OVER the past half year, the global financial crisis has wrenched asunder the gritty factory towns in China's Pearl River Delta, but some signs on the ground suggest the workshop of the world is cranking up again. The slump is not over for the area that churns out a third of China's exports. Many executives estimate that a collapse in orders, mainly from the United States and Europe, has wiped out 20-40 percent of their business. Thousands of factories in low-margin sectors have closed, and the government's latest guess is that 23 million migrant workers have lost their jobs. But at least the nightmare scenario of widespread social unrest now looks increasingly unlikely. And industrial Darwinism has left leaner factories poised to take up the slack when the West rediscovers its appetite for cheaply made Chinese goods. “Generally we believe that we're probably at the bottom and that it's stabilized,” said Steve Smith, general manager of Measurement Specialties , which makes sensors for an array of automobile, industrial and medical applications. Empty workbenches at Measurement Specialties' gleaming new Asian headquarters in the Shenzhen High-Tech Park testify to a slump in the auto market that is a big reason why the firm has cut its workforce to 1,300 from a peak of 1,750 in September. But Smith is keeping his fingers crossed that the worst is over. “We have some indication that demand's starting to pick up,” he told Reuters. Clear as mud Getting a clear picture of Guangdong, the province north of Hong Kong that serves as the world's factory floor, is not easy: as one European businessman put it, sowing confusion is a competitive advantage in the free-wheeling, free-market Delta. This executive said his outsourcing business was still growing fast; none of his top suppliers had gone under and failures were concentrated among struggling, low-margin firms. But Liang Yaowen, head of Guangdong's Foreign Trade Department, said 271 foreign-invested companies had shut down or relocated in the first two months of the year, while foreign investment had witnessed an “unprecedented” slide. On the streets of Shenzhen, which adjoins the prosperous former British colony of Hong Kong, young factory workers look as relaxed as ever during their lunchtime break. But dig a little deeper and the signs of economic strain become apparent. One day last week, in a dusty industrial corner of Baoan on the western fringes of Shenzhen, sidewalk food stalls were doing brisk trade. Why? A chatty factory girl called Liu Yaqing explained that the plant where she assembles DVD players had closed its canteen after the Lunar New Year holidays, which ended in early February. “The jobless situation is getting worse and worse, so many factories aren't providing food any longer,” she said as uniformed workers poured out of nearby plants to slurp down bowls of noodles laced with ground chillies for four yuan (50 cents). None of the workers sounded angry. Nor did they blame the government or local authorities for the gloomy job market. But dissatisfaction with falling wages, increased fees, the loss of perks and diminished job security seemed widespread. With the minimum wage in Shenzhen set at around 900 yuan ($132) a month, some workers said that after extra charges for things like dormitory beds, food, water and electricity, they were taking home only a few hundred yuan. “At first, there were some strikes,” said Yang Zenghu, a 24-year-old worker from Henan in central China. “But people don't really want to resist now and risk change. Instead they're staying at their factories because of the financial crisis.” Glimmers of hope Danny Lau, chairman of Hong Kong's Small and Medium Enterprises Association, which represents some of the hardest-hit suppliers, said such cost-cutting measures were to be expected. He estimated that orders at 60 percent of the 65,000 Hong Kong-owned factories in the Delta were 10-20 percent down on last year; another 20 percent had suffered a 30-50 percent plunge, while the remaining 20 percent had fared even worse.
