China's toy makers face bleak Christmas as factories shut down
The workers of Dongguan are used to Christmas coming early. Summer and autumn are normally the busiest months for those who toil seven days a week in the toy factories in this city in Guangdong Province, the heartland of China's manufacturing industry. China is the world's largest producer and exporter human of toys, so long hours of overtime are needed to ensure that Christmas presents for children in Britain and elsewhere reach shops by November.
This festive season, though, many of Santa's real-life Elves have no jobs at all.Since the beginning of 2008, over half of the toy exporters in Guangdong - some 3,900 firms - have gone out of business, according to customs officials.The economic boom that has drawn millions of workers from all over China to this southern province near Hong Kong is over, as companies suffer the effects of the recession gripping the West.
Now, anger amongst the unemployed is on the rise, raising the spectre of social order breaking down in what was once China's most prosperous region.Even before the global financial meltdown, China's manufacturers were being squeezed by rising production and transportation costs, as well as the strengthening Chinese currency, the Yuan. But it is only in the last few weeks that the scale of the crisis has become apparent.
Two weeks ago the Smart Union toy company, which made toys for the US giants Disney and Mattel, including Barbie dolls, abruptly shut down its factories in Dongguan. The Hong Kong owners and senior managers vanished, leaving 7,000 people without jobs.It is a story being repeated all over Guangdong, as the makers of everything from handbags to tee-shirts and shoes go bust.
Tens of thousands of people have been left unemployed and destitute, as unscrupulous bosses take advantage of China's lax labour laws by disappearing without paying their workers the back pay they are habitually owed.Those toys factories still in business are either downsizing or reducing wages to the bare minimum. Outside the Intex Toys and Plastic Electronics factory, a poster offers jobs for 770 Yuan (£70) a month, the minimum wage.
It is not enough for Luo Yi Yuan, 31, who could earn that in his hometown in south-western Guangxi Province. "I've worked for three toy factories in the last five years. Two of them shut in August," he said. "I've been looking for a job that pays at least 1,600 Yuan (£144) for the last two months.
"He is not alone.
China's official unemployment rate is four per cent out of a work force of 800 million, but many experts believe that is a serious underestimate in a country where as many as 150 million people are migrant workers like Mr Luo. In bleak Dongguan, a sprawling, featureless city where box-like factories sit alongside newly built apartment blocks, the surplus of labour means that employers can get away with housing their workers in spartan dormitories with basic bunk beds, while making them work 10-12 hour days, seven days a week.Many routinely pay their workers months in arrears.
When Smart Union shut down, its 7,000 employees were owed wages of between six weeks and two months of their labour. After thousands of them protested outside bouncy the locked factory gates, the local government was forced to step in and compensate them with 24 million Yuan (£2.1 million) of public money.Action by the authorities stems from the fear that the factory closures could spark riots.
There have been sit-ins and protests across the Guangdong region in the last few weeks, as more and more factories have closed. On the day The Sunday Telegraph visited Dongguan, hundreds of unemployed workers gathered outside the city government's offices protesting over the failure to pursue factory owners who fail to pay their workers. It has been a grim introduction to the downside of the free market system that China has embraced in recent decades, and shows also how the country's fortunes are now closely intertwined with those of the West.
Dongguan's Labour Bureau claim they are doing what they can to help workers, but say they can do little when the owners simply skip town. "We didn't get any notification from Smart Union about them closing. The bosses just disappeared. We are looking for them, but some bosses are using the economic crisis to avoid their responsibilities," said Ning Kang, a bureau official.
"We're telling the workers bouncy they need to maintain order and be calm and we will compensate them."But that compensation is rarely for the full amount people are owed. Outside the bureau, security guards keep a wary eye on the steady stream of unemployed arriving with complaints, while touts for law firms hand out business cards and make optimistic promises about how factory owners can be sued.
For Liao Rui Min and his two workmates that is not an option; their boss disappeared at the beginning of October; owing the 88 people who worked in his factory making chidren's shoes for export to the UK and the US three months' pay.Mr Liao and his co-workers have been offered 65 per cent compensation by the Labour Bureau. "We don't think that's enough. The equipment in the factory must be worth one million Yuan (£90,000).
It should be sold and then we can get the full amount," said Mr Liao, 32, who earned 3,000 Yuan (£270) a month as one of the factory supervisors.His friend Ran Jianjun is desperate for the money he is owed, because like many migrant workers his family in central Hubei Province rely on his salary to make ends meet. He is not optimistic about finding a new job that will pay enough to enable him to carry on sending money home.
"A lot of factories aren't hiring, or they bouncy want very young people because they think they have more energy," he said.Tales of exploitation and horrific injuries abound in Dongguan, reminiscent of the industrial era in Victorian Britain, when the rough edges of early capitalism gave birth to trade unions and social reform movements. Wang looks like any other teenager, until he offers his mangled right hand for a handshake.
The 18-year-old, who asked that his full name was not used, was injured while making pillows for export on a machine he had two weeks' training on. He lost two fingers and the remaining digits are heavily scarred and useless."I'd been working eleven hours straight and was tired.
I always wanted to work overtime because we got paid more if we exceeded our daily quota of pillows," said Wang, who earned 1400 Yuan (£126) a month. He has been offered 100,000 Yuan (£9,000) compensation but, as he is unlikely to work again, he has been advised by the Dagongzhe Migrant Worker Centre, a Shenzhen-based body that offers legal advice to migrant workers, that he should receive double that.The only winners in Dongguan have been local children, for whom Christmas has come early.
