China's ceramics capital struggles to
adapt amid war on smog
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[November 30, 2017]
By David Stanway
ZIBO, China (Reuters) - The city of Zibo,
China's ceramics capital, is undergoing environmental shock therapy to
clear its filthy skies and transform its economy - and not everyone is
Much of Zibo's sprawling industrial district has become a ghost town of
shuttered factories, empty showrooms and abandoned restaurants after a
clean-up campaign that began last year intensified this winter. Dozens
of chimneys stand inactive.
"There used to be a lot of workers here but now they are demolishing the
entire place," said a caretaker who gave his surname as Wei, pointing at
the deserted warehouse of an abandoned factory he was guarding. "We have
no idea what they will build here - that's the boss's decision."
Zibo, home to 4.5 million people about 260 miles south of Beijing in
Shandong province, is one of 28 northern Chinese cities targeted in an
unprecedented six-month anti-pollution blitz as China scrambles to meet
air quality targets.
The city is also at the heart of a wider, long-term government effort to
upgrade China's heavy industrial economy.
Once responsible for about a quarter of China's ceramic output, mainly
floor and wall tiles, Zibo has slashed capacity by 70 percent and shut
more than 150 companies and 250 production lines as part of a ruthless
war on pollution.
Surviving plants have rushed to comply with tough new standards, but
business is still threatened by constant production suspensions ordered
by the government, as well as natural gas shortages this winter as
northern cities switch to the fuel from coal.
"It is a brave step that China is taking, but they have to take it,"
said Alex Koszo, the founder of Vecor, a Hong Kong-based company that
has built a joint-venture plant in Zibo to manufacture
environmentally-friendly tiles from fly ash.
"They have the will, the money, and access to technology, so I think we
are looking at a very different Zibo, and a very different Shandong, in
five to ten years time."
The local environmental bureau declined to be interviewed, telling
Reuters that clean-up efforts were "still at an early stage" - but
changes are already conspicuous.
With old factories marked for demolition, new apartment blocks, shopping
complexes and roads are being built. The city registered growth of 7.8
percent in the first three quarters of this year, driven by the service
sector, according to the local government. Displaced workers have
shifted to construction sites and other industries like textiles,
Zibo has also established a "greentech" incubator in the old district
and opened a new high-tech industrial park in order to attract companies
and encourage innovation in ceramics.
But some local businessmen accuse Beijing of running roughshod over
local industry and paying too little heed to circumstances on the
ground, with one boss accusing inspectors of behaving like "imperial
"There is a ring of 28 cities and pollution only needs to appear in
Beijing - even just medium-level pollution - and all our factories have
to shut," said the owner of a large local factory who declined to be
named, fearing repercussions. "It doesn't matter whether you meet the
standards or not, you have to shut."
Over the past decade, Zibo's ceramics makers took advantage of closures
elsewhere to drive up output and seize market share in China. Zibo's
tiles were used throughout China and exported around the world. In
recent years, however, the industry was weighed down by poor quality and
chronic overcapacity that eroded prices and exposed the sector to
European Union anti-dumping measures.
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The chimney of a surviving ceramics factory in Zibo, Shandong
province, China November 23, 2017. Nearly 150 firms have been forced
to close since a crackdown that began last year. Picture taken
November 23, 2017. REUTERS/David Stanway
Beijing's war on pollution served as an opportunity to tackle those
problems. Now, the mainstay of the local economy is a shadow of its
With annual production capacity slashed to 246 million square
meters, compared to 827 million square meters before the campaign
began, the government hopes surviving manufacturers can upgrade and
compete with higher-end producers.
"I think the steps the government are taking now will push the costs
up, and therefore the price of the goods will be up and the quality
will meet international standards," said Koszo.
But the local factory owner said the campaign has inflicted
long-term damage, eroding cost advantages and driving customers
"If Zibo was the only place producing tiles in the whole country,
then it wouldn't be a problem. But this is an unfair policy: they
are closing us but not others," he said.
Environmental officials deny the pollution crackdown or the
heightened vigilance of inspectors will cause deep harm to China's
economy, saying any losses would be compensated by the long-term
benefits of clean investment.
But in Zibo, even environmentally compliant manufacturers are losing
customers. The factory owner said he has lost 80 percent of domestic
clients and half his overseas ones, with many frustrated by the
stop-start nature of production.
Zibo's ceramics companies are not only hit by emergency closures
aimed at curbing smog. A year ago, they were ordered to switch from
coal to gas, but suppliers are giving priority to residential winter
"People are losing patience and manufacturing is shifting to the
south," said Bryan Vadas, director at the Tile Agencies Group in
Australia, which used to source products for export from Zibo but
has now started buying elsewhere.
Environment Minister Li Ganjie said this year that China would not
adopt an "indiscriminate one-size-fits-all approach", adding that
companies have plenty of leeway to clean up and survive.
"Only enterprises that have no clear survival value, pollute heavily
and have no hope of being rectified will be shut down," Li said.
But local enterprises have struggled to cope with repeated policy
changes, with industry entry requirements adjusted four times in
less than two years, the local factory owner said.
"I have worked hard to build up this business," he said.
"Personally, I just think the government should tell us directly
that they don't want us to stay in operation.
"There's no need for them to torture me."
(Reporting by David Stanway; Editing by Philip McClellan)
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