Chinese factories are closing by thousands

[fccool]

Via: Los Angeles Times:

Financially troubled plants are being abandoned by the boss, leaving behind unpaid workers and debts.

First, Tao Shoulong burned his company’s financial books. He then sold his private golf club memberships and disposed of his Mercedes S-600 sedan.

And then he was gone.

And just like that, China’s biggest textile dye operation — with four factories, a campus the size of 31 football fields, 4,000 workers and debts of at least $200 million — was history.

“We’re pretty much dead now,” said Mao Youming, one of 300 suppliers stiffed last month by Tao’s company, Jianglong Group. Lighting a cigarette in a coffee shop here, the 38-year-old spoke calmly about the bleak future of his industrial gas business. Tao owed him $850,000, Mao said, about 60% of his annual revenue. “We cannot pay our workers’ salaries. We are about to be bankrupt too.”

Government statistics show that 67,000 factories of various sizes were shuttered in China in the first half of the year, said Cao Jianhai, an industrial economics researcher at the Chinese Academy of Social Sciences. By year’s end, he said, more than 100,000 plants will have closed.

As more factories in China shut down, stories of bosses running away have become familiar, multiplying the damage of China’s worst manufacturing decline in at least a decade.

Even before the global financial crisis, factory owners in China were straining under soaring labor and raw-material costs, an appreciating Chinese currency and tougher legal, tax and environmental requirements. When the credit crunch took hold — prompting Western businesses to slash orders for Chinese goods and bankers to curtail loans to factories — many operations were pushed over the edge.

[Gail]

Not to mention the number of chemical scandals linked to Chinese exports?

[fccool]

Not as much the chemical scandal, but because no one is buying their stuff with credit crunch looming. So the owners pretty much bail on their companies leaving everything behind.

[Dr. Shane]

I see oil prices continuing to fall.

[Amelia]

Alot of corruption by the bosses it sounds like too.

[carolaa]

It sounds like these are not just bosses, but the actual company owners. Else how could they get away with just walking off?

[Norman Byers, N.D.]

Quote:

"Everybody's watching what's going on in Beijing right now with the Olympics , Think about the amount of money that China has spent on infrastructure. Their ports, their train systems, their airports are vastly the superior to us now, which means if you are a corporation deciding where to do business, you're starting to think, 'Beijing looks like a pretty good option.'"

Barrack Obama August 22, 2008

More wisdom from the Democratic candidate

[fccool]

And what exactly do you disagree with? China is simply shutting down the extra factories that were making stuff for US, and now that US is broke and can't even afford to buy cheap Chinese stuff... are you suggesting we are better off than they are economically?

[Norman Byers, N.D.]

I am not disagreeing with anything, I am pointing out that Obama said it was looking like a great place to invest. Now we find out how wrong he is.

Quote:

China is simply shutting down the extra factories that were making stuff for US, and now that US is broke and can't even afford to buy cheap Chinese stuff.

According to what you posted it started before the economic crisis.

Quote:

Even before the global financial crisis, factory owners in China were straining under soaring labor and raw-material costs, an appreciating Chinese currency and tougher legal, tax and environmental requirements. When the credit crunch took hold ; prompting Western businesses to slash orders for Chinese goods and bankers to curtail loans to factories; many operations were pushed over the edge.

Quote:

are you suggesting we are better off than they are economically?

Again, my point was not to say anyone is better off than anyone else, it was to show that Obama doesn't know what he's talking about.

Norman

[fccool]

Asian markets looked upon as the future of the economic progress, simply because they do have the production base, and people are saving money. If we have a global collapse today, the Asian countries will take the least heat, and will be the first ones to recover. This is one of the reasons the big wigs teach their kids to speak Mandarin, and move the capital East.

Do you want to know why Oil went down to almost half? Because the financial institutions in the West are struggling to come up with liquid cash to stay solvent... so they are selling Oil and Gold and buying dollars just to keep solvent and survive the coming quarter. This is the same reason the dollar is bolstered. These people have to liquidate their investment assets just to stay afloat. People realize that the fairy tail is over.

The same reason the corporations are paying out billions in bonuses to their executives. They know the ship is sinking, so looting the organization is the only thing left to do.

Sure, China is taking a heat right now because the world stopped buying, but it's just an indication of where we are. The things will go much faster from here on.

Both Obama and McCain know what's up. These people don't get their news for CNN or FOX. They know that things are pretty bad. That's one of the reasons I think Obama was pushed into presidency ... is to keep things calm as a truckload of manure is about to hit the fan. People will more likely to stay calm and listen when the previous party is blamed for the mess.

All I can say, buckle up your seat belts... we are heading for a very eventful winter. Things are not going to get better.

[Amelia]

[Norman Byers, N.D.]

Quote:

All I can say, buckle up your seat belts... we are heading for a very eventful winter. Things are not going to get better.

Well said my friend.