Away from the action of the Olympic green, the rest of northern China is quiet. Manufacturing shutdowns, slow transportation and limited energy supplies have rendered factories silent and left highways pleasingly roomy. For the plastics industry in this part of the country, the Olympics have helped to slow demand, at least temporarily.
What experts have dubbed the ``Olympic effect'' will likely disappear in September, when China's plastics manufacturers can return their focus to other, more pressing concerns.
``The plastic demand in China fell during the first half of 2008,'' said Paul Pang, managing director of CMAI Shanghai Ltd., a China arm of Houston-based Chemical Market Associates Inc. ``The sluggish demand in the recent months is partially due to indirect impact from the Beijing Olympics.''
The limitations most acutely felt in the north are the results of sluggish overland transport and power shortages.
``As the country is in its full swing [of the] Olympics, trucking transport is restricted, particularly in north China around the Beijing area,'' Pang said. ``In the meantime, power supply to the Beijing surrounding provinces has been restricted in order to ensure the sufficient power supply to Beijing.''
As a result, many processors in northern China have reduced their operating rates, Pang said, which has led to lower plastics demand.
While energy shortages are largely limited to the north, new regulations on business visas have impacted the whole country.
``For us, [the Olympics] was sort of a nonevent,'' said Ted Hornbein, head of the Shanghai American Chamber of Commerce's Manufacturing Committee. He also is the Asia managing director for Richco Inc., a designer and manufacturer of plastic fasteners and custom components. ``The only thing has been visas, and I think that [has been a problem] for everyone.''
China's government issued new regulations for tourist and temporary business visas in May. In July, regulations tightened yet again and cities throughout China announced they will not be issuing new business visas through the end of September. With personnel not allowed to enter the country, companies have complained the restrictions limit their ability to tour factories and secure their China-based supply chain.
The introduction of visa restrictions without prior warning, ``creates serious problems for companies operating in China,'' said a statement from the European Union Chamber of Commerce in China.
These restrictions, however, also will pass at the end of September and China's plastics industry faces challenges that will not be so short-lived, Pang said.
``The major impact on Chinese plastic conversion industry comes from the factors of poor export demand for finished goods, high raw-material cost, escalating labor cost and difficult access to bank credit,'' Pang said. ``These factors will likely have long-lasting impact on Chinese plastic demand.''
While Hornbein has taken note of the slowdown since the beginning of the year, his company has been unaffected, he said, and is optimistic about the future.
``For us, we're still doing quite OK, and the year's not over yet,'' he said.