Power Crisis in China: How to Handle the Impacts?

Transforming the economic model, ensuring the harmony between economic development and environmental protection, and taking appropriate revolutionary steps are the primary test for Beijing’s political elites. As a consequence of the economic growth density’s rapid recovery, a power crisis in China is happening due to the threat of a severe shortage of burning energy sources – coal, especially.

Coal-fired power plants provide about two-thirds of China’s annual electricity production. As production activity suddenly became strong again, the electricity demand in China increased, leading to a rise in coal prices. However, some coal-fired power plants have closed for “maintenance.” In fact, they were actually avoiding losses due to the situation when coal prices have increased, but electricity prices have not.

Therefore, when these factories close due to the lack of coal for operation, it is challenging to avoid power shortages leading to power outages.

Power Crisis In China

Since the end of September, the rotational power-cut in China has spread to half of the country. Not only do many factories have to cut production, but people’s lives are also affected, even threatening to slow down the recovery of the national economy of billions of people and put pressure on the global supply chain.

Widespread Power Shortage: A Not-So-New Story in China

This is not the first time China faced electricity restriction on such a large scale. Since 2000, the country has had at least three crises due to power shortages, by which the most recent event happened in 2011. This power shortage has rekindled since 2020 and is mainly concentrated in a few provinces and cities in central and eastern China. By 2021, power shortages are becoming more widespread and severe in some of the country’s leading manufacturing and export hubs.

Power Crisis In China

China’s industrial giants have been grappling with soaring electricity prices and have restricted their electricity use since at least March. By May, manufacturers in Guangdong, China’s leading exporting province, were also receiving similar requests under the condition of amid hot weather combined with lower-than-normal hydropower output, straining the national grid system. Other large industrial zones along the country’s east coast are subject to power consumption restrictions and rotating power cuts.

By September, the restriction on electricity use had spread to 16 provinces and cities, more than half of China, including the capital Beijing. It affected both household electricity and electricity used in public places.

The Impacts of Extended Production Time on Businesses during China Power Crisis

China is one of the giants in merchandising, supplying, and manufacturing all products in the world. Thus, all businesses that have their orders placed in the country will definitely be affected during the event. Aside from the mentioned industries, imports and exports might also encounter problems. Listed below are some of the potential impacts of the Power Crisis in China:

The lack of electricity is affecting most economic sectors, including two key sectors: construction and manufacturing. A series of companies and factories in China, large and small, have stopped working, causing severe shortages of raw materials, from textiles to components. The consequence affects the supply chain and eats away the profits from a significant number of multinationals around the world.
Jiangsu, a province near Shanghai with an economy nearly as large as Canada, has closed steel mills and turned off street lights in several cities.
The other factories, which are object to the shutdown, have also to restrain their working period down to 2-3 days a week. This has resulted in an aggressive decrease in yield production so that they can meet up with Beijing’s pledge to cut emissions.

How to Handle the Business Impacts?

How to still “get things done” smoothly in this case? Here are some suggestions for your business to be consistent throughout the crisis:

1. Understand the Situation

This happening severely affects a vast territory of China, by which not only do factories suffer but also other social facilities and the Chinese people directly. Looking into the industrial aspect specifically, depending on which part of China each of the factories are located, its current situation may vary.

Therefore, we highly recommend keeping up-to-date with the news on the events, especially with the factories in the fields related to your company. Understanding the course of this incident helps you plan for a proper strategy that can make you survive this crisis.

2. Check Your Resources

With the challenging situation in the industry, businesses need to check resources and speculate their inventory needs. It will be better to ensure that your business will not run out of the important goods and you are well updated on your stocks. This way, you can develop a plan and know how to seek assistance while this issue is prominent.

3. Communicate with Your Manufacturer

Indeed, communication will always be the key to everything. Effective communication and taking into account the opinion of your manufacturer can help you understand the situation more clearly to better plan your path. It is good to talk and develop a trusting relationship with your partner while discussing the current problems and asking for potential solutions. If you get it right, you can work together to find ways to overcome this crisis effectively. Moreover, they can also introduce you to other partners that can help you with the situation.

Renewable Power Promotional Items

Check out our recommendation for five solar promotional items that businesses can use as their support for renewable powers.

1. Solar Camping Lamp

This serves for outdoor activities due to the attached solar panel. With an 18-20 hours charging duration, the solar camping lamp provides light from all angles for 6-20 hours. Further use of the product is that it works as a mobile phone power bank. Companies can offer this item to emphasize their care for the environment and other sustainability awareness. Product code: ODM-2776