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Chinese factories feel the pinch

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Story Transcript

TANIA BRANIGAN, GUARDIAN CHINA CORRESPONDENT: Dongguan, in China’s southern manufacturing heartland. The chances are your shoes, your television, or your children’s toys were made here. You won’t recognize it, and you probably haven’t heard of it, but in just 10 to 15 years, exports have built a city of more than 12 million inhabitants. Seven thousand worked here, but these scattered toys in a locked factory yard are all that’s left of manufacturing giant Smart Union. It churned out plastic toys for Mattel, Hasbro, Disney. But now its three plants are shuttered. Earlier this month it went into liquidation. Workers still hang around, hoping to hear of vacancies. The government stumped up for their back pay, but there’s no redundancy package. They need work.

WEI SUNYING, FORMER SMART UNION EMPLOYEE (VOICEOVER TRANSLATION): It was shocking. The company broke down so suddenly. One day we went to work as usual; the next it was all closed. Thousands of us are looking for jobs now. We walk around every day till our feet ache, but we can’t find anything. I came here as a migrant worker because my children need money for schooling. I worked here for eight years, but now it has closed and I can’t support my children. I don’t even have enough money to get back home.

BRANIGAN: Others plan to go back to the countryside in a few days, dispirited by their experiences.

FANG JIANLIN OR YAN LONGYING, FORMER SMART UNION EMPLOYEES (VOICEOVER TRANSLATION): We haven’t found work yet. Good companies have very strict requirements. We can’t get in because you have to take exams and we don’t have much education.

JIANLIN OR LONGYING: Some of my colleagues said they were conned while they were job hunting. Recruiters told them that the conditions and salaries were very good. But on the way to the place they were asked for money. They got robbed. Some were even beaten.

BRANIGAN: This is just one of the thousands of factories right across the Pearl River Delta which have already closed their doors. And as the global downturn accelerates, workers are wondering whether China’s economic miracle can really weather the storm. Economists believe Chinese exports could fall in 2009 after years of growth. Domestic consumption is rising, but not nearly fast enough to fill the gap. A local trade association says a fifth of the region’s 45,000 factories could shut by late January. Richall sells bags to multinationals, brands like Tesco and Wal-Mart. But the management says it was struggling with the higher costs of materials and labor and a rising currency, even before the downturn in consumption overseas.

BOB LI, RICHALL FACTORY MANAGER (VOICEOVER TRANSLATION): Taken together, our total costs have risen by about 30 to 40 percent. The exchange rate has risen by more than 10 percent. So the profits from our exports have been eaten up by the currency revaluation. Some companies have already closed down because of the crisis.

BRANIGAN: It’s three decades since the launch of the economic reforms which have resulted in such spectacular growth in China. But that incredible growth rate of the last few years is now starting to falter, and the fate of millions of workers like these is going to hang on what happens to businesses thousands of miles away in the West.

DISCLAIMER:

Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.