Disbanded on the spot! Shenzhen's 31-year-old factory collapses

Under the influence of factors such as intensified market competition and upgraded consumer institutions, many traditional manufacturing companies have been put under the "tight ring" of survival pressure. Since last year, a number of old foreign trade factories have been disbanded one after another, and recently, two more 30-year-old factories also announced their disbandment on the spot.

Shenzhen's 31-year-old Hong Kong-owned factory shuts down

Recently, Shenzhen Weiqun Precision Machinery Products Development Co., Ltd. (hereinafter referred to as "Weiqun Machinery"), a major precision manufacturing company in Shenzhen, issued a closure notice.

The closure notice mentioned that since the outbreak of the epidemic, the factory's operating difficulties have become increasingly serious, and it has been struggling to support the livelihoods of all employees. However, the trend of economic weakness and continued decline in consumption capacity has become increasingly severe, until recently it became unsustainable. The factory decided to officially suspend production and business on June 6, and all employees were dismissed ahead of schedule.

Compared with some large factories that are closing down, Weiqun Machinery's handling of the matter is relatively mild. Before closing down, the factory will terminate the labor contracts with all employees and make corresponding severance compensation according to the different years of work of the employees.

Public information shows that Weiqun Machinery was registered and established in 1993, with a history of 31 years. The factory mainly focuses on the production and sales of machinery and parts, cutting tools, craft products and mechanical plastic products. Like most foreign trade companies, Weiqun Machinery relies heavily on overseas markets, accounting for 100%, and its products have a good reputation in many regions.

The shrinking overseas demand has led to a decrease in orders, but the factory's production capacity is still strong. This situation is common among large factories. Supply exceeds demand, so naturally, the factory's losses will increase day by day. For Weiqun Machinery, which relies 100% on the overseas market, this blow is fatal and cannot be ignored.

In fact, the recent closures have occurred not only in large factories that mainly deal in mechanical products, but also in large factories of electronics, toys and small appliances, which to some extent reflects the changes in overseas consumer trends.

Dongguan's 30-year-old foreign trade factory shuts down

At the end of May, Dongguan Weiya Electronics Co., Ltd. (hereinafter referred to as "Weiya Electronics") issued a notice of closure and liquidation.

The notice mentioned that although the company 's reforms over the past decade have achieved the expected results, the company's business has failed to make a breakthrough due to the impact of the epidemic. Coinciding with factors such as rising costs of raw materials, orders have continued to decline in the past two years. The company is currently suffering serious losses and cannot maintain normal operations.

Therefore, the company decided to close down and liquidate on May 30.

In order to pay off the wages, social security, food and accommodation expenses of all employees in April and May, the company's various production equipment, liquid materials, finished products and semi-finished products will be sold.

However, Weiya Electronics did not mention employee severance pay in the announcement. Instead, many social media platforms show that Weiya Electronics has long been in arrears with wages. An employee posted a video saying: "In mid-April, the company had not paid February's wages." It can be seen that Weiya Electronics is in a difficult situation.

According to information, Weiya Electronics is a company wholly owned by Weiya Electronic Products Co., Ltd. , which is affiliated to Hong Kong Weiya International Group Co., Ltd. The company was founded in 1989 and is a wholly Hong Kong-owned enterprise. Its products are mainly exported to Europe and the United States. It has three factories in the mainland, two in Dongguan and one in Jiaxing, Zhejiang. They have been closed one after another in recent years.

The recently closed Weiya Electronics had been operating in Dongguan for 13 years, mainly engaged in the research and development, manufacturing and sales of various cables, plugs, plastic products, electronic products and other products. More than 90% of its products were sold in overseas markets such as Germany and the United States. At its peak, Weiya Electronics had more than 1,500 employees.

Even with a good reputation and accumulation, it is a pity that the large company has reached the point of bankruptcy after decades of operation. However, in the past two years, affected by multiple factors such as the global economic downturn, many large companies have collapsed like Weiya Electronics.

Factories closed and business stopped, and many large foreign trade companies collapsed

A 30-year-old Hong Kong-owned toy factory announced its closure at the beginning of the year. Daqi Huasheng Electronics (Shenzhen) Co., Ltd., which is also headquartered in Hong Kong and has a factory in Shenzhen , also announced its closure in early January this year.

Daqi Huasheng stated in the suspension notice that due to the impact of the epidemic and the economic environment, the company's income was not enough to cover its expenses and it has been in a loss-making state, so it decided to suspend production and business and lay off all employees. The company will try to pay the wages owed, and choose to sell assets to pay economic compensation.

It is understood that Daqi Huasheng mainly sells various types of toys, such as plastic electronic toys, remote control toys and electric toys. Its customers include many internationally renowned toy brands, and its products are exported to many countries and regions including North America, Europe and Japan.

A 38-year-old electrical appliance manufacturer in Shenzhen has ceased operations. Xin'an Electric's factory was originally established in 1985. It is a wholly-owned enterprise of Taiwan, Hong Kong and Macau. The factory in Bao'an District has more than 1,000 employees and mainly produces household appliances such as electric dryers, beer machines, knife sharpeners, coffee pots, curling irons, etc. It has been an OEM for well-known brands such as Philips.

During the epidemic, everyone was barbecuing and making tea at home, which made small household appliances popular for a while. However, as the epidemic ended, people's consumption returned to rationality, which also caused many small household appliance companies to encounter a cold winter. Xin'an Electric is one of them.

In August last year , Xin'an Electric issued a "Letter to All Colleagues". Due to a sharp drop in orders and a tight capital chain, it decided to dissolve the company ahead of schedule and planned to end operations in August. The company will pay corresponding economic compensation in accordance with the "Labor Contract Law", and this also brought to an end the company that was once rated as one of the "Top 100 Processing Trade Exporters".

However, the closure is not an isolated case, but a microcosm of the economic downturn in the past two years. The decline in market demand and the change in consumption trends have doubled the pressure on foreign trade factories. They have no choice but to reduce production and layoffs to reduce operating costs according to the current situation. However, even so, many factories still cannot escape the fate of death.

In addition to the above objective factors, there are also factors such as trade frictions and rising raw material costs, which make it difficult for many factories to continue. This situation is mainly in Shenzhen, the center of China's manufacturing industry. Toy factories, printing factories, and plastic factories have closed down or stopped production one after another, leaving tens of thousands of employees facing unemployment.

Even though the market is changing, some traditional manufacturing industries have not accelerated their transformation and upgrading. An industry insider pointed out that "although Shenzhen is an advanced manufacturing base, many industries lack effective coordination and complementarity," and many factories lack independent innovation capabilities and core technological advantages, making it difficult to form differentiated competitive advantages and easily being eliminated by the market.

foreign trade

Shenzhen

mechanical