No sympathy for company’s losses due to closure of polluting supplier

THE GREATER CHINA CEO OF SCHAEFFLER, a leading supplier of bearings and precision components to the automotive industry, reportedly submitted a report to the Shanghai authorities detailing the company faced “considerable” financial losses, because its local raw material supplier was shut down because of its failure to stop polluting. Beijing News commented on Wednesday:

In its report Schaeffler said the shutting down of its local supplier could halt the production of over 200 kinds of cars worldwide and cause a loss of about 300 billion yuan ($47 billion).

However, it is unlikely that the German company has only one raw material supplier in China, and ensuring a stable supply of materials should not pose too much of a problem.

And Schaeffler has a responsibility to choose competent, environmentally friendly suppliers. It made a wrong decision by signing a contract with a company prone to pollute, and its laments for its losses deserve no sympathy as they were ultimately of its own making.

What happened to the metal wiredrawing unit of Shanghai Jielong Industry Group Corp, Schaeffler’s valued supplier, did not come out of the blue.

The Shanghai supplier apparently ignored previous rectification instructions given by the local environmental protection enforcers, in the hope that its consistent contribution to local economic growth would give it immunity. But it underestimated the country’s determination to deal with heavy polluters like itself.

Founded in 1993, the Shanghai metal wiredrawing company has long been on the radar of local environmental protection regulators “thanks to” its polluting. What led to its closure remains unknown, but given its past record it is fair to assume water contamination may have been the reason.

For manufacturers, tougher environmental scrutiny is more of an opportunity to facilitate industrial transformation rather than a threat to their survival.