The impact of the global economic slowdown on enterprises and employees in China

After the outbreak of the global economic slowdown, the export of products made in China, particularly the labour-intensive ones, has dramatically dropped. Drawing upon a questionnaire survey on 439 employees and 55 enterprises specialized in electronics, toys, furniture and textile and interviews with industrial associations and local governments in two coastal cities, Shenzhen and Wenzhou, we have a number of findings. First, the global economic slowdown has forced a large number of small and medium-sized enterprises into bankruptcy and has affected the operation of the survivors in multiple ways. Small and medium-sized enterprises, original equipment manufactures (OEMs) or export-oriented manufacturers were the top victims. Second, the diversified impact of the global financial crisis on enterprises has provided an opportunity for some survivors to improve their competitiveness and restructure their industry. These enterprises, after recovering from the initial stage of financial difficulty, expanded their domestic market, invested in technological innovation, established their own brands and promoted inter-organizational collaboration. Third, the economic crisis has varied impact on the workers. Many were laid off during the economic downturn and others who remained employed had lower income and fewer working hours. Male, poorly educated or rural migrant workers were the most adversely affected. Those who worked in informal sectors, due to the flexibility of their employment, were less likely to be affected by the crisis than those who were employed in formal sectors. All employees, however, sought to minimize the impact of the payroll cut on their livelihood by economizing daily expenses and reducing the amount of remittance to their original family. Fourth, both the central and local governments have adopted crisis management policies during the economic adversity. The national policies focused on providing a stable market environment to enterprises by lowering the requirements on loans. The local policies aimed at facilitating the transformation of business operation, promoting inter-organizational collaboration and updating the industry structure. The policies and strategies adopted by the central and local governments, however, ignored the interests of small and medium-sized enterprises and the workers. In addition, because of poor publicity, many enterprises had insufficient knowledge about these policies and thus received minimal assistance. Finally, professional associations have played an important role in helping enterprises survive the crisis, but their governance structure conditioned their performance

Agriculture · Bankruptcy · Business · China · Economic growth · Economic policy · Economic slowdown · Economics · Financial crisis · Livelihood · Payroll · Productivity · Recession · Restructuring · Regional resilience and development · Finance