Exports to the EU of household appliances manufactured in China could plunge by a third because of failures to meet new standards on hazardous materials, an industry expert warned yesterday.

 

The EU introduced on July 1 new restrictions on hazardous substance content in electrical and electronic appliances, which could cost China US$30 billion worth of exports, said Yu Zhipu of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products. 

 

No Chinese companies in this sector are immune to the EU directive on the restriction over the use of certain hazardous substances in electrical and electronic equipment, said Yu, secretary-general of the chamber's Home Appliances Division.

 

The regulation set a maximum concentration of 0.1 percent by weight of many environmentally hazardous substances such as lead and mercury, which are inevitable in the manufacture of electrical goods. 

 

Large manufacturers such as Haier and TCL have prepared themselves for the regulation issued in 2002 but many small and medium-sized companies have failed to comply.

 

Experts say manufacturers have to upgrade their own production equipment and ensure the standards are applied by those who supply them with parts. It's estimated that the new regulation will bring an average rise of 10 percent to production costs.

 

A survey cited by Tuesday's Guangzhou Daily showed that half the electronic manufacturers on the Chinese mainland had failed to meet the restrictions on hazardous substances with 64 percent predicting price hikes of up to 10 percent.

 

Yu said small and medium-sized appliance manufacturers unable to absorb the rising costs could be forced to give up the European market.

 

Citing an unnamed official with the Ministry of Information Industry the newspaper said the restriction on the use of dangerous substances was a "global trend."

 

The Chinese government has planned to release their own version of appliance standards in March and the official warned there was little time left for domestic manufacturers to catch up with the trend.

 

China earned US$426.75 billion from exports of machinery and electrical products last year, which was 56 percent of the country's total foreign trade. The EU accounted for US$90.48 billion of the sector's exports, making it the second largest market after the US.

 

(Xinhua News Agency July 5, 2006)