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Thousands Of Angry Unpaid Chinese Workers Protest Shocking Bankruptcy Of Major Telecom Supplier
When two weeks ago we reported what may have been the biggest layoff announcement in China's current economic turmoil, after the second largest coal company Longmay Group announced it would lay off 100,000 - or about 40% of its entire workforce - while dramatic, the news did not shock too many. After all, China's commodity fiasco (as a reminder, as we first reported, at current commodity prices more than half of Chinese companies do not generate enough cash flow to even cover their interest expense) is known to most and as such rationalization of this kind are only just starting: it is not exactly clear how China will deal with millions of suddenly unemployed workers, but it will only cross that bridge when it comes to it.
Far more disturbing was today's news from China's prosperous, and far more high-tech, city of Shenzhen, and specifically major telecom supplier Fu Chang Electronic Technology Co. (also known as Fosunny), which supplies parts to domestic telecommunication giants such as Huawei Technologies Co and ZTE Corp. as well as international telecom companies like Vodafone and AT&T.
The company made headlines last week after reports that it had told clients it was planning to list on the stock exchange. The news couldn't have been more wrong because on Thursday, instead of going public, the company announced it would be going dark, when it issued a statement saying it was ceasing operations due to liquidity problems resulting from legal and debt issues.
Even more surprising is that Fu Chang wouldn't be the first - Fosunny is the third supplier of plastic parts to the telecom industry to go bankrupt in the past month, the Global Times said.
The immediate outcome of the announcement, according to IBtimes, was that thousands of factory workers and suppliers staged protests outside the company's Shenzhen office, where China Business News showed pictures of a line of police in helmets confronting a group of protesters.
The Global Times says that protests started after the Thursday announcement and continued through the weekend, with thousands of people gathered outside the company in the Longgang District of Shenzhen, demanding compensation, according to Chen Li, whose company supplied packaging materials for Fu Chang. Chen told the Global Times on Sunday that the impact on his company may be severe.
"It might even lead to liquidity problems for our company and we might end up going out of business," he said, adding that Fu Chang owes his company 2.51 million yuan ($395,600).
Fu Chang owes banks 190 million yuan in debt and suppliers 270 million yuan, and it is two months behind on pay for its employees, the National Business Daily reported on Friday. The newspaper also said the shutdown would affect more than 3,800 employees and more than 300 suppliers.
In a troubling sign for China's supposedly thriving telecom sector, Global Times cited experts as saying such firms "have seen their profit margins squeezed by rising labor costs in southern China, and a slowdown in both international and domestic demand. China’s smartphone sales contracted in the first half of this year, for the first time since 2009, while the country’s overall exports fell more than 8 percent in August, and more than 4 percent in September, compared to last year."
Labor experts told International Business Times recently that factory workers' wages have risen in southern Guangdong province in particular, not least because the new generation of better-educated rural migrant workers -- the mainstay of China’s labor force over recent decades -- is less willing to do mindless production line work. As a result, Guangdong has seen some of its lower value-added companies close, and others move out to cheaper parts of Southeast Asia or inland parts of China.
It is troubling (not so much for the business cycle which demands it but for China's increasing lack of centralized control) that what was once taboo, namely Chinese corporations defaulting, has now become a practically daily occurrence.
It is even more troubling that China's cash flow weakness appears to have spread far more rapidly and broadly than even we anticipated, and is impacting industries which most had though would be immune from a hardish landing, if only in the beginning.
But where it is most troubling, is that what recently became the largest market for Apple's iPhones suddenly appears to be stuttering. And while the Fed can pretend all it wants that there are no substantial and direct connections between China and the US (just don't tell that to Bravo TV's Millon Dollar Listing which while thoroughly fake would absolutely not exist without Chinese buyers), if and when the world's largest company by market cap admits just how bad the Chinese reality is, not even the US government secretly buying up all of AAPL's excess inventory (remember: Apple is the NSA's best friend) will save the gargantuan gadget maker which simply can not exist in a world where the marginal consumer, whether in Boston or Beijing, has tapped out.
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Sum Ting Wong.
Ho Lee Fuk !
Ban Ding Au.
Major telecom company??? 3800 employees.
Gives a whole new meaning to IPO "I'm Pissed Off"
"Do not be concerned - all workers will be paid," said company spokesman Fu Ling Yu
"Fu Chang owes banks 190 million yuan in debt and suppliers 270 million yuan, and it is two months behind on pay for its employees "
A good rule of thumb is:
Miss one week of payroll and it can be attributed to all sorts of insignificant problems with vendors, it, human resources dept. staff, etc.
The second week of missed payroll and it's all over.
No one should have gone to work after the second weekly payroll wasn't distributed, and the regulators, credits should have moved in to liquidate...
After the second payroll was missed the owners/management were either just gambling or looting the employees and creditors...
