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China's home appliance manufacturers could see exports to the European Union plunge by a third because of failures to meet new standards on hazardous materials, an industry expert warned Tuesday.

 

The European Union introduced on July 1 new restrictions on hazardous substance content in electrical and electronic appliances that could cost China US$30 billion worth of exports, said Yu Zhipu, of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

 

No Chinese companies in this sector were immune from the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) Directive, said Yu, secretary-general of the chamber's Home Appliance Chapter .

 

The regulation required a maximum concentration of 0.1 percent by weight of many environmentally hazardous substances such as lead and mercury that were inevitable in the production of electrical products.

 

Large manufacturers such as Haier and TCL had prepared for the regulation issued in 2002, but many small and medium-sized companies had failed to comply.

 

Experts said manufacturers had to upgrade their own production equipment and ensure the standards were applied by their parts suppliers, which would bring an average rise of 10 percent in production costs.

 

A survey cited by Tuesday's Guangzhou Daily showed half the electronic manufacturers on the Chinese mainland failed to meet the RoHS standards with 64 percent predicting price hikes up to 10 percent.

 

Yu Zhipu said small and medium-sized appliance manufacturers unable to absorb the rising costs could simply give up the European market.

 

Citing an unnamed official with the Ministry of Information Technology, the newspaper said the restriction of the use of dangerous substances was a "global trend".

 

The Chinese government planned to release its own version of the RoHS standards in March, and the official warned there was little time left for domestic manufacturers to catch up with trend.

 

China earned US$426.75 billion from exports of machinery and electrical products last year, 56 percent of the country's total foreign trade. The European Union accounted for US$90.48 billion of the sector's exports, making it the second largest market after the United States.

 

(Xinhua News Agency July 5, 2006)