Too sudden! Shenzhen's 30-year-old foreign trade company announces closure

From 2023 to now, the global economy has continued to be turbulent due to factors such as high inflation, soaring costs, and falling demand. The cross-border circle is also in a state of chill. Not only are cross-border sellers having a hard time, but many foreign trade factories are also facing difficulties.

Recently, news broke that another well-known foreign trade factory in Shenzhen announced its closure.

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

On January 12, 2024, XXX Sound Electronics (Shenzhen) Co., Ltd. issued a notice on suspension of work and production.

The notice mentioned that the company has been in operation and management for nearly 30 years since its establishment. In recent years, due to the COVID-19 epidemic and the current poor economic environment, the company has faced severe operating pressure. Its income has long been unable to support its expenses. The company has been in a loss-making state. Despite the efforts of all parties in the company, there has been no improvement.

In view of this, the company had to make the difficult decision to suspend production and business. From now on, the company will no longer produce and all employees will be dismissed.

The company has raised funds from various sources for the unpaid wages of employees and managers before December 2023 and will try to pay them out. As for the economic compensation for the employees and managers’ years of hard work, the company agrees that the government will auction off the equipment and items in accordance with legal procedures to pay them out.

Currently , XXX Acoustic Electronics still has some payments to pay to suppliers that need to be settled.

It is understood that the company is headquartered in Hong Kong and established a mainland branch in Longgang District, Shenzhen in 1994. In addition to Hong Kong and Shenzhen, the company has production bases and offices in Guangzhou, Hunan and other places , and is equipped with independent R&D and sales teams .

The company mainly produces plastic electronic toys, remote control toys, electric toys, high-end electronic consumer products, etc. It maintains long-term strategic cooperation with many international first-line brands , mainly including TAKARATOMY, SPINMASTER, TOY OPTIONS, DICKIE, WOWSTUFF and other internationally renowned toy manufacturers. Its products are exported to the United States, Canada, Europe, Australia , Japan and other countries and regions.

Many well-known large companies failed to withstand the cold winter!

In 2023, many well-known and established foreign trade companies have collapsed one after another.

1. Shenzhen's long-established electronics giant XX Electric ceased operations

On August 15, 2023, XX Electric, a long-established electronics manufacturer in Shenzhen , issued a "Letter to All Colleagues" , announcing the resolution of the company's shareholders' meeting to dissolve the company ahead of schedule and to end operations on August 18, 2023.

XX Electric stated that due to the dual impact of the global economic environment and the global epidemic, the company's orders continued to decline and its operating conditions further deteriorated, so it had no choice but to choose to dissolve early .

It is understood that the company's factory was once rated as one of the "Top 100 Processing Trade Exporters". It mainly produces coffee pots, can openers, beer machines, blenders, massagers, air purifiers and other home appliances for export to the European and American markets . It was once the largest coffee machine OEM factory for the world-renowned brand Philips.

2. Shenzhen Hong Kong-funded factories suspend operations and production

On August 11, 2023, Xtong Hardware & Plastic Products Co., Ltd., a Hong Kong-owned company that has been operating in Shenzhen for 30 years, issued an internal notice stating that due to the huge changes in the domestic and foreign markets in recent years, the company has decided to stop production and business on September 13, 2023. The company will terminate the labor contract relationship with employees on the day of suspension of production, and the compensation will be calculated and paid in accordance with national laws and regulations.

It is reported that the company was established in 1993 and is affiliated to the Hong Kong Mark Group. It is a large-scale Hong Kong-funded enterprise . The company mainly operates in two industries: plastics and printing. The plastics industry mainly includes plastic hangers , hangtags and other plastic products, and the printing industry mainly includes color-coated cartons , self-adhesive labels and other printed products. 80% of the products are sold to Europe, the United States and other countries.

Before the factory announced its closure, it still had more than 1,800 workers and was one of the larger factories in Shenzhen's hardware industry.

Industry insiders analyzed that the factory closed down in order to minimize the company 's operating costs and maximize profits .

3. Well-known Dongguan factory closed down

In October 2023, XX Hardware , a well-known manufacturer in Dongguan , issued an announcement stating that the company has suffered heavy losses in recent years, and it is difficult to continue. After careful evaluation by the company's senior management, it is still unable to reverse the trend. The company decided to close down in batches and stop production from October 31, 2023 to November 20, 2023. The company has been operating in Dongguan for many years, and many employees have also followed the company for many years. Now, under the pressure of reality, the company finally had to choose to close down and feel very sad .

At the same time, the company will formally terminate the labor contracts with all employees in accordance with the law at the above-mentioned time . The employees ' wages will be calculated until the date of termination of the labor contract , and the employees ' social insurance will also be purchased until the month of termination of the labor contract.

The company was founded in July 1992 and has a history of more than 30 years. At the beginning of its establishment, the company mainly engaged in the production and sales of sports equipment accessories , water sprayers , roof frame assemblies , wheel assemblies , air pumps , and paddles, and all products were exported .

4. Dongguan Xxing Electric closes its molding factory

On November 7, 2023, Dongguan Xxing Electric Co., Ltd. issued a " Notice on Closing the Molding Factory". The notice stated that the molding factory has been in operation for nearly 30 years. Due to the impact of the global COVID-19 pandemic for nearly three years, the molding factory has been in a state of continuous deficit since the beginning of 2021, with a decrease in orders. The company has persisted until today, and it is really unsustainable , so it has no choice but to close the molding factory. The company now regrets to inform everyone that the molding factory will be completely closed on December 31, 2023 , and the company will provide financial compensation to the affected employees in accordance with the law .

It is understood that the company is a large-scale material-supplied production enterprise invested and established by Japan's Seiden Co., Ltd. in Dongguan City. With a total investment of HK$360 million, it is a large-scale enterprise supported by Dongguan City and also one of the top 300 enterprises in Dongguan City . The company's products are exported to Europe, America, Japan and other countries.

In recent years, under the influence of the epidemic, the global economy has been turbulent, market demand has slowed down significantly, and overall consumption has been downgraded. In such a market environment, more and more foreign trade factories have begun to reduce production, close production lines, lay off employees, reduce wages, and optimize departments to save operating costs, but many foreign trade factories are still in the predicament of bankruptcy.

The reasons for the closure and shutdown of many factories also include trade frictions, rising raw material costs, labor shortages and other factors.

Especially during the epidemic, many factories were forced to suspend operations, resulting in supply chain disruptions and reduced order volumes , which had a direct impact on business operations .

The global economy is facing numerous challenges. According to forecast data from the World Trade Organization ( WTO ) , global merchandise trade volume will only increase by 1.7% in 2023, a significant decline compared to the average growth rate of 2.6% in the past 12 years .

Recently, the World Economic Forum released the "Chief Economists Outlook Report", in which 56% of the chief economists interviewed expected that the global economic growth rate will decline in 2024 .

How to seize growth opportunities in adversity has become an important issue that cross-border sellers must face.

Foreign trade factory

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