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Businesses Hard Hit by Global Financial Crisis

The latest percussion of the global financial crisis has been felt in China with 7,000 workers with two toy-making factories being forced into unemployment in Guangdong Province.

Smart Union Group (Holdings) Limited, a toy-making company that had gone public with Hong Hong bourse, was forced to close its twof actories in Zhangmutou Township, Dongguan City on Wednesday.

The two factories had been doing business such as producing toys on an OEM (original equipment manufacturers) basis for three of the world's five traders, including the US-based Mattel. Most of their products were sold to the United States.

Trading of the company's shares were called off temporarily on the same day.

Dongguan, a city which has found its wealth by offering export-oriented processing services, has been producing a half of toys made in Guangdong, a global key toy making base. It has been having a bad time since the beginning of the year, especially with the toy-making sector as a result of rising raw materials and labor costs.

Xu Hongfei, deputy chief of Zhangmutou Township Government, claimed the two factories were closed because of the ongoing international financial crisis.

"A serious problem occurred with the circulating capital as Smart Union's shares were pulled out of trading Wednesday," said Xu, who said workers with the two factories didn't get paid since August.

"We were making toys on Tuesday, and we didn't know the boss had gone into hiding until Wednesday," said Du Haiqun, one factory worker, who added they didn't know what to do at the sudden closure of their factory.

Xu admitted they had been trying to contact the boss of both factories, but couldn't get through.

According to Xu, Zhangmutou Township Government has pumped 23 million yuan and started to pay the workers' salaries for the boss as of Friday.

In the meantime, the township government has also been contacting two other local businesses to help hire some of the workers who became jobless because of two Smart Union factories' closure.

(Xinhua News Agency October 17, 2008)

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