Drop-Shippers Beware, China is About to Take a BIG Hit!

With the recent news of strict environmental regulations about to take effect in China, some drop shippers are starting to become a little nervous.

China’s Environmental Protection Agency is taking a stand and forcing thousands of factories to fix their pollution issues, or face being shut down. If you’re currently sourcing and drop shipping products from China, now would be a VERY good time to start preparing for the fallout.

Experts predict that with this increase in regulation in the manufacturing sector there will be some significant increases in their operating costs. A large number of the businesses producing goods including; plastics, metals, packaging, and fabric will be severely affected by the new regulations. Protections similar to these were rolled out early in the year mostly affecting heavily polluting industries such as; cement, iron, & plaster. Some manufacturers were either suspended from producing all together or significantly restricted until the proper protections are in place. The same is to be expected with industries producing goods for drop shipping companies like AliExpress, Alibaba, & Sourcing Map, just to name a few.

Since the new regulations have shown some significant progress. They are now being rolled out to more cities/industries in order to meet the aggressive goals set by China.

“China’s Environmental Protection Tax will take effect January 1^st, 2018. They have pledged to cut average concentrations of airborne particles known as PM2.5 by more than 15 percent year-on-year in the winter months in 28 northern cities to meet key smog targets, the environment ministry said. They also announced the successful launch of nearly 8,000 water clean-up initiatives in the first six months of 2017, comprising a projected total investment of 667.4 billion yuan ($100 billion.)” - Reuters

With these changes, industry insiders are predicting a significant increase in prices for goods being manufactured in facilities affected by these new regulations. One of the biggest fears drop-shippers have is that not only will these regulations increase price, but manufactures may not even be able to obtain the materials to keep up with production. With the 4^th quarter right around the corner and these regulations on the horizon drop-shippers are hedging their bets and preparing for the worst case scenario.

“The approaching winter months typically bring the highest levels of smog pollution in the northern regions of China. This is due to a combination of shifting weather conditions and increased coal burning for heating. In cities such as Beijing, each winter smog can reach dangerously high levels for human health.”  – Reuters

What Should I do Now?

We suggest you take this opportunity to re-visit your products, and where they are manufactured. If you do have product coming from China you may want to seriously consider finding another source. Of course this may prove very difficult given the number and volume of products coming from China. So, at the very least, do your due diligence to ensure you're not being left in the dark. Last thing we want is anyone to be caught off guard. These changes have the potential to significantly alter the way people are currently doing business. You may want to ask your manufacturers if any of the new regulations are going to impact them. You will also want to look into buying your products in bulk now before it's too late and sending them to a fulfillment facility.

Well, that’s all for now folks. We’ll be sure to keep a close eye on this as we move through the 4^th quarter. And, we will also keep you posted on any updates. For questions about how you're affected by these changes or for information on what you might be able to do to avoid any possibly fallout. Please feel free to inquire below in the comments.