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back to index backCHINAtalk October,  2004


Power shortage puts logistical systems under pressure

by Paul French, Access Asia

Shanghai - The logistical systems between major manufacturers and their suppliers in China are increasingly coming under pressure and are in danger of falling apart, said Paul French, director of publishing group Access Asia at the International Freight & Logistics Network, inc Membership conference on Monday in Shanghai.

Many foreign invested companies got preferential treatment during the ongoing power shortages this summer. But their suppliers, mostly smaller private enterprises, suffered from power outages and have increasingly trouble in doing their share of the just-in-time systems that has developed over the years. This is how the old planned economy and the newly developed market economy collide,” said French.

The larger foreign manufacturers had developed over de past year in the Yangtze delta a quite sophisticated network of suppliers they now rely on. Most of them have very small margins,” explained French, we have not yet seen a wave of those companies going out of business, but these small guys are going out of business when problems keep on coming. Private companies are not getting enough power. The GM's and Siemens's get enough power, but cannot get their parts anymore.”

Because of the shortage of power, coals transport get priority over other products, adding pressure on the logistical systems, added French.

Source: CBIZ.cn and Access Asia


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Other articles from the same issue (October,  2004).

China powers ahead – but how far, how quickly, and how will it be managed?
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