Leading HK-financed toy processing factory faces closure on global economic woes

20-Oct-08

Smart Union, Hong Kong Stock exchange-listed toy processing company, announced that it was open for acquisition owing to rising debts, tightening credit, and the economic recession in the US and Europe. The company, one of the largest toy processing companies in the world offering services to big US brands including Mattel and Hasbro shut doors at three factories in week in Guangdong province, China last week. Smart Union reported a loss of US$25.9 mln in H1 2008 excluding taxes mainly due to higher manufacturing costs led by a 20% surge in cost of plastic and appreciation of yuan shrank profit margins. To add to the woes, US toy giants recalled millions of Chinese-made toys last year because of safety concerns, the company said. According to Xinhua News Agency report, 3,631 toy exporters - more than half of industry's enterprises - were pushed out of business in 2008 due to steep production costs, rising labour charges and the appreciation of the Chinese currency. The financial credit woe in the US shrinking China's vast manufacturing hub in the southern province of Guangdong, long regarded as the world's factory floor.