Laid-off workers in China say prospects grim

More than 100 employees of Hong Kong-listed toy manufacturer Smart Union again crowded outside its factory in the southern export hub of Dongguan on Sunday, two days after the firm announced it had gone into liquidation.

The situation has highlighted the growing risk of instability in China's coastal manufacturing hubs as factories face financial difficulties that could possibly lead to large-scale layoffs.

Laid-off migrant workers said job prospects elsewhere in southern China looked grim as soaring prices for raw materials and shrinking demand from the crisis-hit US and European economies squeeze manufacturers in the region.

‘We thought about going to Shenzhen or even Shanghai. But then factories are also closing down in those places,’ Song Xiaoguan, 25, told AFP.

‘If worse comes to worse, I may have to go back to my home in Henan. But the problem is that I had borrowed a lot of money from relatives and friends and I would not be able to repay them,’ he said.

The factory has promised to pay the workers their unpaid salaries by Tuesday.

Another migrant, surnamed Xiu, expressed fear about returning to his native province of Fujian in the southeast, where the economy was in even worse shape than in Dongguan.

‘I do not want to go back home a poorer man, in debt, and unable to feed my family,’ he said.

The workers were among the 7,000 people who were left jobless after the company, a major supplier of toys to US giants Mattel and Disney, announced on its website it had gone into liquidation on Friday.

The company's shares on the Hong Kong stock exchange were suspended from trading on Wednesday.

A number of businesses nearby have taken Smart Union's liquidation as an opportunity to plug their own manpower holes, setting up recruitment booths outside the factory over the weekend.

But many of the newly jobless workers said they were unsure about the viability of those companies.

Chinese state media reported last week that more than half of the nation's toy exporters had gone broke in 2008, hit by rising production costs, the stronger yuan and tightened safety standards.