In what should have been the busiest period for factories in China, factories are closing en masse.

Manufacturing owners tell the Financial Times that orders have dropped significantly. Those in southern China said the fall amounted to 50% in October.

Christian Gassner, the owner of furniture factories in Guangdong , said, “Everybody is crying about the same thing. Orders are dropping 30 to 50 per cent in certain industries. Many people are closing their factories.”

Another owner, identified as Jimmy, said he closed his Guangdong mill in October because of ailing orders and constant lockdowns in the country. The man had lost all hope, saying there was no sign of a rebound.

One man surnamed Chen, said his  employer supplies international supermarkets. He expected that orders at his company had dropped 40% from a year earlier since April. 

Chen said, “Clients are losing confidence. They don’t dare to go all in on China anymore.”

The Chinese economy is faltering due to continuous zero-COVID adherence, a property slump, and global interest rate increases. 

Gary Ng, an economist at Natixis in Hong Kong, told the Times, “We are in a scenario where Chinese domestic demand is affected by lockdowns, plus externally we’re seeing this weaker demand from Europe and the US, which is driven by high interest rates globally.”

While China’s World Factory position weakens, Southeast Asia, where labor cost is more affordable, is rising.

Suki So, executive director of Hong Kong-based Everstar Merchandise, is preparing to shut down her plant in Guangdong and move her Christmas lights production to Southeast Asia. She believes Made in China is no longer a catch and it was the best option to scrap mainland China operations.

One Chinese official in Dongguan city said it was challenging for local governments to assist factories with subsidies since they also had to pay for COVID-testing, a hallmark of Beijing’s zero-COVID regime.

The official, who wanted to remain anonymous, exclaimed, “What are we supposed to do? Let the factories and local economy go dead and waste all income from citizens on the endless PCR tests?”

As the Times cited from China’s National Bureau of Statistics, the country’s manufacturing purchasing managers’ index decreased greater than expected last month, from 50.1 in September to 49.2 in October.

Data released on November 7 showed that exports decreased by 0.3%, which is far below the predicted increase of 4.5%.

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