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Friday 16 January 2009
Factories Shut as Downturn Grips Dongguan
But, as the global economic downturn began to eat into the country’s exports, the jaunty job offers vanished and in their place now hang banners offering “factories to let”.
Banners offering walk-in jobs were flying at factories along the Dongguan-Shenzhen expressway a year ago, when China’s industrial heartland was powering ahead at a record-breaking rate.
But, as the global economic downturn began to eat into the country’s exports, the jaunty job offers vanished and in their place now hang banners offering “factories to let”.
For Dongguan, the winds are changing and the lights are going out in the once bustling centre of China’s export boom as one factory after another shuts down - despite the state’s relief measures to cut the costs of doing export business.
In Dongguan’s industrial clusters such as Zhangmutou, Changping, Dalang, Fenggang and Changan, many premises are vacated for good while others have closed in the hope of resuming after an early break for the Lunar New Year.
Some deserted factories have even been turned into budget hotels in the manufacturing and tourism town of Tangxia.
“The first half of this year will be very difficult,” said Feiger Huang Yaohui, a businessman and native of Dongguan City, the central business district of Dongguan.
“Many factories could not survive, which in turn will hurt the service sector.”
A Hong Kong entrepreneur and racing car driver, Falco Lau Fai-ho, who has lived and worked in Dalang for the past eight years, said queues had vanished even as dining bills had become cheaper in a desperate bid by restaurants to sustain business.
“The town is quieter because some factories have closed doors,” Mr. Lau said. “But for a commercial district like Dongguan City, there is still some bustle probably because of the Lunar New Year.”
Anecdotal evidence shows Hong Kong budget eatery Cafe de Coral has reacted promptly to the downturn by halving the price of a spring chicken set dinner to as low as 17 yuan in Changping, a heavily industrialised town near Dalang.
China, which relies on exports for 40 per cent of its economic growth, has stepped up efforts to shore up manufacturing industries and fuel alternative domestic demand by thrashing out a series of measures such as a 4 trillion yuan (HK$4.5 trillion) stimulus package, slashing interest rates, restoring value-added tax rebates on exports and giving small firms greater access to funding.
The Dongguan municipal government also unveiled a 3 billion yuan fund to help small and medium-sized enterprises obtain cheaper loans and upgrade value-chain and technology levels.
It is uncertain how many manufacturers may have been saved by the measures, but a growing number of factories are going under, particularly around the Lunar New Year.
The Federation of Hong Kong Industries has estimated that about 20 per cent of the 55,200 Hong Kong-owned processing plants in Guangdong will fold if the hostile operating environment worsened.
Hong Kong government data showed the number of Hong Kong-owned processing plants in the province was about 63,000 18 months ago. The demise of Hong Kong factories would threaten to “break the rice bowls” of 9.8 million migrant workers they employ across the border.
Until recently, Dongguan was a job-seekers’ market where barely anyone was keen on a job offer with a monthly salary below 1,000 yuan.
“Now many are fighting for jobs offering a monthly pay of as low as 800 yuan,” Mr. Huang said. “But for employers, the concern is not about cheaper wages but a lack of orders.”
In Zhangmutou, shops and restaurants around defunct toy factories of Smart Union Group (Holdings) joined the company’s workers, suppliers and bank creditors as the latest victims to the world’s financial crisis.
Almost 20 Circle K convenience stores shut in Dongguan last month.
Many economists said this year would be a testing time for China although its economic growth was still a bright spot in the global economy. They forecast that the mainland economy could grow at 8 per cent this year, down from about 9 per cent last year and 11.9 per cent in 2007.
“While improved trade finance conditions help, the export sector is likely to remain dismal amidst the global recession,” noted Credit Suisse chief economist of non-Japan Asia research, Tao Dong.
1 comment:
Factories Shut as Downturn Grips Dongguan
Denise Tsang in Dongguan
12 January 2009
Banners offering walk-in jobs were flying at factories along the Dongguan-Shenzhen expressway a year ago, when China’s industrial heartland was powering ahead at a record-breaking rate.
But, as the global economic downturn began to eat into the country’s exports, the jaunty job offers vanished and in their place now hang banners offering “factories to let”.
For Dongguan, the winds are changing and the lights are going out in the once bustling centre of China’s export boom as one factory after another shuts down - despite the state’s relief measures to cut the costs of doing export business.
In Dongguan’s industrial clusters such as Zhangmutou, Changping, Dalang, Fenggang and Changan, many premises are vacated for good while others have closed in the hope of resuming after an early break for the Lunar New Year.
Some deserted factories have even been turned into budget hotels in the manufacturing and tourism town of Tangxia.
“The first half of this year will be very difficult,” said Feiger Huang Yaohui, a businessman and native of Dongguan City, the central business district of Dongguan.
“Many factories could not survive, which in turn will hurt the service sector.”
A Hong Kong entrepreneur and racing car driver, Falco Lau Fai-ho, who has lived and worked in Dalang for the past eight years, said queues had vanished even as dining bills had become cheaper in a desperate bid by restaurants to sustain business.
“The town is quieter because some factories have closed doors,” Mr. Lau said. “But for a commercial district like Dongguan City, there is still some bustle probably because of the Lunar New Year.”
Anecdotal evidence shows Hong Kong budget eatery Cafe de Coral has reacted promptly to the downturn by halving the price of a spring chicken set dinner to as low as 17 yuan in Changping, a heavily industrialised town near Dalang.
China, which relies on exports for 40 per cent of its economic growth, has stepped up efforts to shore up manufacturing industries and fuel alternative domestic demand by thrashing out a series of measures such as a 4 trillion yuan (HK$4.5 trillion) stimulus package, slashing interest rates, restoring value-added tax rebates on exports and giving small firms greater access to funding.
The Dongguan municipal government also unveiled a 3 billion yuan fund to help small and medium-sized enterprises obtain cheaper loans and upgrade value-chain and technology levels.
It is uncertain how many manufacturers may have been saved by the measures, but a growing number of factories are going under, particularly around the Lunar New Year.
The Federation of Hong Kong Industries has estimated that about 20 per cent of the 55,200 Hong Kong-owned processing plants in Guangdong will fold if the hostile operating environment worsened.
Hong Kong government data showed the number of Hong Kong-owned processing plants in the province was about 63,000 18 months ago. The demise of Hong Kong factories would threaten to “break the rice bowls” of 9.8 million migrant workers they employ across the border.
Until recently, Dongguan was a job-seekers’ market where barely anyone was keen on a job offer with a monthly salary below 1,000 yuan.
“Now many are fighting for jobs offering a monthly pay of as low as 800 yuan,” Mr. Huang said. “But for employers, the concern is not about cheaper wages but a lack of orders.”
In Zhangmutou, shops and restaurants around defunct toy factories of Smart Union Group (Holdings) joined the company’s workers, suppliers and bank creditors as the latest victims to the world’s financial crisis.
Almost 20 Circle K convenience stores shut in Dongguan last month.
Many economists said this year would be a testing time for China although its economic growth was still a bright spot in the global economy. They forecast that the mainland economy could grow at 8 per cent this year, down from about 9 per cent last year and 11.9 per cent in 2007.
“While improved trade finance conditions help, the export sector is likely to remain dismal amidst the global recession,” noted Credit Suisse chief economist of non-Japan Asia research, Tao Dong.
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