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'World's factory' confident of tackling global financial crisis
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Fifty workers sit in a tiny room in a spectacle frame factory in Dongguan, undergoing training, including factory discipline and rules, fire safety and work skills.

"I recruited them yesterday," says Sunny Chan, executive director of Sun Hing Vision Group Holdings Limited. "From October, it became easier to recruit new workers, as some of the small glasses factories at the Pearl River Delta have closed down due to the global economic crisis."

Sun Hing, with 8,000 workers, is a major glasses frame factory in the Pearl River Delta, Chan says.

Although more than 90 percent of the company's products were sold to the United States and Europe, Chan said the global financial crisis had little influence on business. Orders for the first 10 months this year were almost the same as for the same period last year.

"Now is not the worst time. I predict my factory will be mostly affected by the financial crisis in the first three quarters of 2009."

In anticipation, the company plans to lower production costs by 5 percent through energy conservation and improve production efficiency.

"I am very confident of surviving the financial crisis and even becoming stronger as we have no debts and my company is the big one in the industry. If the smaller ones close down, we will get more market share and skilled workers," Chan says.

It's not just the big companies being confident: high-tech firms with their own patents and research and development centers are too.

Although the labor-intensive toy industry is deemed a high risk in the financial crisis, C.M. Leung, managing director of Lung Cheong International Holdings Limited, says it always has bright future because children all over the world love toys by nature.

"The important thing is that toy companies should update designs and should have their own intellectual property," Leung says.

Lung Cheong produces a range of remote control toys and robots. It works with the prestigious Tsinghua University and Wuhan University of Technology to develop new products.

"The most difficult time has not come yet, although we have our own intellectual property and our products are popular, we have to prepare to resist risks brought by the financial crisis," he says.

The company is trying to diversify its market. Previously, more than 90 percent of its toys were sold abroad, including in the United States, Europe, Japan and other Asian countries.

"We're aiming to sell 20 percent of our products on the domestic market in 2009," says Leung.

Dongguan is dubbed the "world's factory" as it is home to more than 28,000 industrial firms, including 15,000 overseas-funded businesses, producing footwear, clothes and IT products, to sell all over the world.

The city's GDP surpassed 300 billion yuan in 2007 and the combined number of permanent and temporary residents exceeds 10 million.

But the economic crisis has highlighted another distinction this year -- the growing number of factory closures.

Liu Zhigeng, secretary of the Dongguan municipal committee of the Communist Party of China, says 627 firms with the losses of 720 million U.S. dollars in the first three quarters, but the city attracted and used overseas investment totaling more than 2 billion U.S. dollars.

"Dongguan's economy has been stable. From January to September its export volume was 49.8 billion U.S. dollars, up 17.3 percent from the same period last year. Income reached 46.5 billion yuan, up 16.8 percent," Liu says.

But he too predicts, "The most difficult time might be the first half of 2009."

The municipal government has prepared with business tax breaks and fee exemptions worth more than 700 million yuan, while providing 1 billion yuan to help with industrial structuring, 1 billion yuan to help small and medium-sized enterprises and another billion yuan for training the unemployed or help them start their own businesses.

"The financial crisis has affected the city's economy, but it cannot affect us fundamentally. It is also an opportunity for the city to realize industrial readjustment and optimization, " Liu says.

Export-oriented companies in Dongguan have other challenges too, such as RMB appreciation and rising raw materials and labor costs.

"Despite the difficulties, companies in Dongguan seldom consider moving their factories to other countries or regions because the industrial environment of Dongguan is perfectly mature. People can obtain every accessory and part needed for production in just 25 minutes," says Leung.

"We will stay here and we are confident of surviving the crisis and even seeking development opportunities from the financial turmoil," he adds.

(Xinhua News Agency November 17, 2008)

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