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Importers Concerned Over China’s Pollution Crackdown

The Chinese government’s ongoing program to inspect factories throughout the country seems to have only a minor impact on apparel and textile facilities.

Teams led by ministerial-level officials are completing inspections of environmental protection efforts across China, with the results having affected many industries, according to reports, notably metal, coatings and plastic.

The teams, made up of officials from the Ministry of Environmental Protection, the ruling Communist Party’s anti-graft watchdog, began the first of four rounds of inspections in July last year after an earlier pilot project in Hebei province, several media outlets have reported.

The fourth round, which began last month, will complete coverage of mainland China’s 31 provincial-level regions, according to reports.

Nate Herman, senior vice president of supply chain at the American Apparel & Footwear Association, said the inspections have been ongoing for several months.

Herman said while he has occasionally heard from some of AAFA’s members of “temporary closures of factories,” the apparel and textile industry does not appear to be a target. The AAFA represents more than 1,000 brands, retailers and manufacturers.

While there is some talk in the market that apparel factories have been impacted, it doesn’t appear to be in any way widespread—“That we would have heard about,” Herman said—although geographically it has been going on in several areas of the country.

Herman said his take is that the situation is akin to what the Chinese government did during the Olympic Games in Beijing in 2015, when factories were forced to close several weeks ahead of the event to clear the air of pollution for the world view and athlete’s health.

Julia Hughes, president of the U.S. Fashion Industry Association, said, “We have heard about this from several of our members and we are concerned about it. We’re trying to track it down and see is if it’s really having an impact on apparel and textiles factories.”

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The USFIA represents textile and apparel brands, retailers, importers and wholesalers based in the U.S. and doing business globally.

Hughes said she’s seen some reports that indicate that it is, but she hasn’t heard from any members that any particular factories have been closed down.

“Nobody has said to me that they have had a factory shut down or an order stopped at a factory that they are doing business with,” Hughes said.

Given that this is the time of year that holiday goods start shipping from China, Hughes said she was “a bit nervous,” and USFIA is monitoring the situation.

“It’s mainly some dyeing factories and some finishing factories closed because they cannot control the pollution problem,” said Wang Hua, general manager for China’s Ningbo Dragonsilk Fashion Co., speaking at Apparel Sourcing in Paris Wednesday. The problem, he said, is mostly with garment washing and those are what’s causing the delays. “Sometimes some orders will ship delayed one month because of the pollution problem. Because some dyeing factories are closed, the good factories…need more time.”

Shanghai Sankei Garments and Auxiliary Co. overseas manager Pony Lu explained that the problem is mostly in the Wujiang area of China where there are a lot of dyeing factories.

“Many small factories are closed I heard….they cannot get orders because they cannot control the pollution,” said Lu. “In Shanghai the government controls it well, so we don’t have this problem.”

Apparel and textile imports to the U.S. from China increased 1.6% to 2.97 billion square meter equivalents in July compared to a year earlier, and were up 0.8% in value to $3.9 billion year-to-year.

For the year to date through July, Chinese imports increased 4 percent to 17 billion SME, but were down 3.4% in value terms to $20.7 billion.

Some 18,000 polluting companies have been punished so far, with fines totaling more than 870 million yuan ($132.2 million) handed out, and more than 12,000 officials disciplined.

[Read more about China’s policies: China’s New Scrap Ban Could Prove Detrimental to Global Textile Recycling Efforts]

Some local governments were so worried about the inspections that they ordered many factories to shut down before inspectors arrived, according to reports. Some factory owners have complained the tough approach was not fair because they were not given time or help from authorities to install costly equipment, while workers complained of losing their jobs.

Environmental protection has become a key performance indicator for officials in recent years, as the central government tries to address acute pollution caused by decades of unchecked economic growth that has increasingly fueled social discontent and resentment.

Nearly 14,000 companies representing about 70 percent of the businesses examined, failed to meet environmental standards for controlling air pollution, the MEP reported in June. The latest round of inspections has focused on Jilin, Zhejiang and Shandong provinces, with many factories shutting down as a result.

China has two of the top 10 cities with the worst air pollution in the world, according to the World Health Organization. Last December, Beijing’s city government issued a “red alert” due to dangerously increasing smog, ordering 1,200 factories to shut down.

Additional reporting by Tara Donaldson