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 user 2008-10-27 at 10:09:22 am Views: 67
  • #20741
    Southern China to shed millions of jobs as economic crisis bites
    At least 2.7 million factory workers in southern China could lose their
    jobs as the global economic crisis hits demand for electronics, toys
    and clothes, according to industry estimates.The region has seen
    massive export-driven expansion in recent years by supplying the world
    with cheap consumer goods, but rising production costs and falling US
    and European demand have marked a swift end to the boom.Now 9,000 of
    the 45,000 factories in the cities of Guangzhou, Dongguan, and Shenzhen
    are expected to close before the Chinese New Year in late January, the
    Dongguan City Association of Enterprises with Foreign Investment
    estimates.By then, the association expects overseas demand for products
    from the three manufacturing hubs to have shrunk by 30%, as the
    knock-on effects of the US housing market collapse and credit crunch
    filter down to Chinese workers.

    “I am afraid it is not going to
    look good on the Chinese government if the decline of the export-led
    industries and the unemployment problem continue to worsen,” Eddie
    Leung, the association’s president said.Leung, also a member of the
    Chinese Manufacturers’ Association, said the estimate of 2.7m job
    losses was conservative, given that many of the larger factories in
    Guangdong province employ thousands of workers.One of them, Hong
    Kong-listed Smart Union, a major toy manufacturer in Dongguan supplying
    US giants Mattel and Disney, closed its doors last week, leaving 7,000
    workers out of work and with several weeks of back pay owed.

    Chan, chairman of the Federation of Hong Kong Industries, said a
    quarter of the 70,000 Hong Kong-owned companies in southern China,
    17,500 businesses, could go to the wall by the end of
    January.Describing the likelihood as a “worst case scenario,” he said
    Hong Kong firms in the region employed a total of 10 million workers,
    but did not want to speculate on the extent of possible job
    losses.While small and medium-sized factories are especially prone, the
    threat of lay offs looms just as large over the region’s manufacturing
    giants, further squeezed by the appreciation of the yuan.

    To’s Mansfield Manufacturing is a classic example of the spectacular
    growth in China’s industrial heartland over the last three decades.To
    started a metal business from a small room in Hong Kong in 1975, in
    1991, he joined hundreds of other Hong Kong entrepreneurs moving their
    production across the border into China to take advantage of cheap
    labour and land.He now employs 8,500 workers in 11 factories in China
    and Europe. His six factories in Dongguan cover 140,000 square meters
    (1.5 million square feet).To’s company, which is now a subsidiary of
    Singapore-listed InnoTek Ltd. supplies metal components for cars,
    plasma televisions, printers and other electrical appliances to
    Japanese brands including Canon, Toshiba, Epson, Minolta and Fuji-Xerox.

    for the company, among the largest in its field in China, has grown by
    40 percent annually in recent years, but with credit being harder to
    come by, no manufacturer is safe, he said.”With banks being so tight on
    their lending policies now, bringing down a factory overnight has now
    become very easy.”All his expansion plans have had to be put on
    hold.”Some of our long-time Japanese and European clients have asked us
    to stop producing for them in the next two to three weeks,” he
    said.”They said they did not want to have too much stock piled up in
    their warehouse as demand continues to dwindle.”

    To recently
    started building a new 70,000 square metre factory in Dongguan and was
    planning to hire 2,000 more workers later this year. But now, all work
    on the unfinished factory has stopped until more orders roll in.”No one
    would expand their business when the prospects for the entire
    manufacturing industry look so grim,” he said.Instead of hiring more
    workers, To is looking at cutting 1,000 employees across his
    operations.But far from being downhearted, he is shifting part of the
    company’s export-led production to developing energy-saving electrical
    appliances for the domestic market, which he sees as weathering the
    current financial turmoil.”In the long run, I am confident that
    mainland Chinese consumers’ purchasing power will keep rising as their
    Western counterparts continue to lose out.”