This September, the G20 Leaders Summit will be held in Hangzhou, China, and the event is expected to begin causing supply chain disruptions as early as this summer. Factories within 150 kilometers (about 93 miles) of Hangzhou have been ordered to partially or completely close to improve air quality. So how will this impact global supply chains?
The G20, was initiated in 1999 as an international forum for governments and central bank governors from the 20 major economies. This year marks the first time that the Summit will be hosted in China. To prepare for the meeting, the Chinese government is taking monumental steps to ensure it is prepared to host leaders from the world's largest economies.
The countries of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union make up the G20, which replaced the G8 as the main economic platform of wealthier nations in 2009.
The G20 Leaders Summit will begin on September 4 in Hangzhou. Hangzhou is the capital of China's Zhejiang province and is in close proximity to Shanghai.
To minimize pollution in the atmosphere, the Chinese government has ordered partial or complete closing of factories within 150 kilometers of Hangzhou between the end of June and the middle of September.
Closing factories is part of a clean air campaign in preparation for the forum. Factory closings could disrupt production and shipping as early as June.
There are reportedly 370 dye houses, print mills, and finishing mills which will be forced to shut down around Hangzhou. In total, there are an estimated 1,000 factories which are expected to close. Additionally, the factories which have not yet closed have allegedly increased their fees due to strong demand.
Tips to minimize supply chain disruptions:
- Place orders early (by early April) to ensure cargo is shipped in advance of closings
- Ask vendors the timeframe and extent of factory closing
- Communicate changes in forecasts with your logistics partners
- Have a plan B for sourcing, if possible
Marisol International will continue to monitor this situation and provide updates as available. Subscribe to the weekly Marisol Transportation & Trade News Update to receive news as the G20 approaches.