China's bosses are abandoning ship

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Left without wages

Yang Shenggang, 33, had been at a Shenzhen shoe factory for seven years, working his way up from the assembly line, making $50 a month, to become a supervisor earning six times that amount. This spring, he said, the Hong Kong owner fell behind in paying wages.

One morning in September, the plant abruptly closed.

"The boss was just gone," Yang said. "I have to get my five months' salary back. My family needs money to eat and live."

Stanley Lau, deputy chairman of the Federation of Hong Kong Industries, a trade group with 3,000 members, said he didn't know how many owners in Hong Kong had run away.

"I think it's wrong," Lau said. But he added: If a factory operator went by the book, it could take two years to close a shop because of regulations and red tape.

Others may flee not out of aversion to bureaucracy but because they want to get away with what cash they have left and not face angry suppliers, lenders, employees or regulators. Sometimes relatives and managers who help run operations flee too, and without anyone who can take responsibility, some factories have little choice but to shut down.

Lau's trade group has estimated that as many as 15% of the 70,000 factories run by Hong Kong businesspeople in the mainland will close this year. He says many more are likely to shut after Chinese New Year in February, when millions of migrant laborers will return home for several days.

"Once workers go home, they can close down the factory quietly," he said in an interview in Hong Kong.

Taiwanese operate about 20,000 plants in Guangdong, and some of them also have walked away from their factories, workers and labor groups say. In northern China's Shandong province, dozens of South Korean export company managers have fled, according to state-run media reports.

"If these laid-off migrant workers stay in the city, it might cause social problems in the urban areas," said Cao, the Chinese academy economist. "But if they go back to their hometown, they won't have enough to do to make money."

Thousands of workers face that dilemma in Shaoxing, about 140 miles south of Shanghai. Companies with names such as Rich-tex and Sun-tex dot the city, the capital of China's textile industry.

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Industry giant falls