Current State of China’s Environmental Programs
Today, China faces many environmental issues emanating from excessive pollution. The country is home to 16 of the most polluted cities in the world (Shapiro, 2012). The issues have led to the destruction of the country’s physical and biological environments (Shapiro, 2012). Human health has also been put at risk. Many people in the country are diagnosed with respiratory problems. Rapid industrialization is blamed for the environmental pollution in the country. Environmental oversight bodies and lobby groups fail to adequately confront the major issues affecting the country (Shapiro, 2012).
There is severe water shortage in China (Economy, 2005). The limited resources available are highly polluted. The main source of water pollution in the country is industrial plants. Factories dump untreated waste directly into water bodies. As such, there are limited sources of water for industrial and human consumption. Over 59.6 percent of the groundwater present in the country is polluted (Economy, 2005). The soils are also highly polluted. The main reason behind this is dumping of solid industrial waste (Kutz, 2009). Rapid deforestation in China has also resulted in deteriorations in the quality of soil.
In China, the central government is charged with the responsibility of formulating environmental programs and policies (Yuanjia, Ung, Ying & Yitao, 2007). In most cases, the regulations are fairly strict. However, the enforcement aspect is left to the local government (Shapiro, 2012). Local governments are more interested with economic growth than with environmental protection. As a result, they totally disregard environmental programs put in place by the central government.
Key Changes in China’s Environmental Regulations
In 2010, the Chinese government came up with a number of environmental legislations. In addition, the country adopted a plan to emphasize on the enforcement of the available regulations. The program was expected to run for five years. The new rules impacted heavily on players in the pharmaceutical industry. In the past, the investors were not paying much attention to the existing environmental regulations (Shapiro, 2012). According to the new regulations, parties wishing to venture in the Chinese pharmaceutical industry have to submit an application for an industrial license (Yuanjia et al., 2007). They are required to disclose specific information on certain aspects of their proposed pharmaceutical manufacturing plants. To begin with, they should provide a list of the equipment they intend to use in their operations. Materials to be used in the course of production, such as solvents, should also be disclosed to the registrar.
The new regulations seem to be one of the tough measures put in place for the local companies. However, foreign manufactures, especially those involved in the production of active pharmaceutical ingredients, view these policies as lenient (Shapiro, 2012). As a result, a new company wishing to enter into the Chinese pharmaceutical industry from the U.S will find it easy to operate in the country as a result of the laxity of the regulatory bodies (Tremblay, 2008). However, with the new regulations in place (and the government more committed than ever to enforce environmental regulations), the company is likely to find it difficult to start operations. The main reason is that the new regulations require companies to meet a lot of environmental standards before operations. As a result, the existing Chinese suppliers will benefit since this will reduce competition by preventing the entry of new players into the industry. The manufacturing operations of the U.S based company will also be hampered since the new requirements do not allow companies to increase their production capacity without permission. They are expected to operate on the capacity indicated during registration.
Development of Environmental Programs in China
China’s economic and population growth has come at a huge cost to the environment. In spite of this, the country has made efforts to reduce the production of toxic and hazardous waste. For example, China’s emission of Sulphur oxide gas has reduced by over 9 percent between 2006 and 2010 (United Nations Economic Commission for Europe, 2013). The reduction is an indication that the country is working on programs to deal with pollution problems (Shapiro, 2012).
However, China rarely takes initiatives to get solutions. Instead, the government waits and watches as other developed countries perform experiments and test programs. Later, the authorities duplicate the program elements and implement them as their own (Shapiro, 2012). The practice works for the country since the ‘hard work is already done’. As such, resources that would have been spent doing research are saved. As a result, the cost of implementing environmental regulations is reduced. The spared resources can be put into other uses, such as infrastructural development. In addition, the programs are effective since they have already been tested.
However, this strategy is associated with a number of disadvantages. The government fails to acknowledge that ‘each environment’ is unique and solutions should be provided after serious research (Zhou, 2007). What worked for another country may not work for China. As such, there is a risk of adopting ineffective policies and programs.
The Chinese Environmental Regulations Enforcement Strategy
Compared to the U.S, China is not as strict when it comes to the enforcement of environmental regulations. The Chinese government prioritizes economic development. As a result, sources of pollution, such as rapid industrialization, are encouraged. It is a fact that the central government has an enforcement division. However, the agency rarely acts unless the environmental issue has significant negative impacts on the country’s reputation. A classic case is the 2008 Beijing Olympics. At the time, the government ordered the shutdown of companies viewed to be major sources of air pollution (Shapiro, 2012). The businesses were not compensated. In addition, workers were not paid for the time the operations were grounded.
Given this scenario, it is apparent that a company wishing to enter the Chinese pharmaceutical industry could face serious problems in terms of manufacturing operations. The company may be required to shut down its plant anytime when ordered by the government. Lack of compensation will result in financial losses. Workers are also likely to feel threatened working in the industry. They are likely to feel that the company’s Environmental, Health, and Safety (EHS) department and other programs designed to protect them and the environment are incompetent (Tremblay, 2008). The reason is that the programs do not protect employees from the harm they are exposed to through pollution by companies that fail to comply with the set regulations.
Recommendations
The U.S based company involved in the manufacture of active pharmaceutical ingredients should not relocate to China. Although the environmental regulations in the country are not as strict as those in the U.S, there are still a number of issues associated with the planned relocation. For example, employees will be demoralized following the relocation. Since environmental regulations and workers rights are not strictly adhered to in China, employees may fear exploitation (Tremblay, 2008). Secondly, the company’s reputation will be hurt as a result of the relocation. The Chinese government will pay little attention to the company. As such, the investor may be tempted to ignore the existing environmental regulations. As a result, the business will be regarded negatively in the global market. Thirdly, the company may be required to halt its operations in future in to protect the reputation of the Chinese government. The practice will result in financial losses for the investor.
References
Economy, E. (2005). The river runs black. New York: Cornell University Press.
Kutz, M. (2009). Environmentally conscious materials handling. Hoboken, NJ: John Wiley & Sons, Inc.
Shapiro, J. (2012). China’s environmental challenges. Boston: Polity Books.
Tremblay, J. (2008). China’s pharma leaps into discovery. Chemical & Engineering News, 86(5): 11-15.
United Nations Economic Commission for Europe. (2013). The globally harmonized system of classification and labeling of chemicals (GHS): Purpose, scope, and application. Web.
Yuanjia, H., Ung, C., Ying, B., & Yitao, W. (2007). The Chinese pharmaceutical market: Dynamics and a proposed investment strategy. Journal of Medical Marketing, 7(1), 18-24.
Zhou, E. (2007). China’s pharma basking in its spotlight. Clinical Research & Diagnostics Channel, 27(5): 43-48.