China's toy makers shut factories: a bleak Christmas ahead

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."