Dongguan's war on vice bad for business all round

From taxi drivers to snack sellers, the workers who thrived keeping Dongguan's red lights burning are lamenting their falling fortunes

PUBLISHED : Wednesday, 19 February, 2014, 11:42pm
UPDATED : Thursday, 20 February, 2014, 10:33am

In downtown Dongguan, neon lights flash at night and billboards lure customers into the saunas and massage parlours. At first glance it appears to be business as usual.

But if you ask security guards at the gates of luxury hotels about the sex trade they quickly suggest you move on. These services, they say, are no longer available.

The crackdown on the vice trade has severely impacted many businesses, some with only a loose connection to the world's oldest profession.

Video: CCTV news report on sex trade in Dongguan

While state media have hailed the crackdown as essential to clean up morals and curb corruption, most people in Dongguan's service and retail sectors said they had never realised until now just how important the sex trade was to their business.

From taxi drivers to beauty salons, apartment landladies to mobile phone sellers, almost everyone said their takings had dropped since the crackdown earlier this month.

I think this crackdown will last a long time. I’m thinking of leaving

"Many luxury hotels are almost empty these days," said a clerk at the four-star Vienna Hotel.

Dongguan has been one of the most prosperous cities in the Pearl River Delta for three decades.

For many years its economy grew an average of 18 per cent a year, while between 2003 and 2006 it grew at more than 19.5 per cent a year, the fastest pace in Guangdong.

But the financial crisis in 2008 hit the city's manufacturing sector hard, and Dongguan slipped towards the bottom of the province's growth figures.

As manufacturing declined, the sex industry gained in importance. Analysts have estimated the business now helps generate about 50 billion yuan (HK$63 billion) a year.

The pillar of the vice trade is the hotel business. As a second-tier city, Dongguan, surprisingly, has the highest density of luxury hotels on the mainland.

Official statistics show the city has 90 hotels with four stars or more.

But the average room rate for five-star hotels in the city was about 500 yuan (HK$635) last year, significantly lower than the average of 765 yuan in Guangzhou and 817 yuan in Shenzhen.

With low room rates, hotels find it more difficult to make a profit. Hence, some luxury hotels provide sex services under the cover of saunas and massage parlours. These businesses are now under intense scrutiny amid the crackdown.

Official reports said the city had shut 190 saunas and revoked the licences of 11 entertainment venues since February 9.

"I have run a snack stall near a hotel for three years and have never seen it close its karaoke business, even though there were sex-trade-related raids before," said a street vendor near the Lion Hotel in Changping, one of the best-known sex hotels in the area.

"Many girls working in the hotel loved spending time at my stall, but they have not shown up all day. I earned 5,000 yuan a month selling snacks to the girls, but my income today is only 20 yuan. I think the crackdown this time will last a long time. I'm thinking of closing the stand and leaving Changping."

The cosmetics and clothes sectors were booming in the days when the sex trade was out in the open, but now they, too, are feeling the chill.

"Our average daily turnover was 5,000 to 6,000 yuan, but now the figure has dropped to about 2,000 yuan," said Liang Ping, a saleswoman with the Japan DHC Cosmetics shop in a crowded downtown area. "There are hundreds of cosmetics and clothes shops here. All of us feel the same."

Her shop used to be busy in the evenings and stays open until 10.30pm, but these days there are almost no clients after 8pm.

Dongguan Qile Shangcheng Company, a wholesale firm selling adult toys, underwear and condoms, estimated sales had dropped by up to 20 per cent.

"Local customers accounted for about 70 per cent of total business. We might need to increase sales outside Guangdong," said general manager Ou Yunqi.

Even some mobile phone vendors miss the days when sex workers spent generously to get the latest fashionable device.

"My main clients are sex workers. They would often spend thousands of yuan every two or three months to buy the latest mobile phone," a salesman said, "Now they have all disappeared."

Property agent Ye Weijie said business had dropped 30 per cent. "The crackdown has influenced the rental market, but housing owners are still reluctant to cut their prices. They are waiting and watching," he said.

Li Xingwang, deputy head of the research department of the property agent company Hopefluent Group, said serviced apartment might be the hardest hit. "Many rentals have been cancelled and property sales are also down."

Li said the crackdown would definitely harm Dongguan's economy and hurt investors' confidence.

"We still need to wait a month to get any clear gauge of the real impact," he said.