Recently, a company located in Dongguan announced that all employees would be on unpaid leave for nearly five months due to a sharp decline in overseas orders. As soon as the notice came out, it immediately caused a shock in the Pearl River Delta industry.
A company in Dongguan, Guangdong issued a holiday notice, saying that domestic and foreign orders were severely out of touch and falling off a cliff, finished goods could not be shipped in time, resulting in cost backlogs, and materials were intermittent and unable to maintain normal production. It decided to start an unpaid holiday on June 1, 2022. It is tentatively scheduled to resume work in mid-October 2022.
Coincidentally, on the last day of May, employees of another large factory in Dongguan suddenly received a “Notice of Suspension of Work and Suspension of Production and Waiting Arrangements” issued by the company. It said that the company has encountered serious difficulties in production and operation and is currently in the restructuring stage. It will officially suspend production and production from July 1, 2022, and will no longer provide jobs until further notice; it will no longer pay wages to employees from August 1. It is also unable to provide benefits such as accommodation, canteen conditions or room and board subsidies. The company pays living expenses equivalent to 80% of Dongguan City’s minimum wage every month.
Whether it is a five-month leave without pay, or a suspension of work and production to pay 80% of the minimum wage, it is a bolt from the blue for workers, and it is a last resort for companies. During the three-year epidemic, overseas merchants were blocked, resulting in the loss of many orders. The current new wave of epidemics has had a huge impact on overseas trade industries, and has therefore encountered a severe situation that has been rare in many years.
Many companies have stated insufficient orders in their holiday notices. Although the epidemic has caused many industries to suspend work and production, all orders will not be reduced to zero. So where do domestic foreign trade orders go? The answer is – the order flew southeast.
Data released by the General Administration of Customs showed that in April, the total value of my country’s export trade was US$273.62 billion, a year-on-year increase of 3.9%, and the growth rate dropped by 10.8 percentage points. Due to the long-term lockdown in Shanghai, some leading foreign investors, represented by Apple, are transferring production capacity. In April, Apple announced that it would start producing the latest iPhone 13 series at Hon Hai’s factory in Chennai, India. In addition to India, export data from Southeast Asia has also received great attention recently, and Vietnam has triggered a new round of discussion. For example, in the clothing manufacturing industry and the textile, white goods, and electronic product industries, orders have been queued up to the third quarter of this year.
Since March, Indonesia’s export growth has exceeded 40% year-on-year, Vietnam’s export growth has exceeded 30%, and Malaysia, Thailand, and the Philippines have all grown at around 20%. Vietnam’s total import and export of goods trade in March reached US$66.73 billion, a month-on-month increase of 36.8%. Among them, exports were US$34.06 billion, an increase of 45.5%; imports were US$32.67 billion, an increase of 28.7%. Now on the shipping route from North China to Ho Chi Minh City, the freight rate for some containers has increased by more than 50%. It can be seen that foreign trade in Southeast Asia and other countries is recovering rapidly, which has caused orders that previously returned to our country to start flowing out again, and business in the industry has also begun to become difficult to do.
In previous years, the first half of the year was the peak season for orders and production in the foreign trade industry, but this year many foreign trade merchants did not get off to a good start. “In the past, at this time, many factory orders were fully booked, but this year many businesses have not opened yet,” said a person engaged in foreign trade.
At present, driven by the skyrocketing increase in raw materials, more and more companies are under-operating and forced to lay off workers. The two factories above that stopped production and took unpaid leave are by no means an exception.
Finally, as the notice said, I hope that the epidemic and the war will pass soon, the company’s orders can return to normal, and everyone will be fine when we reunite!
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