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Fleeing investors prompt China to review foreign capital use
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Liu Changyou has been walking the streets of Qingdao, Shandong Province, for a month since losing his job at a Korean-funded enterprise that suddenly shut down.

Hailing from the northeastern province of Heilongjiang, Liu was once a worker in the Modern Artware Plant in Qingdao. But when he returned from the Lunar New Year holiday in early February, he found that his boss, who was from the Republic of Korea (ROK), had not.

"The local labor authority told me the Korean boss was dead after he went back to the Republic of Korea during the Chinese New Year,"Liu said. But Liu thought it more likely that the manager had fled, something that's been happening with a number of ROK-invested factories.

Situated in the Qiantian area of Qingdao's Chengyang District, the Modern Artware Plant was shut. Its gate was closed and bore a notice "for lease."

The factory, and its workers, are among the many that have been affected by changes sweeping China's manufacturing industry: rising labor costs, changes in tax rates and rebates, a stronger currency and policies that favor capital- and technology-intensive industries over the low-tech, labor-intensive sectors.

In many cases, factories simply shut down, stranding workers without pay. In Qinqdao alone, a couple of hundred ROK enterprises, mostly smaller factories, have shut down abruptly in recent years. Workers show up for their shifts one day, only to find the factory gate padlocked and the managers gone -- without paying their debts or their workers.

Most of the foreign investors in these factories don't go through the formalities of declaring bankruptcy: they simply slip away in the night, abandoning their equipment. Or as the Shandong Department of Foreign Trade and Economic Cooperation (SDFTEC) puts it, these investors left through "abnormal" procedures

"There are four artware (ceramics) plants that have left here since the Chinese New Year," said Li Zhicheng, the director of the neighborhood committee in Qiantian. "Another four left at the end of last year without any prior notice."

Qiantian has had the largest number of ROK enterprises in Qingdao. Li said that in recent years, more of these enterprises had withdrawn and the pace appeared to be picking up. Several years ago, only one or two plants shut each year, but in less than three months this year, four had closed.

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