written by:  



Yasmine Bachraoui

Business Developer @Steel Available