Clear The Air News Blog Rotating Header Image

Trade Will Decline If Hong Kong Factories In Guangdong Close

Trade Will Decline If HK Factories In Guangdong Close

By Paul Richardson LONDON – Cargonewsasia – 10 March 2008

The China export juggernaut continued to roll on last year with imports of containerised goods from the mainland to North Europe growing by almost 40 percent, a growth rate similar to that recorded in the previous five years. But this year is likely to be another story, say industry officials, who predict a downturn as thousands of export factories may be forced to pull down their shutters.

According to industry sources in the major industrial and production areas around the Pearl River Delta, as many as 14,000 China, Hong Kong and Taiwan-owned factories producing export goods could close in the first half of this year.

Around 30 percent of the migrant workforce who travel from the Chinese hinterland to work in this predominantly productive, and so-called “higher wage” area, have not returned to their work place following the Lunar New Year.

The Guangdong area – known to be the high production region for goods into Europe – has been the big catchment area for the hinterland labour force, but sources said there are signs that the tide is turning.

The gap between salaries offered to Guangdong workers and those offered by the inland companies is rapidly shrinking and those workers who travelled to their homeland for the Lunar New Year, the attraction to remain in the hinterland is now far more greater than ever before.

The potential drift back to roots has also been accentuated by the severe weather conditions prevailing over China in the post-New Year period.

As many as 14,000 factories owned by Hong Kong companies in the Guangdong region are closing down or threatening to close because its workers have not returned from their native province. These factories account for some 20 percent of the cargo headed for Europe.

The Beijing administration has been considering relocating the Guangdong factories to areas such as Hunan and Jiangxi, but sources said, “it will not be easy to accommodate” those already operating in these areas.

The central government is also cracking down on factories responsible for chemical and environmental pollution and pressuring them to move out from Guangdong’s urban areas into locations such as, Zengcheng, Huadu, Conghua and Nansha.

These moves are certain to cause a downturn in Europe-bound cargo this year from Guangdong, sources said.

Leave a Reply

Your email address will not be published. Required fields are marked *