Beijing [China], April 15 (ANI): Dongguan city in Guangdong province of China was once praised “world’s factory within the world’s factory”, and the epitome of China’s industrial prowess now seems to have lost it. The closure of Dongguan Gogo Garment, the city’s largest lingerie manufacturer closed on January 10 as the company cited dwindling customer orders and failed attempts to break into the domestic market as the reasons behind its downfall, The Diplomat reported.
Gogo Garment was founded in 1980 and had become a leading Original Equipment Manufacturer for international lingerie. Its workforce had reached nearly 10,000 at its height. For 43 years, Gogo Garment, which spans tens thousands of square meters of space, has been a trusted partner to prestigious international high-end lingerie companies. In spite of its resilience, this company filed for bankruptcy.
Koppo Electronics – a Fortune 500 Company with over 6,000 employees – decided to stop operations in July 2022 because of unpaid cross-border payments for ecommerce, the backlog of completed goods and a sharp decrease in domestic orders and international orders.
The situation didn’t improve even with the relaxation of Covid-19. There are many factories in Dongguan that are struggling with heavy loads and on the verge of collapse. The imminent threat of closure is looming.
The reality is that there is no improvement in 2023, despite hopes of surviving the year 2022. Manufacturing companies in the area have seen a shift in global supply chain, and no orders were received this year. The notification of factory closings is becoming more common.
The Pearl River Delta, which includes the Greater Bay Area, is experiencing a dire situation with shutdowns, closings, bankruptcies and collapses.
Many of the typical ‘Made in China’ manufacturers, which have persevered and struggled until the end, have not been spared from the unfolding crisis. These enterprises, which have been around for decades, assumed that their prosperity would last forever. But in reality, both state-owned and private manufacturing industries are facing unprecedented challenges along the southeast coast of China.
The real estate sector’s ability to weather the storm in light of the current state of manufacturing is questionable. Housing market facing major challenges with many properties unable to sell.
In China, as of February 2023 an estimated 3.5 million square feet of residential buildings were still unoccupied, which is equivalent to approximately 4,000,000 residential units. According to real estate consulting firms, approximately one third of newly built homes in China will remain unoccupied in 2022. This is the highest percentage since 2015.
Land and real estate developments are the easiest and most straightforward path to economic prosperity. This is because it’s possible to make significant profits by owning land.
The assumption behind this approach is that the house will always be saleable, people are always employed and will have consistent income and wage growth, investments will always yield positive returns and real estate values will continue to increase while social inflation remains unchanged.
The deep-rooted issues of the manufacturing industry of China will lead to the collapse of China’s economy. Lack of employment options prevents people from buying houses. Those who already own houses will also struggle to pay their mortgages.
The industrial economy’s potential decline could be much more rapid and severe than expected, with only military-industrial firms showing willingness to invest regardless of cost. (ANI)
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