Has Your China Manufacturer Been Seized Today?
A loyal reader just emailed me an Outside Blog post regarding a China government decision that will have immediate ramifications for certain companies and should give at least some other companies a little pause. The post is entitled, "China Seizes Control Of Tent Manufacturers For Quake Aid," and it is on how "the Chinese government has seized control of all Chinese-owned tent factories and existing stock" to aid in earthquake relief. According to the post, Chinese army soldiers will be "on factory floors for at least a month, maybe more." The post goes on to note that this "move may have some effect on US suppliers gearing up for the outdoor season, and could bottleneck production into the spring of 2009."
This sort of seizure is yet another contingency of which some manufacturers should be aware. Many countries have laws allowing their governments to commandeer (I am running this post just so I can use that word) certain critical assets during emergencies or time of war (for example, US law provides for civilian maritime vessels to be taken for government use during war) and I would think it is the rare company that ever considers this. I am not saying every company needs to consider the possibility of China's government taking over their factory or supplier tomorrow, but this is just one more thing at least certain companies should put into their supply chain risk mitigation plans/strategies.
Comments
My "rumor/urban legend alarm" is going off full blast here. This looks precisely like the type of article that contains a grain of truth somewhere that gets told and retold until the final result looks nothing at all like what is going on.
The reasons my urban legend alarm is going off are:
1) lots of detail that add drama to the article, but nothing that can be verified
2) a weak chain of transmission, one person tells someone else who tells someone else with the final person telling you the story being five or six layers away from the actual incident
3) No documentary evidence from the Chinese media.
Anyway, the only thing I could find about this story is
http://english.sina.com/china/1/2008/0619/167667.html
Posted by: Twofish | July 26, 2008 5:54 AM
For this and many other reasons it is foolhardy for any company to depend 100% on any supplier in China. I would always have at least two sources, one in Asia and one in the Americas - or better yet - one at home!
Posted by: Jay | July 26, 2008 11:20 PM
Jeez, what's with the sensational headline? I just finish talking to a Chinese colleague in Chengdu at the Intel plant, and then I backwash into my coffee reading your title...
Posted by: Hartman | July 27, 2008 7:53 PM
This story is about as sensationalist as it gets, and the author clearly has failed to understand the context in which this occurred.. and Dan, you are sensationalizing the point to up your comments (I have fallen for it)
1) You have an earthquake that has killed 100k + people, and created a need for large quantities of tents
2) You have a government responding to the need, and has put out requests of all tent manufacturers to produce as many tents as possible to spec
3) You have a heavy handed approach (I will concede that) to ensure that manufacturers focus on domestic need vs. export
First, what is wrong with that?
Second, how is this a condition that could be applied to another category of good?
Third, the tents being manufactured are not the same products as those being produced for REI. Sure, some capacity is being moved from one to the other, but if this was a systematic issue REI and others would not be sending their inventory anyway.
In short, what is going on is not applicable to anything else, and trying to connect these dots and scare people is ridiculous.
Posted by: Justda411 | July 28, 2008 10:27 PM