In southern China 7,000 workers have been laid off after two
major toy factories making brands for western markets were closed
down. China's export manufacturers, and toy makers in particular,
have been hit hard by the global financial crisis. Daniel Schearf
reports from Beijing.
Hundreds of now unemployed workers
gathered outside government offices Friday in Dongguan city in China's
southern Guangdong Province.
The workers were seeking
compensation for two months of unpaid wages after the toy factories
they worked for on Wednesday suddenly closed.
The company that
owns the factories, Hong Kong listed Smart Union Group makes toys for
U.S. brands Mattel and Disney, and is one of thousands of export
manufacturers that have suffered heavily from the global financial crisis.
Last
week the mayor of Dongguan, Li Yuquan, told a group of visiting foreign
journalists more than 400 factories in the city had closed
down in the first half of this year and that unemployment was a growing
concern.
He says this year it is estimated that foreign
businesses' profitability will be a lot less than last year and that
there are also more businesses that are losing money. He says it is
estimated that next year the number of factories closing down will
possibly be a little higher.
Guangdong is China's export
manufacturing hub and has seen export growth drop by 13.5 percent as
western buyers have little cash to spare.
About half of Chinese companies making toys for export in Guangdong, some 3,600, have been forced to shut down this year.
Aside
from the global downturn, other factors are the rising cost of labor,
raw materials, and increased safety standards, as well as a stronger
Chinese currency.
Smart Union earlier announced a $26 million loss from weak demand and rising costs.
It is not clear if the company will pay the back wages owed to workers.
China's
state media reports the factory bosses have been missing for several
days and the local government on Friday began paying workers out of a
fund of more than $3 million.
