Thousands of Hong Kong-owned factories could shut down before the end of the year
Official figures show that a third of the 50,000 factories in mainland China owned by Hong Kong interests could close by Christmas. Exports are down whilst raw material costs and wages are up. Now firms want a freeze on higher wages already battered by high inflation.
Hong Kong (AsiaNews/Agencies) – Up to a third of Hong Kong's 50,000 or so mainland factories could shut by Christmas as exporters are hit by cost rises and lower global demand for Chinese goods. Millions of migrant workers could be out of a job a few weeks from now.
The warning comes from the Federation of Hong Kong Industries, which represents some 3,000 firms with factories in China whose activity has been sharply curbed by falling demand in the United States and the eurozone. Traditionally Christmas orders are placed well in advance of the end of the year. Now, orders in the second half of this year and the first half of next year are expected to fall anywhere between 5 and30 per cent.
For Stanley Lau, deputy chairman of Hong Kong's leading industrial promotion body, matters are made worse by rising raw material costs and factory worker wages, which have already risen by up to 20 per cent this year over last.
One additional risk on the near horizon is the spectre of yet another round of expected minimum wage hikes from between 18-20 per cent on 1 January, Lau warned.
“Many [factory owners] can't see when the market will have a rebound so they are trying to cut their losses by closing, before all their money is gone,” Lau explained.
If this happens, millions of migrant workers would lose their job like in 2008-2009 at the height of the financial crisis, when thousands of plants shut down in the Pearl River Delta, China’s industrial heartland.
Lau said his federation and a number of Hong Kong firms are now lobbying local Chinese governments to freeze wage hike plans to see market trends.
However, experts note that inflation has already reduced workers’ purchasing power. Some basic food items like pork have seen double digit increases.
At the same time, the debt crisis of some European Union member states is not likely to revive the fortunes of Chinese exports. The EU is China’s main tradition partner.
The warning comes from the Federation of Hong Kong Industries, which represents some 3,000 firms with factories in China whose activity has been sharply curbed by falling demand in the United States and the eurozone. Traditionally Christmas orders are placed well in advance of the end of the year. Now, orders in the second half of this year and the first half of next year are expected to fall anywhere between 5 and30 per cent.
For Stanley Lau, deputy chairman of Hong Kong's leading industrial promotion body, matters are made worse by rising raw material costs and factory worker wages, which have already risen by up to 20 per cent this year over last.
One additional risk on the near horizon is the spectre of yet another round of expected minimum wage hikes from between 18-20 per cent on 1 January, Lau warned.
“Many [factory owners] can't see when the market will have a rebound so they are trying to cut their losses by closing, before all their money is gone,” Lau explained.
If this happens, millions of migrant workers would lose their job like in 2008-2009 at the height of the financial crisis, when thousands of plants shut down in the Pearl River Delta, China’s industrial heartland.
Lau said his federation and a number of Hong Kong firms are now lobbying local Chinese governments to freeze wage hike plans to see market trends.
However, experts note that inflation has already reduced workers’ purchasing power. Some basic food items like pork have seen double digit increases.
At the same time, the debt crisis of some European Union member states is not likely to revive the fortunes of Chinese exports. The EU is China’s main tradition partner.
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