Shenzhen and Zhongshan, China: Exports Decline due to RoHS Restrictions - September 2006

Shenzhen and Zhongshan, China: Exports Decline due to RoHS Restrictions - September 2006

In 2006, Shenzhen and Zhongshan cities in Guangdong Province, China, experienced a significant drop in exports of electronic products to the EU. The background is the EU's RoHS Directive, which came into effect in July of the same year. This was an international effort to reduce the impact on the environment and human health.

At the time, China's manufacturing industry was in the midst of rapid growth, and Guangdong Province in particular was known as the "world's factory. However, a system based on inexpensive mass production made immediate compliance with RoHS difficult, and the unclear inspection standards on the EU side and the lack of a testing and analysis system in China caused many companies to refrain from exporting. As a result, sales in Shenzhen and Zhongshan fell 8.5% and 7.7% y/y, respectively.

This situation was more than just a trade issue; it heralded the arrival of the "era of environmental quality" for Chinese manufacturing. This series of disruptions in 2006 was symbolic of the need to adapt to global standards and the structural transformation of the manufacturing industry.