The surprise decision to lift fuel and power prices has added to the cost burden of Hong Kong entrepreneurs across the border, raising fears that the wave of corporate closures will worsen.
Manufacturers said that aside from the higher transport, energy and raw materials costs, they will have to contend with the strengthening yuan, which recently hit fresh record highs against the US dollar and the pegged Hong Kong currency.
In terms of higher energy costs, industries that are huge power consumers such as electroplating and metals businesses will be hit hardest.
Hong Kong Small and Medium Enterprises Association chairman Danny Lau Tat-pong said the price inflation would trigger the demise of about 20,000 of the 65,000 Hong Kong factories in Guangdong this year and that about 10,000 had been forced out of business since the beginning of this year.
'This is a new headache on top of a string of problems we are already facing,' Mr Lau said.
He was referring to the impact of the floods in Guangdong, adverse trade policies, the new labour contract law, the continuous appreciation of the yuan and the increase in the other costs of production.
Alice Kwan, whose factory in Shenzhen makes packaging products for Coca-Cola and Disney, said higher diesel prices forced the factory to switch to sourcing electricity from local power plants, which was cheaper, rather than use its own diesel-fuelled generators.