Chinese businesses hard hit by global financial crisis
17/10/2008 17:17
The latest percussion of the global financial crisis has been felt in
China with 7,000 workers with two toy-making factories being forced into
unemployment in Guangdong Province.
Smart Union Group (Holdings) Limited, a
toy-making company that had gone public with Hong Hong bourse, was forced to
close its two factories in Zhangmutou Township, Dongguan City, Wednesday.
The
two factories had been doing business such as producing toys on an OEM (original
equipment manufacturers) basis for three of the world's five traders, including
the U.S-based Mattel. Most of their products were sold to the United
States.
Trading of the company's shares were called off temporarily on the
same day.
Dongguan, a city which has found its wealth by offering
export-oriented processing services, has been producing a half of toys made in
Guangdong, a global key toy making base. It has been having a bad time since the
beginning of the year, specially with the toy-making sector as a result of
rising raw materials and labor costs.
Xu Hongfei, deputy chief of Zhangmutou
Township Government, claimed the two factories were closed because of the
ongoing international financial crisis.
"A serious problem occurred with the
circulating capital as Smart Union's shares were pulled out of trading
Wednesday," said Xu, who said workers with the two factories didn't get paid
since August.
"We were making toys on Tuesday, and we didn't know the boss
had gone into hiding until Wednesday," said Du Haiqun, one factory worker, who
added they didn't know what to do at the sudden closure of their factory.
Xu
admitted they had been trying to contact the boss of both factories, but
couldn't get through.
According to Xu, Zhangmutou Township Government has
pumped 23 million yuan and started to pay the workers' salaries for the boss as
of today.
In the meantime, the township government has also been contacting
two other local businesses to help hire some of the workers who became jobless
because of two Smart Union factories' closure.
Xinhua
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