How Bearing Customers can Respond to Changing Dynamics in China

China's Power Crunch - The Latest Stock to the Bearing Industry

China’s sudden and drastic response to the power crisis is causing major supply impacts and lots of uncertainty

Causes of the Crisis

Coal Shortage 1

Coal-based producers account for more than 70% of China’s electricity generation. However, China’s supply couldn’t catch up and import from Australia was limited due to political disputes and sanctions which are unlikely to ease during Biden’s administration.

Xi’s Carbon Emission Targets 1

Xi’s push to reduce greenhouse gas emissions and go “carbon neutral” by 2060 has capped the growth of coal mining. Furthermore, Xi has implemented regulations for coal mine operations, limiting their ability to increase supplies

Renewables Not a Viable Option 2

China tried to shift to renewables, but a serious draught hit the hydropower center of Yunnan province resulting in a 4% decrease in total renewable output each month. Wind power also slowed down in growth from 25.4% in 2020, to 7% in 2021.

RESPONSE

Sudden and Unplanned Power Rationing Across 20+
Provinces

Resulting Regulation and Impact

Power cuts and curbs on electricity use have been reported in at least 20 provinces and regions. In China’s tech heartland Jiangsu Province, some manufacturers have been told to reduce their energy use for the rest of September by 10% to 30% from usual levels, while some companies received requests to stop using electricity entirely from last Sunday until the end of the month. The magnitude and duration of the rations remains unclear, causing uncertainty

Map of Regions Impacted by Energy Regulations

as of Oct 2021 1

IMPACT

Majority of Bearing Factories Forced to Cut Activity Time
by 20-50%

Read the detailed insights on:

Factors impacting bearing price and availability

Scenarios for how the future will unfold

Advice on how customers can remain productive and profitable during today’s volatility

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Author & Acknowledgements

Karan Gupta
Head of Strategy
karangupta@kginternational.com
Karan leads KG International’s growth strategy in terms of partnerships, market/product expansion and penetration, operating efficiencies, and customer experience. Karan is a seasoned strategist having worked with Deloitte Consulting in the US for a variety of Fortune 500 clients in many industries. He worked across a range of strategic issues such as corporate / business unit strategy, M&A, operating model transformation, offering innovation, new product launches, etc. around the world.

Karan obtained degrees in Mechanical Engineering and Applied Mathematics from the University of California, Riverside where he focused his research on Fault Modeling of Bearings and Induction Motors.
ACKNOWLEDGEMENTS
We would like to express our immense gratitude to the following team members for their contribution to this article:
  • Rohit Gupta, CEO
  • Mazhar Hussein, Head of Procurement
  • Ashish Jain, Purchasing Manager

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