Beijing: The Chinese Communist Party’s (CCP) zero-Covid measures are forcing large numbers of private manufacturers to close in the Pearl River delta region.
Last month, Cooper Electronics, based in Guangdong’s manufacturing hub of Dongguan, announced it would close this month, RFA reported.
Hong Kong-owned toymaker Dongguan Kaishan Toys has announced it will follow suit, while Dongguan Jingli Plastics and Electronics will suspend production on August 31 after laying off all of its staff, according to ChinaToysNet.
Other private businesses have told RFA they plan to furlough all staff for six months after a massive slump in new orders made it impossible for them to meet their payroll bill.
The moves come as foreign-invested manufacturers are increasingly relocating to Vietnam, Cambodia and other Southeast Asian countries, as costs continue to skyrocket in China, RFA reported.
Financial commentator Cai Shengkun said the hollowing out of Dongguan as a manufacturing base has been a long time coming.
“Dongguan used to be China’s manufacturing base, and in its heyday was the production base for products sold by the world’s largest companies,” Cai said. “During its heyday, Dongguan maintained high GDP growth for over a 20-year period … and accumulated enormous wealth.”
“But now with the relocation of some industries and the continuous migration of foreign capital, there are not many high-end factories in Dongguan left,” he said.
Cai said President Xi Jinping’s insistence on a zero-Covid approach, meaning individuals and entire cities can be placed under lockdown at a moment’s notice, with mandatory quarantine and testing for all, have also struck a major blow, RFA reported.
“Rising shipping costs and the impact of the pandemic have meant that (these) industries are no longer profitable,” he said.
“With shipping costs getting higher and higher, these products will no longer have any export advantage.”