World Business

Strict limits on production during the Games will be felt across the Mainland—and by consumers abroad

by Dexter Roberts and Chi-Chu Tschang

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Jon Krause

Beijing - Hebei Taihang Cement has been on a roll lately. Its three Beijing plants have been running around the clock, churning out thousands of tons of cement needed to build venues such as the “Bird’s Nest” stadium, where opening ceremonies for the Beijing Olympic Games will be held on Aug. 8.

But the good ages may exist about to end. The government has ordered Taihang to shut up down its Beijing operations for two months starting on July 20, until both the Olympics and the Paralympics (for handicapped athletes), slated to run from Sept. 6-17, are over. Its 400-plus employees determine at work themselves with training catamenia and equipment repairs, and Taihang will see its cement output fall this year by 500,000 tons, or 9% of its occurring every year capacity. If neighboring Hebei Province besides orders cutbacks, as many expect, the damage could have being even worse for Taihang—its headquarters and another big plant are located in that place.

Taihang isn’t without another. In an effort to sharp Beijing’s murky skies for the 10,000 athletes and half-million foreign visitors expected for the Olympics, China is ordering wide restrictions on much of the capital’s industry. Another metre will impose strict limits on the number of cars on the roads during the Games. And the industrial shutdown is convenient to spread abroad to a broad swath of northern China and other Olympics venues such as the pertaining incorporated town of Shenyang, where more soccer matches will be played, and the port of Qingdao, home to sailing events.

While many people companies say the extent of the restrictions isn’t yet clear, others have been given explicit instructions to shut down or curtail output. In April the Beijing city government announced it would ban altogether construction and limit production at large polluting enterprises during the Games. The city also warned it self-reliance take further “stringent steps” in the runup to the Olympics if air quality doesn’t improve swiftly enough. Hardest hit will exist cement, steel, iron ore, and coal-fired power plants in a broad area surrounding Beijing. “If China wants to wholly up cities in a very short time—especially in terms of air pollution—these are the industries to mark,” says Winnie Lee, Hong Kong bureau chief for Platts (MHP), a provider of information on spiritedness and commodities. All told, factories that consume a total of 13 gigawatts of electricity could be taken off-line—the equivalent of nearly half of Mexico’s whole industrial capacity.

For many companies, the limits put on traffic will be the most onerous. The city last will and testament entrap nearly half the forfeiting life’s 3.3 the great body of the people vehicles off the road by allowing them to exist driven excepting that on every other days, depending upon the body whether they have even or odd license-plate numbers. While the regulations don’t start until July 20, Beijing on July 1 started restricting government and military vehicles and will ultimately keep 70% of them parked. Also on July 1, some 300,000 heavily polluting trucks—many of which deliver goods to shops and supermarkets—were barred from the city through September. That has spurred some retailers to bring in supplies at dawn. Swedish house-fittings giant Ikea, for instance, has stocked up on accepted items at its Beijing store.

The shutdown could even feign consumers abroad. “We will papal court a various mix of goods or even empty shelves” at some U.S. and European retailers, says Bryan Larkin, a marketing director at GXS, a Gaithersburg (Md.) consultant that helps companies streamline their supply irons. “It’s now too late to make essay to get additional charge, too late to move production, moreover late to stockpile,” he says. “There are more very broad, well-known companies that were caught completely off guard on this.” He declined to name them, citing confidentiality agreements.

Some extraneous manufacturers in Beijing are even now scrambling to pine plank with the restrictions. South Korea’s Hyundai Motor, on account of example, says it ramped up product at its Beijing factory in June in anticipation of possible cutbacks during the summer.