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Environmental policy in China: Bad atmosphere leads to better prospects

Economic growth was the top priority of Chinese politics for three decades. However, geared on by the serious environmental problems and a growing sensitivity among the population, a new way of thinking in the direction of more sustainability has been observed in the People’s Republic over the past few years. A glance at the country which is the undisputed number one when it comes down to the production of promotional products.

Whereas the USA led by Donald Trump recently announced its withdrawal from the Paris Climate Agreement which triggered off very little understanding, another country is starting committing itself to the new environmental protection. The corresponding guidelines are already formulated for the current five-year plan (2016 to 2020). For example, the People’s Republic wants to improve the quality of the groundwater and the surface water as well reduce the energy consumption and CO2 emissions. The fact that these aims have actually been laid down in a change of the law demonstrates that they are not merely empty promises, with which Peking is trying to placate the population that is more and more frequently coming together to demonstrate at local environment protests: On January 1, 2015 a new version of the 1989 Chinese Environmental Protection Law came into effect, which offers the population more opportunities to take on environment polluters. Furthermore, the new law has considerably tightened up the type and scope of the sanctions: The spectrum of possible measures includes the confiscation of systems, temporary and permanent closures of companies, imprisonment of persons responsible up to a period of 15 days as well as continuous fines to the equivalent of max. 13,500 Euros per day – until the environmental violation has been rectified. The political turnaround is way over due, as Cora Jungbluth of the Bertelsmann Foundation confirmed in a guest article for the publication econet monitor published by the German Industry and Commerce Greater China in January 2016: “Around one third of the water reservoir is considered to be highly polluted, over a third of the ground surface is affected by erosion and desertification and several Chinese cities could actually be classified as being uninhabitable due to the massive air pollution.“

High smog pollution

Particularly in Winter when many households also heat their homes using coal, the air pollution is extremely high like here in Peking. A face mask has become an everyday companion for many of the city dwellers.

In view of the smog values in cities such as Peking and Shanghai that repeatedly exceed by far the threshold values where according to the WHO danger to health begins, respiratory masks have long since become everyday companions of the city dwellers. China had accepted this for a long time, but ever since millions of Chinese saw the smog documentation “Under the bell” by the journalist Chai Jing on the web, many people are alarmed. The fact that the Chinese government took the film off the net just a few days after its release in the year 2015, didn’t really change the situation. The film may have been removed from the media; however the problems remain. One of the biggest sources of air pollution is the use of coal as the main energy supplier and for heating Chinese private households. The targets of the current five-year plan place a greater emphasis on themes such as the development of renewable energy, the promotion of electric mobility, recycling and closed-loop economy as well as water treatment. The reform of the environmental protection law with the significantly stricter sanctions is an attempt to get on top of the environmental problems. Bernhard Felizeter, Director of the Environmental Department of the German Foreign Chamber of Commerce and Industry in Peking: “In the past, the wide-spread non-compliance with the valid regulations of the economic protection law and the insufficient punishment of violations partly gave many companies in China a clear advantage over their competitors. The new version makes the competitive conditions fairer.”

Effects for the industry

Christof Achhammer, Manager for Germany, Austria and Switzerland at Mid Ocean Brands, has ascertained that the new law is not merely a paper tiger, but indeed will actually be implemented: “The legal specifications are very strictly monitored and the fines for violations are very drastic.” There is no question about it, the new political specifications are bringing a fresh breeze into the Chinese production sites, which are still the main suppliers for the European promotional products industry. However, whereas in Europe one is to a large extent sensitised for environmental issues and enjoys blazing everyone with one’s sustainable commitment, little progress has been made in terms of the sense of responsibility of the West, when it comes down to East Asia. Michael Diekmann, CEO of the advertising and merchandising agency, Die UKW: “Over here the environment and child labour is often discussed, but at the end of the day, China is very far away. And last, but not least the price is often decisive for a lot of people. I guess the price ultimately decides between 80% and 90% of the bids for tender.”

Double standards of the West

The China Office, a subsidiary of the Belgian Van Bavel Group based in Ningo, China, which sees itself as an intermediary between the European promotional products trade and Chinese production companies, views the situation in a similar way. Paul Keser: “Our large customers are very interested in CSR and product safety during the quotation phase. However, they are mostly not prepared to pay the extra price. This does not really help the factories. The West wants cheap products. So China needs to produce very cheaply. Therefore there is little money to protect the environment.” The China Office provides several answers here: The company works together with production sites that are selected according to environmental aspects. Keser: “We audit every factory we work with. Whether in the form of physical visits or external audits or the examination of the auditing documents. We have built up a huge database that contains over 3,500 factories with their auditing and other documentation.“ The China Office also offers factories advice, helping companies with the preparation of controls and making suggestions for improvements. Diekmann has also observed that one can achieve a great deal with the corresponding commitment, because ultimately in the face of the tough competition among the Chinese manufacturers the demand is decisive: “We have been operating in China for 34 years. At the time nobody asked much about emissions for instance. Then around 20 years ago we developed our own import guidelines for Die UKW via our QMT (Quality Management Tool) and kept putting the pressure on. That disciplined the supplier partners. Our factories in China have become more sensitive. In the meantime, quality assurance and certifications are an absolute must.” Die UKW has around 180 regular suppliers. All of whom comply with the Quality Management Tool and have agreed by contract that external auditing institutes are granted access to the production sites. Diekmann: “That has its price of course and makes the products five to ten percent more expensive overall. But I stand behind this. In China the environmental problems are directly on the doorstep: You only have to look out of the window during the train journey and you can see immediately that it is high time that things have to change. So, if we don’t win an order due to reasons of price, that is just how it is.” However, not all big companies can be tarred with the same brush and accused of having double standards: “On the other hand there are also customers, who work together with us more since we were awarded the ISO 9001 certification and others who even want to carry out audits themselves and send the TÜV to our manufacturers in China.“

As EU law requires large companies to disclose certain information on the way they operate and manage social and environmental challenges, the promotional products industry will presumably also come under stronger focus as part of the supply chain and the sensitisation for environmental issues will increase overall. There is a lot happening here in China too. Achhammer hopes for the customers’ understanding that possibly delays in delivery could occur at specific moments: “Factories throughout the country were partly closed down to reduce pollution or due to the energy inefficient procurement of raw materials. This has caused a supply shortage and rising raw material prices. On the other hand, the energy output at the peak period of increased environmental pollution is sometimes spontaneously reduced, which has an additional effect on the production.” Diekmann doesn’t believe that this will lead to a shift to other markets. “South Korea is much more advanced, but more expensive. One shouldn’t underestimate the Chinese. The process of rethinking is happening at such a fast pace that it partly surprises me. China will continue to be the most important market for the promotional products industry. We have connections here that go back many years and we will stick with these. It is a trusting and responsible cooperation. It is fun working with the Chinese.” So a good outlook for China – in both senses of the word.

// Rebecca Klug
photos: iStockphoto (1); Thinkstock (1)
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2017-09-18T10:23:39+00:00 September 13th, 2017|