The Effects of China’s New Environmental Regulations on Manufacturing

 

It’s no secret that China has a pollution problem, and the manufacturing industry is a major contributing factor. Until recently, factories faced higher costs to comply with the Environmental Protection Law (EPL) in China than the cost of non-compliance. As a result, many factories didn’t make the needed changes to meet pollution regulations and chose to pay the penalties instead.

In 2016, the Chinese Government recognized this problem and committed to improving air and water quality by amending the EPL and tightening enforcement. Changes included higher fines for polluters, increased power for environmental protection authorities, requirements to increase transparency, and increased protection for whistle blowers.

Within one year of the changes, more than 80,000 factories were penalized and at least 14,000 factories were shut down completely. Textile and leather were among the most impacted sectors, making the shift even more difficult for those in the apparel and accessory industry. Even though it’s been several years since these closures, companies in the US are still feeling the impact.

 

What Does This Mean for Small Businesses & Startups?

 

The strict enforcement of the EPL caused many smaller fabric mills and dye houses to shut down permanently. These small-scale operations were typically willing to accommodate smaller businesses and startups by working with lower minimum order quantities. The remaining factories and large-scale operations are now at capacity filling the orders of well-established brands. Many are now unable or unwilling to work with smaller companies. This is making it difficult for these brands to establish a crucial part of their supply chain.

If you don’t want to wait in line behind bigger brands, you’ll need to find a mill that will work with smaller minimum order quantities. This can be difficult, but it’s not impossible. When looking into a dye house or mill, you should consider their past inspection history and current clientele. This will help you understand their abilities to fulfill your orders in a timely and reliable matter, as well as give you an idea of how you’ll be prioritized compared to other brands they’re working with. Keep in mind that you can always try to negotiate for a lower MOQ, but you may not always be successful doing it alone.

Higher compliance with EPL is a positive thing. It’s a big step towards sustainability in manufacturing and that’s an idea we can all get behind. But these changes haven’t been easy on the apparel industry. At Blacksmith, we understand how overwhelming it can be to set up a supply chain that works for you, your business, and your budget. Blacksmith has established relationships with fabric mills that can accommodate smaller MOQs, even with the increased strict enforcement of the EPL. If you’re struggling to find a fabric mill or dye house to work with, we can help.