Amid the scorching summer of 2025, several manufacturing companies in Dongguan, Guangdong Province have successively reported shutdowns, layoffs, and dissolutions, indicating a sharp decrease in foreign trade orders and the enterprises are facing financial difficulties amid ongoing impacts of Western sanctions and domestic political uncertainties. A manufacturing industry executive in Shenzhen bluntly stated that China’s “reform dividends” have been exhausted, and the manufacturing industry is facing a structural endgame.
In Tangxia Town, Dongguan, the long-established Hong Kong-funded company, Yifeng Sports Technology Co., Ltd., issued an internal notice on July 14, announcing a complete shutdown of its factories and placing all employees on standby. Although the company promised to “pay regular salaries for the first month, and afterwards provide a living allowance at 80% of the minimum wage (equivalent to 1664 yuan Renminbi),” employees are generally pessimistic about resuming work.
An employee of the factory told a reporter on July 30: “We have been laid off, and only a few staff members in certain departments remain to handle post-closure matters. The machines in the factory have long been removed, the air conditioning units dismantled, and we were simply dispersed.”
Yifeng Sports Technology is a subsidiary of Yifeng Group, founded in Hong Kong in 1977, and is an internationally renowned manufacturer of sports helmets and shoe soles with five bases in mainland China. Formerly stable orders have suddenly plummeted due to the shutdown crisis, catching many employees off guard. An insider revealed that the factory used to produce “popcorn shoe soles” for international brands, and the orders abruptly dropped to zero, catching everyone by surprise.
Since July, several foreign-funded and private enterprises in Dongguan have closed down one after another: on July 1, the sole Canadian-owned Tianhong Technology announced dissolution; on July 18, Nanzhuoli Home Furnishing Company in Nanhai, Foshan declared a halt to production due to a sharp drop in orders; on July 22, the leading semiconductor company Wuzhu Electronics Technology Co., Ltd., with annual revenue of 1.5 billion RMB and nearly 6000 employees, applied for bankruptcy liquidation; on the same day, the well-established electronic components manufacturer Xinlong Technology Co., Ltd. also announced closure, with internal staff revealing, “The factory is empty, machines have been relocated, the company can no longer sustain.”
On July 30, when interviewed by a reporter from Dajiyuan, Zeng Na, an employee of Zhongshan Lighting Enterprise, could barely contain her emotions: “We barely survived the past three years of the pandemic, thinking that recovery was on the horizon, but reality turned out to be even crueler.” She mentioned that a semiconductor factory in Shenzhen where her friend worked was also notified of a two-month shutdown and has not received any news of resuming work yet.
Chen Gengsheng (alias), a manufacturing business owner operating in Dongguan for over twenty years, expressed in an interview with Dajiyuan that in the past three years, an average of about 3000 factories in Dongguan closed down annually, far exceeding the number of new registrations: “Twenty years ago, CNC machining was priced by the hour, but now the machines sit idle with no orders. The brilliance of the ‘world’s factory’ has become history.”
The shutdown crisis is not limited to Dongguan alone. According to official data from Guangzhou City, from January to May 2025, there were 318,500 new business entities in Guangzhou, but a staggering 72,769 companies were deregistered, with an average of 482 closures per day. This figure clearly reflects a systemic crisis facing enterprises in the Pearl River Delta region.
Several interviewed employees of enterprises mentioned that they used to rely on foreign trade orders to sustain operations, but now with extended order cycles, delayed payments, fluctuating Renminbi exchange rates, and rising raw material prices, profit margins have been severely squeezed. A financial manager of a company, Ms. Chen, admitted, “Even factories in Jiangsu and Zhejiang provinces are finding it difficult to operate. It’s not that we don’t want to work, we just can’t continue. Everyone is short of money, products are not moving, and overseas customers are no longer placing active orders.”
To alleviate financial pressure, many enterprises are resorting to the “shutdown and standby” method as an alternative to layoffs, shifting costs onto employees and society. A netizen commented, “Providing the minimum living allowance, paying the minimum insurance premium, not laying off employees but also not assigning them work, this is a ‘soft dissolution’.”
The Pearl River Delta is witnessing a wave of “job hunting” amid the scorching heat. A young man who has recently lost his job commented on Douyin, “The scorching July heat is making people go up in smoke, the factory closed down, and I have to quickly find work.”
An industrial economist from Zhejiang analyzed that the dilemma faced by China’s manufacturing industry is not only influenced by changes in the global market but also reflects issues with domestic macro policies, the business environment, and weak domestic demand. Since 2020, the accelerated relocation of industrial chains, capital outflows, and the intensified impact of AI technology have all contributed to the reshuffling of the manufacturing industry. For local governments, stabilizing employment and adjusting structures have become even more challenging tasks than “making chips.”