Trying to IPO ??? CERTAIN gambling and/or looting. The invetors would very likely simply have been cleaned out by the owners/management before the inevitable...
As the riots intensify, we'll see much more QE, lots more. QE4 for Barry and another massive QE in China.
PMs will respond accordingly.
Lei bo rin chai na chi pa bi ka zu no pei en pu loi yi zu.
does that translate to:
Blame it on the TPP ?
No, blame it on the Debt-MOney Monopolists and the implosion of their debt-money exponential growth Ponzi scheme.
Folks, are you prepared for this to happen to you in the not too distant future?
The "in the know people" are shedding assets. My former parent company is shedding everything... daughter companies, buildings, etc...
They KNOW.
I am shedding *everything*...my model is Jack Reacher, just the clothes I am wearing and a toothbrush...
"Fuk Mee?"
"NO, FUK HYU!!!"
Thank you, Austin Powers.
lol :]
^^^
It may be getting more risky for us to buy Chinese, so I guess it would be prudent for us to shift some more of our buying to Korea. Like that one right up there...
shift to one of the nine TPP signees (except USSA).
Source of further liquidity drain...untill pushed into wars and prospects reversed.
Mainland China, proving again it is the heart of capitalism. China is a role model for the banksters here in the USA. When things go wrong, stiff the peasants. What China needs now for first world status is a Bankruptcy Court system like the USA has, to legitimize the corporate looters.
Was their hardware infested with En Ess Aye spyware and spy hardware?
They had no choice but to miss payroll. How else would they pay for their houses in Irvine? (and elsewhere)
The dominos just get bigger and bigger.......
"Robust recovery" spreads further into Asia.
Asian takedown, take II in progress. [Japan was take I]
It's going to be nasty.
Peak phones
We prefer the term "peek phones", thank you.
- NSA
Peak Apple
When will this effect the plastic garbage shipments enroute to Walmart and 95% of the US population? The ONLY good thing about this is being able to see what is happening in other countries FIRST before you start believing shit out of the US gov't, such as "save the children, we need the guns!".
I feel bad for the ones being laid off, however any fool coulda seen this coming... Then again, I guess the state media over yonder is worse than ours...
OT: I keep hearing about Monday the 19th something is happening...
Not worse. It might be different but it certainly is not worse.
Yeah, I'm getting my teeth cleaned.
They should have had prism on their devices like aapl and they would have been in the clear
Liquidity problems? WTF? The PBOC has plenty of money! So does the FED! What is "debt and legal problems"?
Jon Corzine, .gov, and the banks have no debt or legal problems.
What is going on!?!? Fosunny pissed off the wrong elites?
There goes BlackBerry & Chen!
Look, a squirrel.
Lorca's Novena
OT: I keep hearing about Monday the 19th something is happening... ******************* HEY - WHAT'S HAPPENING ON THE 19th?!?!?!?!Financial I suppose
As usual, nothing is happening. Same old moronic shit, day after day after day after day, ad nauseum...
They will soon have new employment...WW3.
Send them to Syria to liberate Syria or Merkel will probably take them.
So I guess my dream of being a worker in a Chinese factory will never come true!
There is still a job for you in China as human toilet paper.
Just use your hands to service the workers -- no paper required !!!
Nonsense. You can start today, if you like.
Now, if you expect to be paid for doing your dream job, you might want to leave Dollar General on good terms, just in case.
Can you imagne EBT not being paid for 2 months?
The EBT gang has the same sense of entitlement as the people invading Germany.
The German cops are telling German citizens protesting that they will shoot them. I wished the German citzenry was armed.
Check out the video and see how civil and patient the recipients are.
https://www.youtube.com/watch?v=Ufk7IXdxc-c
It wouldn't take more than a few days on the conservative side.The news about Fosunny is not Sofunny
Fo Sho?
Meh. American can still kick China's ass -- Hewlitt Packard can blow through that many workers before lunch -- we're Number One!
Holy shit, these motherfuckers are serious liars.
Wei Tu lo
Sum Ting Wong
Organ donors.
It is not called a layoff it called termination or firing.
A layoff is when there is a temporary slowdown and the workers continue to be employed by the company but are not paid because there is no work for them. When business improves they get called back to work.
Somewhere in the last 30 year with all these corporations cutting their workforce but not wanting to state the reality they hijack the word layoff.
Another example of newspeak I suppose.
But it is different this time....
>>> Apple is the NSA's best friend
----
cite a credible source with other than Microsoft fanboi bullshit-after all, its been common knowledge that Windows has had a back door to the NSA for 15 years-GOOGLE IT!
dont be anally raping your readers with disinfo
Were I Apple I'd use my cash to replace humans with robots, no way human drone can compete with robot, humans will only be used for creative purposes and votes and debt accumulation.