480 private firms close in Guangzhou

By Zhan Lisheng (China Daily)
Updated: 2009-02-11 07:43

GUANGZHOU -- More than 480 private firms in the South China city closed down in the first 10 months of last year, a survey has said.

Conducted by the Guangzhou united front department of and the municipal federation of industry and commerce, the poll paints a grim picture for local industry.

The 480 firms closed because of the global financial crisis, while 320 other private businesses closed for other reasons, it said.

Two percent of Guangzhou's manufacturing firms are privately owned.

Toy firms and restaurants have been particularly hard hit, with printing, logistics and auto-component firms also struggling, the survey said.

Toy firms have received scarcely any orders since October, while some restaurants have seen their revenues fall by 40 percent since September, the study said.

Li Xiaomian, deputy director of the united front department, said the collapse of local firms has triggered a domino effect, while the rising cost of raw materials in the first nine months of last year and sudden plummet after October also caused problems.

"Many firms stockpiled raw materials in the first half of the year out of fear of further price hikes," Li said yesterday.

"You can imagine how disgruntled bosses were when price then fell by 30 percent in October." Wang Tie, secretary-general of the Guangzhou Toy and Gift Industry Association, said the increase in the number of bad loans has made it hard for toy firms to get credit from banks.