A story in today's USA Today tries to describe the economic slowdown's effects on Chinese factories. The article highlights the plight of a textile factory in Shaoxing that went from successful to completely shutdown and owing creditors $290 million USD in three months.
The article does point out that because of the slowdown, rising raw material prices, and the Chinese governments actions to slow economic growth and eliminate low-end factories, the situation with River Dragon is happening throughout southern China. Here is the address for the article:
http://www.usatoday.com/money/world/2008-10-21-red-dragon-china-factories-economy_N.htm
I find it very hard to believe the factors cited by USA Today were really the main factors in River Dragon's closure. More likely there was some bad and/or illegal things going on at this company that finally caught-up with the owners. Economic slowdowns do not close factories with 4,000 workers in three months.
It is clearly true that the global economic slowdown is affecting Chinese manufacturers. As I mentioned yesterday however, it is helping the Chinese government slow growth, control inflation, and better balance trade. It certainly is not gloom and doom. The economy is still growing 9% for goodness sakes! Some factories must be doing well and others must be starting-up.
The article is an interesting look at how the slowdown is affecting China, but it presents an overly negative view. There is lots of good news in China right now.
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