from

(snip)"(Reuters) - Up to a third of Hong Kong's 50,000 or so factories in China could downsize or shut by the end of the year as exporters get hit by cost rises and darkening global demand for Chinese goods, a major Hong Kong industrial body said on Tuesday.

The Federation of Hong Kong Industries, which represents around 3,000 industrialists running factories in China, said it expected orders in the second half of this year and the first half of 2012 to fall between 5-30 percent.

The European debt crisis and a fragile U.S. economy have depressed this year's Christmas orders, Stanley Lau, deputy chairman of Hong Kong's leading industrial promotion body, told a news briefing.

He said a consolidation was on the cards, with around a third of Hong Kong's 50,000 or so factories in China likely to scale down operations or close by year-end.

"We feel that this is not an overestimate," said Lau, who is also the owner of a Hong Kong watch factory in China, citing higher raw material costs and rising factory worker wages, which had already risen up to 20 percent this year.

"Many (factory owners) can't see when the market will have a rebound so they are trying to cut their losses by closing, before all their money is gone," Lau said.

Lau added, however, that this wasn't a definitive estimate and that a brightening of market conditions could allow many industrialists to recover swiftly and scale up capacity.

He didn't give specifics on how many factories might close.

One additional risk on the near horizon, however, was the specter of yet another round of expected minimum wage hikes from between 18-20 percent on January 1 in a number of key factory regions in southern China, Lau warned.

He said his federation and a number of Hong Kong industrialists were now lobbying local Chinese governments to freeze plans for this wage hike.

"If we continue to see labor costs keep increasing, in the future the Hong Kong industries operational pressures will become more and more severe," he told reporters.

A Reuters on-the-ground survey at Asia and China's largest trade event, the Canton Fair in southern China, found that many factory owners were now bracing for another severe round of factory closures given a sharp drop in orders from Western customers, primarily in the major market of Europe.

During the 2008-09 financial crisis, thousands of factories in the Pearl River Delta closed and millions of migrant workers were laid off."(snip)


There are lots of potential take-aways from this news blurb. Among them ...

- grab holiday 'bargain prices' on imported Asian goods while you can find them. As low cost Asian suppliers cease operations, and as the remaining Asian suppliers are forced to pass on rising raw material and rising labor costs, this year's 'glut' of unsold consumer goods will be followed by fewer future offerings at higher prices.

- despite sparse reporting in US / world mainstream financial media, EuroLand is really in financial trouble at the consumer level if reductions in European orders for Asian consumer goods has affected Asian suppliers this badly. Of course, data on US container freight / west coast port activity re Asian imports is also down significantly.

- cumulatively, this all points to a significant global economic 'slowdown' just beyond the 'horizon' i.e. early 2012, with associated negative pressure on stock prices, global commodity prices ( ex precious metals anyhow ) etc.

- with Chinese labor costs on the rise, even lower cost alternate suppliers in Vietnam, Thailand etc. will undoubtedly attempt to grab market share. If the 'right' Vietnamese and Thai supplier companies can be identified, there's potential opportunity for major investment earnings !