Sunday, September 25, 2011

Things Get Worse in Wenzhou

I covered the
real estate meltdown in Wenzhou in a previous post. Now, it seems, things have gone from bad to worse.

A Bunch Of Chinese Manufacturing Bosses Just Defaulted And Fled Their Failing Businesses
According to Shanghai Daily, 7 large business owners, mostly manufacturers, fled the city of Wenzhou on September 12th. They left thousands of employees jobless and hundreds of millions in unpaid debt.
One of the runaway employers is Hu Fulin, the owner of Zhejiang Center Group (ZCG). ZCG owns the most popular sun-glass company in China (they make 20 million pairs a year) and employed 3,000 people. He also invested in real estate and the renewable energy industry.

Hu is penniless now, but he owes his employees their August and September salaries (about $1.5 million), and he hasn't paid his suppliers either. The city government has set up a task force to figure out how to track all of Hu's loans and repay his debts.
Remember building a house of cards when you were a kid and your little sibling could not resist flicking one of the cards out of the bottom row? The resulting cascade is short and brutal, but these aren't cards, these are lives.

I do wonder what pot of money is the local government going to draw on to make good on all this?

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