Even as the scene appears a bit scary, there is still a ray of hope if only entrepreneurs note the writing on the wall and go all out to cut costs before they raise the clamor for a bailout.
![]() |
Two women make beds on a production line of the small private firm Nangang Shoemaking Factory in Foshan, Guangdong province. |
In October, 714 companies were closed in Dongguan in Guangdong province, home to over 60,100 private companies and a major manufacturing center in China.
"We will see more companies closing in the coming months, with the figure likely to cross 1,000 after Christmas," says Dongguan Deputy Mayor Jiang Ling.
Most of the international buyers of Chinese products failed to get letters of credit in October leading to significant cancellations of Christmas orders, says Frank FX. Gong, chief China economist at JPMorgan Securities (Asia Pacific) Limited in a recent report. "Indeed, 'things suddenly ceased' was the common comment we heard on the ground lately," he says.
But for some like Luo Chun, sales director of tin box maker Dongguan Tinpak Co, the freeze on Christmas orders has not yet meant closing. Luo says overseas order fell by 10 percent from June to October, normally the peak time for Christmas orders.