The Chinese Government and the electronics industry have accelerated preparations to cope with two new European Union directives restricting the use of harmful substances in electronics.

The EU action also calls for recycling of water used in electricity and electronics production.

The new restrictions are expected to have major impacts on Chinese exporters, likely costing billions of dollars to implement.

"The two directives will cause some impacts on Chinese manufacturers, but the difficulties are not overwhelming," said Yao Wenping, vice-president of China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

The two directives refer to those on the Restriction of Use of Hazardous Substances and the Waste Electrical and Electronic Equipment by the EU. The first directive restricts the use of lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyls, or polybrominated diphenyl ethers in electric and electronic products in the EU market beginning on July 1, 2006. The second requires producers and distributors to collect, recover and recycle their products, and demands they take back their old products when they are discarded. That rule goes into effect on August 13.

Ir. Ab Stevels, a senior advisor in environmental engineering with the Dutch electronics giant Royal Philips, said in an interview on Sunday evening that while the implementation of waste directive is still an issue under heated debates in the EU, 15 of 25 EU nations have passed legislations to carry it out under the new restrictions.

China exported about US$380 billion worth of electric and electronic products last year and about 30 percent of them went into the European market.

Some experts predict the implementation of the two directives is likely to cost Chinese manufacturers as much as US$10 billion, including increases in costs of materials, export processing costs, and distribution expenditures.

Chamber of commerce officials estimate that 95 percent of its 6,800 member companies will be affected by the two European rules.

Nine governmental agencies in China have worked together to discuss ways to cope with increasing environmental barriers, according to Yao.

She added that the Ministry of Commerce has set up a special team to follow the development of the directives and will recruit experts to help Chinese makers to cope with the requirements.

The government is also thinking about setting up a fund to encourage the industry to develop solutions.

The industry is also moving quickly to handle the issue.

Skyworth Multimedia (Shenzhen) Co Ltd has required its suppliers to provide components in agreement with the European rules.

Cao Daorong, chief engineer and deputy general manager of the quality department with the Shenzhen-based Chinese home appliance giant, said exports of his company will fully meet the new directives by June.

He said there will not be a sharp increase in costs for the company and the cost of a traditional cathode ray tube television set would rise by just 1 percent.

The biggest Chinese electronics company Haier Group also set up a special task force to develop solutions.

Foreign-invested companies, which export 75 percent of electric and electronics products from China, will also try to improve their supply chain.

Philips said it will help Chinese suppliers and other manufacturers in meeting the requirements.

"On one hand, this is serious, but on the other, do not panic," said Stevels.

He said his firm will pass the information about the two directives to its suppliers and transform its technologies in the area to those firms if necessary.

As of this year, the company stopped using lead in all its electronic products in China.

(China Daily April 20, 2005)