Hong Kong manufacturers in the Pearl River Delta are battling to maintain operations in the face of power shortages which are disrupting production and pushing up costs.
Some have complained of power cuts of up to three days a week in Shenzhen and of two days in Dongguan, a production hub, forcing them to resort to dirtier and more expensive diesel generators, and disrupting production schedules.
Key industry bodies have predicted that increasing difficulties in the delta, dubbed the world's workshop, will force more factories out of business.
Sources close to the Hong Kong Economic Trade Office in Guangdong said the number of Hong Kong factories dwindled to about 35,000 at the end of last year from 39,000 at the beginning of the year and from the 2007 peak of 80,000.
Hong Kong Small and Medium Enterprises Association chairman Danny Lau Tat-pong said manufacturers 'had their backs to the wall' because of a series of challenges, including power shortages, rising wages and raw material costs, a state policy of upgrading industries, a rising yuan and Middle East political turmoil.
'It is not just difficult,' Lau said. 'It is extremely, extremely difficult.'