Shipping woes cut down Chinese fireworks exports to the U.S.

LIUYANG, China -- Chen Tiezhong will likely spend the Fourth of July -- America's Independence Day -
- worrying about the future of his sprawling fireworks factory. China, where fireworks were invented, is running short of ports from which to ship the dangerous cargoes abroad.
The day is a great occasion for fireworks across the U.S., and China's fireworks industry meets 98 percent of America's overall needs, and 80 percent of the pyrotechnics needed for professional displays. But the U.S. fireworks business stands to lose US$25 million to US$30 million this year because of lost orders, says Julie Heckman, executive director for the American Pyrotechnics Association.

A Missouri firm says it backed out of some shows because of the shortage. Meanwhile, some Chinese factories are being pushed close to bankruptcy.

"Our factory will be forced to close, whether we want it or not," said Chen Tiezhong at his sprawling 500-employee operation in Liuyang in central Hunan province.

His factory is one of 900 around this small city that is known as China's fireworks capital. A traffic circle features a massive metal sculpture of rockets soaring and bursting into flower-like shapes. The Chinese word for fireworks is "yanhua" or "smoke flowers."

Most of the factories are far from town, tucked safely away among the farms in surrounding hills and valleys.

Chen rattles off a litany of woes: micro-thin profit margins, rising labor costs and soaring prices for raw materials.

Now, the closure of some Chinese ports to fireworks may be the final straw.

In February, a blast at a fireworks warehouse led to a ban on fireworks shipments at the southern port of Sanshui, Guangdong province, which previously handled 20 percent of China's pyrotechnic exports.

Then, in late March, officials stopped fireworks shipments at Nanshan, another Guangdong port, after inspectors found explosives that had been declared as something else.

Guangdong may not allow fireworks shipments to resume, because the province is trying to shift its economy to more sophisticated goods.

Adding to the industry's woes, China has ordered major ports such as Shanghai and Hong Kong to suspend shipments of explosives as part of tightened security ahead of August's Beijing Olympics.

"It's been extremely difficult," Chen said. "There is simply no way out even if we're willing to pay 10,000 yuan (more than US$1,400) extra for each container."

In China, 30 to 40 percent of fireworks for overseas customers have not shipped, forcing many of the country's 7,000 factories to curtail or even stop taking overseas orders, said Liu Donghui, the secretary-general of China-based International Fireworks Association.

On the U.S. end, 10 percent to 15 percent of orders didn't show up, said Heckman.

China ordinarily sends 9,000 shipping containers of fireworks a year to the U.S., she said, and the shortfall "is by far the most difficult challenge the U.S. fireworks industry has had to face."