Transport curbs for the Olympics are rippling beyond Beijing

  • 05/08/2008

  • International Herald Tribune (Bangkok)

BEIJING: The transport restrictions that China is imposing as part of its drive to ensure clean air and security for the Olympics are rippling well beyond Beijing, ensnaring a widening circle of companies. Private cars can use the city's roads only every other day, depending on whether the numbers of their license plates are odd or even. Most trucks can enter the city only at night, and only if they meet tough emissions standards. On top of that, a range of goods deemed dangerous, including most liquids and even electronics, cannot be shipped by post, nationwide. Such measures, not the separate decisions to shut polluting factories in and around the capital, explain why a Beijing factory owned by Gushan Environmental Energy, the top producer of biodiesel in China, now sits idle among the corn fields on the sleepy southern outskirts of town. "The government's recent strict enforcement of measures controlling the movement of vehicles and goods in and out of the Beijing area have rendered biodiesel production at our Beijing plant impractical for the time being," said Yu Jianqiu, the company's chairman. The plant will be closed until Sept. 20, making about 10,000 fewer tons of biodiesel as a result, the company said. Evidence is mounting that many other companies are being affected by the transport restrictions as well. Companies in Beijing are not the only ones affected. A survey of manufacturers published by the brokerage firm CLSA last week showed that many factories around China were having to wait longer for raw materials because of the transport curbs, which in some cases are leading to higher costs. Zhejiang Adwin Furniture, based in Wenzhou, a hive of enterprise in eastern Zhejiang Province, stopped shipping its furniture to Beijing and the northeast of the country as early as June, said an executive, Liu Yongcheng. Heavy trucks arriving from the south are being turned back as far away as Dezhou, in Shandong Province, nearly 300 kilometers, or 185 miles, from central Beijing, said Yang Xinlei, a senior executive at Gtime Logistics in Beijing. Such restrictions have presented a big challenge for major logistics companies. Dan McHugh, chief executive of Deutsche Post's DHL Express Asia Pacific, said his company started working 18 months ago on plans to deal with the limits. DHL has spent about $2 million to prepare for the Games, buying extra X-ray machines and hiring more staff to handle the additional nationwide customs checks, McHugh said. "The key thing is the amount of inspections that they're both mandating and asking for," he said. Ben Simpfendorfer, a strategist for China at Royal Bank of Scotland in Hong Kong, said that while the measures would not slow overall economic growth by much, the resulting headaches were greater than many expected. "A lot of these companies are struggling with cash flow anyway, so when you start to see disruptions in the transport and distribution network, it does begin to cause problems. It has a ripple effect," Simpfendorfer said. "But it's more likely heartburn than a heart attack." That is little consolation to the workers at Gushan's biodiesel factory outside Beijing. "Of course we don't like to see our factory halt production," said a worker who was sitting beneath one of the few trees lining the deserted road in front of the factory. But that would not mean he and his colleagues would have the summer off to watch the Olympics, said the man, who declined to give his name for fear of getting into trouble with his employer. They will have to go through training and indoctrination in company culture over the coming weeks. "Once the Olympics are over, things will be better for us," he said.