Chinese household manufacturers facing the Green barrier
2008-08-05

Review Two European Union (EU) directives, WEEE and RoHS, aim to boost recycling of old electronics, curtail use of hazardous substances in manufacturing, and improve the environmental performance of producers. But these tough "green" regulations could serve as trade barriers to electronics exports from China, the world's third-largest trading country. ¡¡ The Waste Electrical and Electronic Equipment (WEEE) directive, which took effect in August 2005, calls for product end-of-life management, eco-friendly design, and life-cycle thinking. Meanwhile, the Restriction of Hazardous Substances (RoHS) directive, scheduled to take effect July 2006, prohibits the use of six hazardous substances—including mercury, lead, cadmium, hexavalent chromium, and brominated flame retardants—in all electronics exported to the EU. 

Effects Small and medium-sized companies, which account for 30 per cent of China's electronic product lines have faced the pressure from the directive's effects first. 1. Weaken China's household electrical appliances export competitiveness The RoHS regulation applies specifically to producers in the supply chain, requiring them to reevaluate the chemicals used in every component, product, and process. It is expected to have huge industry-wide effects, leading to higher material, equipment, and unit costs and to a need for increased worker training. Industry insiders estimate that the directive will lead to a 10 percent rise in production costs in China's electronics industry. The increased costs have brought many challenges to Chinese companies, which largely owe their success on the international market to low-price strategies. 2. Impact the confidence of foreign investment in the electronics business There are two reasons for the preference of foreign investment in Chinese household appliance enterprises. First, the home appliances market in China is great huge. Second, they want to occupy the market of other countries by the low cost of labor in China. However, due to the anti-dumping allegations of other countries, those foreign-invested enterprises have gradually lost market share overseas in recent years. This will inevitably endanger the economic interests of foreign investors; even affect their confidence in investing in China. 3. Affects the overall image of Chinese electrical appliances product On the one hand, the electrical appliances enterprises might lose the huge international market when big nations take anti-dumping policies to us. On the other hand, explained from the side that the Chinese product competitive power have been strengthened. However, if small countries like Trinidad and Tobago, with low consumption level, also come to counter-dumping, the impression that Chinese electrical appliances product gives will be Low-cost, low-grade

Responsive Strategy 1. Enhance our own brand, strengthen research and development Most of Chinese household electrical appliance enterprises are at the low-end of the global value chain. In order to develop the international market rapidly, they had to use the price war which is the chief criminal of anti-dumping abroad. Therefore, the fundamental way , in the long term, is to make great efforts to cultivate its own brands, strengthen technological research and development. Chinese household appliance industry should attract consumers by strong brands and advanced technology, instead of low prices. 2. Actively promote green management Green Management refers to putting the idea of environmental protection into enterprise management process. This idea can be summed up as the principle of 5 R. ¢Ù Research. Take environmental protection into enterprise decision-making elements. ¢Ú Reduce. Actively use new technologies to reduce or eliminate emissions of harmful waste. ¢Û Reuse. Change traditional products to environment friendly products. Use the green sign actively. ¢Ü Recycle. Recycle the waste products, carry on the recovery processing. ¢Ý Rescue. Actively participate in environmental activities in the community. Make sure the staff aware of the policy on environmental protection. Establish an eco-friendly corporate image. 3. promote the strategy of multi-market Speaking of the present situation, it is developed countries such like Europe, US and Japan who relies on its own technical superiority to assign strict technical standards and regulations. But speaking of some developing countries and backward countries, the barriers are much fewer.