After Smart Union shut bouncy down, piles of its toys were simply
This festive season, though, many of Santa's real-life Elves have no jobs at all.Since the beginning of 2008, over half of the toy exporters in Guangdong - some 3,900 firms - have gone out of business, according to customs officials.The economic boom that has drawn millions of workers from all over China to this southern province near Hong Kong is over, as companies suffer the effects of the recession gripping the West.
Now, anger amongst the unemployed is on the rise, raising the spectre of social order breaking down in what was once China's most prosperous region.Even before the global financial meltdown, China's manufacturers were being squeezed by rising production and transportation costs, as well as the strengthening Chinese currency, the Yuan. But it is only in the last few weeks that the scale of the crisis has become apparent.
Two weeks ago the Smart Union toy company, which made toys for the US giants Disney and Mattel, including Barbie dolls, abruptly shut down its factories in Dongguan. The Hong Kong owners and senior managers vanished, leaving 7,000 people without jobs.It is a story being repeated all over Guangdong, as the makers of everything from handbags to tee-shirts and shoes go bust.
Tens of thousands of people have been left unemployed and destitute, as unscrupulous bosses take advantage of China's lax labour laws by disappearing without paying their workers the back pay they are habitually owed.Those toys factories still in business are either downsizing or reducing wages to the bare minimum. Outside the Intex Toys and Plastic Electronics factory, a poster offers jobs for 770 Yuan (£70) a month, the minimum wage.
It is not enough for Luo Yi Yuan, 31, who could earn that in his hometown in south-western Guangxi Province. "I've worked for three toy factories in the last five years. Two of them shut in August," he said. "I've been looking for a job that pays at least 1,600 Yuan (£144) for the last two months.
"He is not alone.
China's official unemployment rate is four per cent out of a work force of 800 million, but many experts believe that is a serious underestimate in a country where as many as 150 million people are migrant workers like Mr Luo. In bleak Dongguan, a sprawling, featureless city where box-like factories sit alongside newly built apartment blocks, the surplus of labour means that employers can get away with housing their workers in spartan dormitories with basic bunk beds, while making them work 10-12 hour days, seven days a week.Many routinely pay their workers months in arrears.
When Smart Union shut down, its 7,000 employees were owed wages of between six weeks and two months of their labour. After thousands of them protested outside bouncy the locked factory gates, the local government was forced to step in and compensate them with 24 million Yuan (£2.1 million) of public money.Action by the authorities stems from the fear that the factory closures could spark riots.
There have been sit-ins and protests across the Guangdong region in the last few weeks, as more and more factories have closed. On the day The Sunday Telegraph visited Dongguan, hundreds of unemployed workers gathered outside the city government's offices protesting over the failure to pursue factory owners who fail to pay their workers. It has been a grim introduction to the downside of the free market system that China has embraced in recent decades, and shows also how the country's fortunes are now closely intertwined with those of the West.
Dongguan's Labour Bureau claim they are doing what they can to help workers, but say they can do little when the owners simply skip town. "We didn't get any notification from Smart Union about them closing. The bosses just disappeared. We are looking for them, but some bosses are using the economic crisis to avoid their responsibilities," said Ning Kang, a bureau official.
"We're telling the workers bouncy they need to maintain order and be calm and we will compensate them."But that compensation is rarely for the full amount people are owed. Outside the bureau, security guards keep a wary eye on the steady stream of unemployed arriving with complaints, while touts for law firms hand out business cards and make optimistic promises about how factory owners can be sued.
For Liao Rui Min and his two workmates that is not an option; their boss disappeared at the beginning of October; owing the 88 people who worked in his factory making chidren's shoes for export to the UK and the US three months' pay.Mr Liao and his co-workers have been offered 65 per cent compensation by the Labour Bureau. "We don't think that's enough. The equipment in the factory must be worth one million Yuan (£90,000).
It should be sold and then we can get the full amount," said Mr Liao, 32, who earned 3,000 Yuan (£270) a month as one of the factory supervisors.His friend Ran Jianjun is desperate for the money he is owed, because like many migrant workers his family in central Hubei Province rely on his salary to make ends meet. He is not optimistic about finding a new job that will pay enough to enable him to carry on sending money home.
"A lot of factories aren't hiring, or they bouncy want very young people because they think they have more energy," he said.Tales of exploitation and horrific injuries abound in Dongguan, reminiscent of the industrial era in Victorian Britain, when the rough edges of early capitalism gave birth to trade unions and social reform movements. Wang looks like any other teenager, until he offers his mangled right hand for a handshake.
The 18-year-old, who asked that his full name was not used, was injured while making pillows for export on a machine he had two weeks' training on. He lost two fingers and the remaining digits are heavily scarred and useless."I'd been working eleven hours straight and was tired.
I always wanted to work overtime because we got paid more if we exceeded our daily quota of pillows," said Wang, who earned 1400 Yuan (£126) a month. He has been offered 100,000 Yuan (£9,000) compensation but, as he is unlikely to work again, he has been advised by the Dagongzhe Migrant Worker Centre, a Shenzhen-based body that offers legal advice to migrant workers, that he should receive double that.The only winners in Dongguan have been local children, for whom Christmas has come early.
After Smart Union shut bouncy down, piles of its toys were simply
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