Beijing Consumed by Smog
- Daniel Telele
- Dec 2, 2015
- 2 min read
Air pollution in Beijing is no surprise. In a city where residents have become accustomed to wearing protective facemasks, the crisis is worsening and the concerns over the long-term effects of China's situation continue to rise.
The government has set an "Orange Alert" -- the highest possible on the scale. On December 1st, reports claimed air pollution had soared 35x above the recommended safety level. Schools remained closed and the government encouraged individuals to avoid outdoor activities when possible. The timing could not have been more fitting, as this week marks the beginning of the COP 21 conference in Paris.
Automobiles and coal plants generate much of the pollution. It is further worsened by poor weather. Wind helps to relieve the air quality; however, gusts significant enough to make a difference are not expected for several days.
IMPACTS & RISKS
China's air quality is a significant risk exposure for business. Here are a few quick points to keep in mind:
1. Smog kills. Estimates are between 500,000 - 600,000 per year. As a result, top talent is reluctant to stay or come to China.
2. On days when smog is particularly bad, workers might have issues arriving and staying productive.
3. Movement of resources and finished goods could become more difficult. Delayed delivery or shipment could skew sales for the worse.
4. The Chinese government could rely on an increase in corporate tax to increase the fight against air pollution, particularly in industries, which are heavy contributors.
5. From point 4, additional regulation should be expected as the international community and Chinese health concerns place additional pressure on government officials to establish a plan.
For more information on the topic, please see Ch. 5.5 "Sustainability Risk Management in China" in Managing Business Risks by James Pearson and Alex Bannerman.
Comments