July 22, 2021
Sustainability is part of most discussions lately, being it politicians, managers or in private. Therefore, the way the society looks at production and supply chain activities, shifts greatly towards sustainability. As China is known as the “world’s factory”, sustainability should have an effect on Chinese manufacturing as well. But how do small and mid-sized Chinese factories approach sustainability? Let´s find out!
Over the years we have talked to plenty factories in China about sustainability, being it for carbon footprint calculations, market research for clients or pure interest. A typical first response is something like "what is a carbon footprint?" or "why do you care? I give you a good price!". Especially when we need data for carbon footprint calculation, we invested a lot of time in educating the factories.
Half a year after China’s president Xi Jinping announced the country’s aim to be carbon neutral by 2060, we wanted to see how our clients´ factories view sustainability. This curiosity was enhanced by us noticing more awareness of the topic by the factory management. With this survey we follow-up on our first Shiftery Insights on COVID, check it out here. Please refer to the dynamic PowerBI dashboard below for further insights and details about our survey participants. We want to mention that the following results are showcased unfiltered, hence continue reading until the end for our interpretation.
Firstly, we have been interested in how widespread the awareness of the carbon neutrality initiative in China is. A strong majority (72%) of factories was actually aware of the initiative by the Chinese government (Figure 1). This is also greatly reflected in the increased sustainability awareness when talking to factories in China in our daily business. However, this does not indicate the degree of understanding nor their actions towards sustainability. Let´s dive deeper!
Even though Chinese factories are aware of sustainability goals, the vast majority (72%) currently is not interested in getting sustainability certificates. (Figure 2). That means, only every forth factory is interested in obtaining a sustainability certificate. Of those 28%, one half considers a product certification, while the other half considers a factory/company certification.
At the same time over 40% of factories had clients requesting sustainability certificates. Surprisingly, this was especially requested by companies in the electronics sector. So far, most factories do good business with traditional products and processes. However, our surveyed factories experience an increasing demand for sustainably sourced products. This, however, does not yet have a noticeable impact on the factories’ ways of production.
Looking at the product level, the demand for sustainability certificates was higher. More than 50% of factories had clients requesting sustainable products (Figure 3). It needs to be mentioned here, that we did not ask for specific certifications, but instead generally referred to "sustainable products". This, of course, leaves room for interpretation and likely not all of the sustainable products stated are truly sustainable. Nevertheless, there is a strong interest notable from the clients across the sectors.
To observe the factories’ self-perception, we kept the questions of whether they would like to become more sustainable, rather broad and only used the word sustainable. We wanted to find out both, whether they plan on becoming more sustainable and whether they are planning to offer more sustainable products.
Surprisingly to us, the responses have been rather confident. Over 40% of the factories stated that they are already sustainable and over 30% claim to be planning to become more sustainable, which adds up to about 75%. Especially mid-sized companies show the willingness to conduct business more sustainably.
Similarly, 42% factories stated their products are already sustainable and the same percentage stated to be planning to make their products more sustainable (Figure 4). It is yet to be determined what the factories perceive or respectively claim to be sustainable.
Judging from our experience of calculating carbon footprints, most factories do not have the full understanding of sustainability or carbon neutrality yet. Therefore, the factories´ self-assessments seem overly confident and derivations should be made carefully.
Nevertheless, we clearly notice a higher awareness of the Chinese factories, which is partially driven by the increased customer demand but very much noticeable since the carbon neutral initiative was introduced by the Chinese government. We stay excited and hopeful for the shift to sustainability.
Check out our dynamic PowerBI dashboard below for further insights at your own interest. Share your findings, thoughts and own experiences with us on social media and join the discussion or get in contact with us directly. More Shiftery Insights to come shortly!
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