China not immune from West's economic woes
2011-11-28 11:10:57
China's economy had been flying high thanks to consumers in America and Europe, but with sales slumping here, manufacturers in China are hurting.
CBS News correspondent Celia Hatton reports that, one southern China city, in the past ten months, 450 companies have been forced to close down.
Factory owner Xie Jun is chain smoking his way through the worst year of business he's ever seen.
The US slowdown has hit his small factory more than 6,400 miles away in Dongguan, China. Xie Jun's factory used to turn out $1 million worth of iPad covers and cell phone accessories every year, but not anymore. Orders from Xie's most important customer - the US - are down 70 percent.
If the next two months are no good, the workers will have to leave, he said.
"We won't go under, but we'll stop production. We can't continue like this," Xie Jun said through a translator.
Xie Jun has already laid off 70 people. That's more than half his workforce, and still he's losing $50,000 a month.
A slump in orders from American and European stores means Chinese factories are working at their slowest rate in almost 3 years.
Many were looking to China - the world's second largest economy behind the US - as an economic superstar that would pull the rest of the world out of the global recession. But China has its own problems since it's dependent on exports for growth - a harsh reality for entrepreneurs like Xie Jun.
Some factories have closed, some owners are selling their machines. Everyone talks about how bad business is this year, he says.
Factory owners will soon face even more problems. The minimum wage is going up, adding to the costs of production. And that means that American shoppers will soon pay more for many things stamped "Made in China."
"It feels like there's no improvement in sight," Xie said. "I have no idea how we'll recover."
Xie Jun's not expecting orders from the US to ever return to what they once were. China - the country once known as the "world's factory" - is now looking at a very different future.