RE: Times article 8/11/218 Nov 2021 21:30
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He added: “It is ironic that while the UK is being critical of China’s emissions levels, we are also getting very concerned about the possibility of a shortage of the products that we in Britain demand from China that cause those emissions.”
China was hit by a similar power crunch in June. However, the situation is more critical now because of a combination of soaring coal prices, pressure from Beijing to tackle carbon emissions and the need to heat homes as winter approaches. In Guangdong, China’s biggest manufacturing region, almost 150,000 companies have been hit by energy shortages. Factory owners are being told that rationing is likely to last for months.
Analysts had warned that energy-intensive sectors such as metals and cement production would be among the worst hit, but the reduction in power output has now spread to include everything from clothing to toys, chemicals, dyes, furniture, paper and glass.
Matt Clark, a partner at Alix Partners, the consultancy, said: “This will add to the misery of supply chains and inflationary pressures.”
Analysts at ING have said they expect supply chain disruption to last “well into 2022, which will result in higher trending goods inflation, production hiccups and dampening recovery in production”. Three provinces in northeast China have been particularly hard hit by the blackouts, with household electricity cut off, and more than 20 listed Chinese companies have issued notices of production suspension, according to a report prepared by Alix Partners for its retail clients.
Gary Grant, 63, chief executive of The Entertainer, which sources toys from China, said it had been a traumatic year for retail supply chains. “The products that are meant to be manufactured now are supposed to land here in February. But these manufacturing delays have extended that by another 60 to 90 days, meaning there will certainly be a shortage of early-summer products.”
Grant said further disruption from China would “undoubtedly lead to prices from the Far East rising by 10 to 12 per cent, and that will start to be felt here next year”. One boss of a leading British clothing retailer said that factories reducing output to just two to three days a week would have a significant impact on next year’s spring and summer collections, exacerbating woes caused by domestic supply challenges. In addition, it would result in further inflationary pressures.
A British supermarket insider said that Chinese factories were restricting hours by cutting off power for a few days at short notice. While their suppliers were trying to manage the disruption, the unexpected nature of the blackouts made them hard to plan for.
Simon Roberts, 50, chief executive of J Sainsbury, said last week that the supermarket group was finding it was taking 40 days for Argos products to reach the UK from Asia — double the normal length of time.
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