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ENTERING GLOBAL MARKETS

An Olympic Shutdown?

Beijing's Olympic dreams may be a nightmare for U.S. companies

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Conventional wisdom says the Olympics are a boon to the host city's economy. The Games bring with them throngs of tourists and athletes and create opportunities for local businesses in fields such as hospitality and security. But in Beijing, which hosts the Summer Games from August 8 to August 24, Chinese officials find themselves in the unusual position of taking steps to curb commercial activity.

In May, China acknowledged that it was restricting multiple entry visas, the type favored by business travelers. Coupled with traffic restrictions that will halve the number of cars on the road from July 20 to September 20, the action has stoked fears that the city's business sector will grind to a halt.

A bigger problem for American entrepreneurs has been a government plan to temporarily idle polluting factories in the five provinces closest to Beijing for as long as two months this summer. The idea is to reduce smog in order to accommodate outdoor events like the marathon. Industries such as steel and plastics are expected to be the most affected. But so far, the government is not divulging much officially about the scale or the duration of the anticipated work stoppage. "It's not like anyone got a letter," says Peter Sciacca, the founder of di Sciacca, a glassware company in Chandler, Arizona, that manufactures its products in northern China. "People heard from people at other factories, which caused a panic, because this coincides with the end of the holiday production season."

Like a lot of Western companies, di Sciacca has been warning its customers that orders placed during the Olympics may not be filled for months. The company has also raised prices to pay for the installation of electric kilns and possibly kilns that burn natural gas instead of coal, which Sciacca hopes will mollify the pollution police.

A final concern related to the Olympics: lost productivity. Mitch Free, the founder of MFG.com, an Atlanta-based company that connects buyers with manufacturers, says he is anticipating a 50 percent drop in business in China this month, caused in part by his Chinese workers taking time off to watch the Games. "Our employees are going to be distracted," he says, "and we're not going to fight it."

Last updated: Aug 1, 2008




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