Going broke turning green

A worker removes equipment from a garment factory closed last year Imaginechina via/AP Photo

As Factories Fail, China's Business Law Does, Too

With the bankruptcy law in its infancy, violence often erupts when factories collapse

By Dexter Roberts

Dongguan, China - Business had been good, even great. But by early 2008, the lighting manufacturer realized his factory in China was heading for failure. The collapse of the U.S. housing market had devastated demand for his lamps and fixtures sold at American retailers. Costs kept rising in Dongguan, the southern city where he had expanded his operations. So the 43-year-old boss quietly slipped out of China, leaving behind $100,000 to cover the final month's rent and salary for his 400-plus workers. Suppliers were left unpaid.

Lucky he left early. As word spread about the factory's closure, furious employees streamed onto the nearby street, a narrow passage lined with Internet bars and outdoor pool tables. Suppliers drove up in blue moving trucks, blocked the gate, and sent in hired thugs to grab computers, cables, machinery—anything of value. Unable to find the boss, the gang roughed up the company's lawyer and held him hostage for much of the day. "It was a new factory and looked like a gold mine. They were going to take everything out," says the boss, a European who has been in hiding in Taiwan for almost a year.

Order was restored only after the landlord called in five truckloads of police to protect his property. And suppliers who arrived too late were out of luck. Xiao Xiaosan, a maker of metal parts for lamps, says he is owed $76,000. Although he rushed to the factory on the day of the closing, he doubts he'll ever see his money. "It's impossible for me to find the owner outside of China," he says.

As the global recession slams China, bankrupt business owners are shutting factories overnight. Often, they leave the mainland, afraid of angry suppliers and workers and uncertain about legal protections. Dongguan alone last year recorded 673 cases—up 24%—of owners fleeing their factories, leaving behind 113,000 unemployed workers owed $44.1 million. Labor disputes almost doubled, to nearly 80,000.

Migrant worker blows himself up because he was not paid

Yesterday afternoon, Han Wushun, a 42-year-old ethnic Chinese migrant worker from Sichuan, asked his bosses at Xinjiang Beixin Road and Bridge Construction Company for back pay of 4,500 yuan (about 450 euros). When he found out that he would not receive this, he blew himself up with a homemade bomb he was carrying in his backpack. The explosion killed him and injured the two managers, who were trying to get away

Schumpeterian Economics For 'Chindia'

Because small, entrepreneurial businesses are responsible for much of the job creation, rising unemployment is a good indicator both of the severity of the economic slowdown and of the fate of small-business entrepreneurs.

A BYD Auto advert in China. Photograph: Richard Jones/Sinopix

China's E6 electric car: 'We're not trying to save the world – we're trying to make money'

Its release imminent, BYD Auto's revolutionary E6 electric car is integral to China's plan to dominate the global market for 'clean-transport'. Jonathan Watts reports

When BYD Auto launches one of China's first mass produced fully electric sedans later this year, it will be trying to conquer the world rather than save it. But such is the explosive growth of China's car market and thirst for petrol that the two goals are likely to become ever more synonymous.

The E6 plug-in is currently under wraps at the company's sprawling industrial complex in Shenzhen, but it will soon be at the vanguard of a company's – and a nation's – plans to dominate the global market for "clean-transport".

Senior government leaders have initiated a major push for hybrid and electric vehicles in a bid to bypass car makers overseas and avoid an environmental meltdown at home.

BYD is likely to be a major beneficiary. The initials stand for Build Your Dreams, which prompted snickers when the company debuted in US car shows last year, as did the soaring ambitions of the founder Wang Chuanfu, who has stated that BYD will be the biggest carmaker in China by 2015 and the biggest in the world by 2025.

Despite it making a third of the world's mobile phone batteries, until recently few people outside of China had heard of BYD. But the company exploded into the international consciousness late last year by beating Toyota and General Motors to launch the world's first mass-produced plug-in hybrid.

Introducing the BYD E6 Electric Car