Reverberations of World Recession Rock a City Built on Exports
Tania Branigan reports in the Guardian:
Few in the west have heard of Dongguan, but the chances are that your shoes, your TV or your children’s toys originated here. Exports have built a city of 14 million inhabitants, almost all migrant workers from the countryside. Its economy has sustained 15% annual growth in recent years. The global economic crisis is proving the final straw for exporters punished by rising costs and stronger currency.
In the past year, chill winds have blown through the Pearl River Delta. Sixty-seven thousand small firms collapsed in the first half of 2008, many in these manufacturing heartlands, says the national economic planning body. Toy firms have been particularly badly hit, by safety scares and product recalls. Textile firms, with wafer-thin margins, are also reeling. Next came tighter credit for many foreign-owned firms, like Hong Kong’s Smart Union. And then, in the past two months, a sharp drop in US and European consumer demand.
A local trade association predicts that by late January, Dongguan and its neighbours Shenzhen and Guangzhou will lose 9,000 of their 45,000 factories.
Please click here to watch the video: Chinese factories feel the pinch.