As many as 600 Shanghai-based textile factories will be closed starting in August, ahead of G20 in Hangzhou, and the repercussions could be substantial.
The country also ordered the closure of as many as 255 factories in other industries, like oil refinery Sinopec Corp to shut down from Aug. 24 to Sept. 6 to help reduce the pollution.
It isn’t the first time China has ordered factory closures as an ad hoc answer to cutting down the smog before high profile events, and it isn’t the first time the move will have effects on the supply chain.
China’s Institute of Public and Environmental Affairs (IPE) said roughly 50 percent of the country’s textile dyeing industry is based in the Zhejiang province, of which Hangzhou is the capital, according to EcoTextile, and the total number of factories slated for the temporary shuttering could be as high as 1,000.
“This large-scale shutdown of factories in the Hangzhou area creates complications for supply chains,” EcoTextile reported IPE as saying. “The consequent slowdown, or in some cases, standstill, in production limits factories’ ability to generate shipments until after the summit concludes. In the meantime, many suppliers have already increased fees to accommodate the high demand in anticipation of closing.”
Factories in the larger Zhejiang area and neighboring province Jiangsu, may also call for closures ahead of the G20 meeting.