Shenzhen and Zhongshan, China: Exports Decline Due to RoHS Restrictions - in the Context of the Times in 2006

Shenzhen and Zhongshan, China: Exports Decline Due to RoHS Restrictions - in the Context of the Times in 2006

In 2006, Shenzhen and Zhongshan cities in China's Guangdong Province, which are centers of electronics manufacturing, experienced a significant decrease in exports of home appliances and electronic products to the EU. Particularly noteworthy was the impact of the EU's RoHS Directive (Restriction of the Use of Certain Hazardous Substances), which came into effect on July 1 of the same year. This directive prohibits, in principle, the use of hazardous substances such as lead, mercury, cadmium, hexavalent chromium, PBBs, and PBDEs in electrical and electronic equipment, and was intended to reduce their impact on the environment and human health.

As a historical background, internationally, environmental regulations were being tightened worldwide following the entry into force of the Kyoto Protocol (2005). Sustainable development and the creation of a recycling-oriented society had become policy themes for many countries, and the EU was playing a leading role. Meanwhile, China's rapidly growing manufacturing industry, while leading the world in price competitiveness, was facing major challenges in meeting environmental standards.

Companies in Shenzhen and Zhongshan were slow to review their inspection systems and manufacturing processes to comply with the RoHS Directive; the lack of sufficient information on inspection methods from the EU side and the underdeveloped system of testing and analysis institutions in China led many companies to decide not to export. Export declines of 8.5% y/y were recorded in Shenzhen and 7.7% y/y in Zhongshan.

The slowdown in exports underscores the importance of exports to China's economy and demonstrates that environmental responsiveness is now an unavoidable condition for competition. The development of quality control, material procurement, and traceability was rapidly promoted.

The following year, in 2007, the Administration Measures for the Control of Pollution Caused by Electronic Information Products, which could be called China's version of RoHS, went into effect, promoting the spread of environmentally friendly products and the development of an analysis system. The 2006 decline in exports was not a one-time event.