How the Olympics Are Affecting China's E-Commerce Merchants

As we gear up for yet another Olympic games, all eyes are on China, as this is the first time in a long time that the games have been hosted by a country that has not been as friendly with the United States and Western democratic countries as we would all like. Within the past five years, China has risen to be not only a major economic superpower but it appears to more of a spoiler where other country's economies are concerned. In the early stages of their manufacturing ramp-up, China purchased futures for a large portion of the world's available steel on the open market, driving the price up for everyone else that wanted or needed it. In addition to the high steel prices affecting manufacturing and transportation costs, China was now able to expand their exports and be properly compensated for the goods coming from all the factories that their steel has built. It's no secret that China has emerged as the number one exporter and manufacturer of low cost goods to the world; the price that they have had to pay for these volumes of goods leaving even a country China's size is the strain on the transportation, security and commerce agencies that facilitate all of these moves.

As we close in on the opening ceremonies, the affects of increased security and traffic volumes have made Chinese commerce increasingly difficult. In fact, the strains on the security and traffic for those involved in the Olympic games has been affected to the point that China has ordered numerous manufacturing facilities to pause until the closing ceremonies are commence and the games are over with. This came about from an increase of lead times for the transportation of goods from facility to facility or facility to port and even port inland due to the traffic and security stops putting traffic at a standstill. In the end, the limited infrastructure caused the Chinese government to make the difficult decision to limit exports and place a pause on certain manufacturing operations; while it is clear that the manufacturing processes have been halted on their own or by government request, it does make sense that products sitting on loading docks doesn't make sense or money for anyone. In many ways, this slowdown in their economy has affected medium and even smaller size merchants in China by halting the flow of goods leaving the country, their customers which, in many cases are consumers and end users will be forced to seek those products elsewhere. An indicator of this slowdown can be measured as simply as referencing the price of scrap steel, which is directly related to the price of raw steel on the open market, which has gone down recently. There is a light at the end of the tunnel for Chinese manufacturers and merchants and that is the closing ceremonies of the Olympic games. Until then, the Chinese economy in a slowdown is far better off than most economies in the world.