Crisis in Shenzhen 'minimal', despite lay-offs, closures

Shenzhen authorities insist the extent of factory closures and job losses in the city since the onset of the financial crisis has been minimal, even though the manufacturing hub's cargo volume has dropped 30 per cent in one month and migrant workers have been laid off.

Mayor Xu Zongheng said yesterday that only 682 companies had shut down in the past 10 months and about 50,000 factory workers had been laid off.

Mr Xu said the closed factories - with a combined annual output of 2 billion yuan (HK$2.28 billion) - had contributed just 0.15 per cent to the city's industrial output.

'Sixty per cent of those that closed manufactured toys, plastics, metal appliances or clothes,' he said. 'This doesn't shatter the city's industrial foundation.'

The mayor said 60 to 70 per cent of the factories closed because of rising raw material costs, the yuan's appreciation and declining orders amid the financial crisis, and the rest either closed because of competition or were shut down due to pollution violations or illegality.

Meanwhile, Ma Yongzhi , deputy head of the Shenzhen Communications Bureau, said the city's logistics sector was facing big challenges during the economic crisis, as cargo services to the US and Europe had been cut largely because of declining exports and factory closures.

He said the supply of trucks and warehouses well exceeded demand, and logistics companies faced big drops in income because many of their manufacturing clients were defaulting on payments.