China's power cuts are poorly communicated, according to a European business group
SHANGHAI, Oct 13, China's power shortages will likely force some European firms operating there to delay orders, and some firms are unhappy with how authorities inform them of power cuts, according to a European business group on Wednesday.
Klaus Zenkel, vice president and chair of South China at the European Chamber of Commerce, told reporters at a media briefing. "Many members think they have to wait their orders, their customers are unhappy, so it affects their normal business, and maybe some customers will cancel their purchases," he said.
Other member firms have complained that factories often receive notice from local governments of power cuts on the day itself, limiting manufacturers' ability to plan for them, according to Bernhard Weber, vice-chair of the European Chamber's Nanjing chapter.
"Companies are notified in the middle of the night via SMS that power cuts are imminent," said Weber.
Only in an economic zone in the city of Wuxi do authorities provide factories with a daily power quota on o-month basis, he added.
"All the other regions, all the different cities, they do it on a day-to-day basis. So you never know whether you can produce, in essence, from shift to shift."
Zenkel said that some businesses had to rely on their own diesel generators when they lost access to the normal power supply.
Worsening power shortages in China last month halted production at several factories, including many supplying firms such as Apple (AAPL.O) and Tesla (TSLA. O), triggered by a shortage of coal supplies.
The global second-largest economy and top exporter is facing an energy crisis that will last until the end of the year, with analysts and traders predicting a 12% decrease in industrial power consumption in the fourth quarter because coal supply is expected to be cut this winter.
Joerg Wuttke, the chamber's president, stated that the start of China' centralized heating system in the north on Oct. 15 and Nov. 15, when residents in China will be able to heat their homes from their own homes, will mark critical tests for industry.
If the power cuts persist into the Christmas period, there could be more component shortages and price increases, he added.
"We are in for a marathon, we are not in 'for slack."