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November 24, 2008
Chinese factory closures exaggerated by media


A shoe factory in Dongguan, China.

While the Chinese export sector still expands, growth is down — from 9 percent in October compared to 26 percent in September of last year.

With thousands of workers now unemployed, Chinese workers head inland as factories close.

David Levy is an American who moved to China over 20 years ago. He writes about the Chinese landscape at “China Manufacturing Leadership.” Levy discusses the impact of factory closures on day-to-day life in southern Dongguan — home to the world’s largest shopping mall — which may not be as severe as media reports have indicated.

Dongguan factory closures: the view from street level

To read the press on plant closures in Dongguan, you would think that the city has become a sort of ghost town, with hordes of traumatically unemployed  workers roving  the streets like a pack of zombies  (the un-severanced) seeking their last month’s paycheck from long gone bosses.

Now, I work here in Dongguan, and I drive through various parts of industrial Dongguan and Shenzhen everyday.  I have friends and suppliers throughout the manufacturing districts of these cities with whom I discuss the current situation.   Besides what I read in the newspapers, I see no evidence of significant plant closings in my daily life.  Nor do my friends and suppliers.  The district-level government people I sometimes talk to cite closures of only very small firms, which they say were undercapitalized to begin with.  Some factories are still hiring workers, as evidenced by “help wanted” posters placed out on the street.

The press reports show impressive numbers of closings, but give details about a very few of the more spectacular situations; factories like Smart Union (in Zhang Mu Tou) or WeiXu (in Chang’An)  who’s closures disgorged  thousands of disgruntled workers into the streets, protesting and eventually getting paid off by the local district Government (and some, reportedly, getting beaten up by the police)

What I do see and hear about, and what we all know is true, is that business is down for almost everyone these days and that many  workers are either being  laid off or sent on extended vacation in response to drastically decreased order levels.

I don’t know how many factories have closed.  I suspect the situation is not nearly as dire as we read about in the western press, and that for the most part it is confined to those small, undercapitalized factories which did not play a significant part in the local economy.

That’s the view from street level.

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The views expressed by contributing bloggers do not reflect the views of Worldfocus or its partners.

Photo courtesy of Flickr user clayirving under a Creative Commons license.

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Since Forbes’ article, many people have been referring to the South China Mall as the world’s biggest. Better check that fact though — my friend Anka Lee and I visited the mall for an NBC San Francisco blog. Here’s what we discovered:


I to live in Dongguan and have to agree with the above posting. Some very high profile factory closings, but most were small places, what I would call second tier factories.

In the footwear industry only “China Top” is the major closure, otherwise none of my customers had any news of their vendors closing. For sure, business is slow, cutbacks are happening, but also not seeing the mass closures as reported by the media.

Still darn tough to find good employees for the factories that are hiring.

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