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Global Financial Crisis to Cost China Millions of Jobs

Posted October. 20, 2008 08:44,   


The global financial crisis has dealt a serious blow to Hong Kong, Asia’s financial hub, and the Pearl River Delta in Guangdong province, China’s manufacturing center, with millions of jobs expected to be lost.

Smaller foreign-invested manufacturers, including those from Hong Kong, have gone bankrupt in Shenzhen, Dongguan, Guangzhou and Huizhou, leading to huge job losses and rising fear over employment security.

Hong Kong industries forecast that at least a quarter of Hong Kong companies operating in the Pearl River Delta could go under and estimated that job losses could reach 2.5 million in three months.

Home appliance maker BEP International Holdings, which is listed on Hong Kong’s Hang Seng stock market, said it will close its Shenzhen factory due to financing difficulty.

The announcement came two days after China’s largest contract toymaker Smart Union Group Holdings said it will shut down two factories in Dongguan.

The closure of BEP’s factory cost 1,500 jobs and that of Smart Union 6,500. The latter’s employees held a demonstration in front of the Dongguan City Hall demanding back pay.

Tai Lin Radio Service Ltd., a 62-year-old Hong Kong chain for electrical appliances, also went bust Friday, following the demise of clothing manufacturer U-Right International Holdings early this month.

According to the Chinese daily Wenweipo, at least 500 high-end restaurants in Hong Kong are expected to close within three months given the damage suffered by the region’s financial and manufacturing sectors.

When SARS hit the territory in 2003, around 3,000 high-end restaurants shut down.

The chairman of the Federation of Hong Kong Industries, Clement Chen, said, “The flow-on effects in Hong Kong will be drastic. It will hit the banks, the service industries, everyone.”

`We are very, very worried about our businesses. Our feeling for the medium term is grave and we believe the recession is going to last for some time.”