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Could the Olympics spoil Back to School sales?

Supply chain blogs recently warned that the Chinese government may close down a number of manufacturing industries during the Olympic games this summer and other posters warn that shipping and production slowdowns could be felt around China. The site says games could disrupt the flow of technology hard-goods in the fall. Or not.
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Written by David Morgenstern on

Supply chain blogs recently warned that the Chinese government may close down a number of manufacturing industries during the Olympic games this summer and other posters warn that shipping and production slowdowns could be felt around China. The site says games could disrupt the flow of technology hard-goods in the fall. Or not.

Apple has its own Olympic plans: its first mainland store.

According to a post in Richard Brubaker's All Roads Lead to China blog, the Chinese government has a plan to shut down manufacturing efforts in Beijing, Tianjin, and Shanghai, before, during and after the Olympic games.

Brubaker said his "gut" told him that:

The industries most likely to get the knock on the door are those that are dirty, belching black smoke, sucking up a lot of water, and require a lot of energy to accomplish all that. So, if you are a clean enterprise running off the grid and procession your water (like Plantronics in Suzhou), I wouldn’t worry. But anyone else should do a rapid self assessment of where they fall on the green scale and then work out the risk.

So, that's a mixed bag for technology companies. Depending upon the company and industry, there could be some disruption of the supply chain. Or not.

However, on the Spend Matters blog, a reader Walter, based in Shenzhen, said that government offices in Beijing will be closed and that tens of thousands of workers may seek to earn some extra money as guides. The closures and slowdowns could ripple through the country and sink productivity.

Having lived here for over 4 years, 888, the lucky dates of the start of the games, will be like a holiday, [with] everyone watching the games, on TV or Internet, especially diving, hurdles, badmininton, and table tennis ... and the love of basketball. Production, and quality maybe a problem, as this is the first big national thing here, and I believe that if you need something shipped, do it in early to mid July. The hotel prices will go sky high in the popular cities, hoping visitors will go other places while here for the games, and so will intra-country plane fares.

From Walter's report, the Olympics could make the productivity dip for March Madness in the States look like chump change. The Olympics will be two months long and have a wider, nationalistic appeal.

Remember that most computers and consumer electronics used in the world are manufactured in China. From these supply chair reports, the Olympic games could affect production and the shipping of product as well as the quality of manufacturing.

On the Apple-Olympics front, according to reports, the company will open its first Apple Store in China during the games. The store will be located in the Sanlitun district.

Skipping over the immediate retail interest, Apple also manufactures Macs and iPods in China. For example, there was a MarketWatch story last week that confirmed that the Hon Hai Precision Industry Co. of Taiwan was contracted to manufacture future iPhones for Apple.

"Hon Hai is ready to ship anytime. It is just waiting for the nod from Apple," said the person.

According to a 2007 BusinessWeek story on Apple's Chinese supply chain, Hon Hai operates under the trade name of Foxconn and in addition to the Apple iPod, manufactures cell phones for Nokia, game consoles for Sony, and PC monitors for Hewlett Packard.

While some components and subassemblies are made in Taiwan, these Taiwanese companies contract out manufacturing to mainland factories. The BusinessWeek story listed Hon Hai Precision, Asustek Computer, and Inventec Appliances as some of Apple's outsourcers for manufacturing based in Taiwan.

In addition, the story discusses Apple's quality assurance checking with its manufacturing suppliers. The Olympics could make that job tougher during the summer months.

So, it's no sure bet that there will be any major problems for Apple or other tech companies for their supply chains heading into the beginning of the school year. Maybe a headache or two.

Still, heeding the warning from the experts, if students want to guarantee they will have a new notebook or iMac when classes start, perhaps it will be wise to order before the games begin.

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