An Olympic Drag On Industry

MANAGERS AT CHEMISTRY laboratories and at companies that produce or ship chemicals in China are not warming up to the Olympic fever gripping the country. Whatever fervor they might have had has been cooled by the strict measures that Beijing authorities have implemented to ensure the games run smoothly.

It has become arduous to ship any type of chemical in any quantity within, into, and out of China. In addition, Beijing now demands more documentation from foreigners who apply for visas, preventing many customers from visiting their suppliers. And all manufacturers, even small-scale ones, operating within 200 miles of Beijing face such stringent scrutiny of their air emissions that many have had to stop producing for most of the summer.

"Our customers and everyone we deal with are complaining about the new shipping restrictions," says the Shanghai-based manager of a U.S. company that specializes in shipping chemicals out of China. He asked not to be identified for fear of compromising his relationship with government officials at this sensitive time.

Among this manager's challenges, his company has been unable to secure even gram-quantities of custom-made chemicals from a Beijing lab it normally buys from because of domestic shipping restrictions. Recently, a shipment of bottled liquid chemicals ordered from a supplier in northern China was stopped in the city of Wuxi and never reached its intended destination of Shanghai.

Even though the chemicals are unregulated, this manager says, "local officials take the initiative to interpret the rules in a very strict way." Chemical shipments by air from major cities including Shanghai and Beijing are still permitted, "but how does your shipment manage to reach the airport?" he asks.

Hao Hong, chairman of the pharmaceutical ingredients producer Asymchem, is proud of the fact that his company has been allowed to continue operating its plant in Tianjin, near Beijing, this summer because it meets the strictest standards of air emissions. But nonetheless, he fears that the production schedule at some of the company's plants will be disturbed because suppliers in other provinces cannot send him raw materials.

To make matters worse, to obtain entry visas, foreign customers, managers, and technical staff of chemical and pharmaceutical producers operating in China must now produce a letter of invitation issued by government officials in the city they are visiting. Foreigners may also be asked to produce evidence that they have booked and prepaid their hotel rooms for the entire duration of their stay in China.

The visa restrictions are taking their toll. Chinese fine chemicals producers supplying clients abroad say they are receiving fewer visitors. Kai Lamottke, the managing director of a Sino-German drug discovery firm that operates in the Zhangjiang Hi-Tech Park tells C&EN, "I am not in China now with my business partner mostly because of visa restrictions." Unlike visitors who stay in hotel rooms, he normally stays in a rented apartment when in Shanghai, an arrangement that adds to the challenges he faces in obtaining a visa. When he finally succeeded in obtaining a visa just recently after four visits to the consulate, Lamottke relates, officials were apologetic about the trouble he'd been through.

Lamottke notes that since spring, his company has faced serious headaches getting lab chemicals ordered from abroad through customs, as well as restrictions in shipping pharmaceutical compounds out of China.

THE EFFECT of visa restrictions on international meetings is difficult to evaluate. The American Chemical Society and the Chinese Chemical Society have postponed until after the Olympics a joint scientific symposium that the two societies were initially hoping to hold earlier this year in the northeast city of Dalian.

But CPhI Worldwide Event Director Annemieke Timmers is pleased that international attendance was high at the pharmaceutical ingredients trade show CPhI China, which took place in Shanghai in late June. "We made every effort to help both visitors and exhibitors obtain their visas," she says. Timmers estimates that 19% of visitors to the trade show in 2008 were foreigners, compared with 22% last year.

Johnny C. W. Kwan, a senior vice president who heads BASF's operations in China, says the chemical industry will just have to adapt to the restrictions China has implemented. Kwan, who is also the chairman of the Shanghai-based Association of International Chemical Manufacturers, says not much can be done about the visa restrictions. As for the shipping clampdown, he doesn't see major problems shipping chemicals made in Shanghai to other countries. "There are some delays at customs, but it's difficult to generalize as it varies by product," he says.

Not everyone is so sanguine, however. The Shanghai-based research manager of a major U.S. drug company, who asked not to be named because he doesn't have authorization to speak publicly, says the various security restrictions China has implemented for the Olympics are causing serious problems. "We're a big company with integrated supply management that sources from China," he says. "These days, when China sneezes, we suffer."