Shenzhen, a foreign trade electronics company that has been operating for 13 years, suddenly issued a “Company Dissolution in Advance” notice on September 4, announcing the immediate dissolution of the company and the termination of all labor relations as of that day. The news of the company’s dissolution instantly rendered hundreds of employees jobless, leading to a scene of chaos with a large number of workers gathering at the factory premises.
Yongsheng Electronics (Shenzhen) Co., Ltd., located in Shajing Street, Bao’an District, Shenzhen, released a “Letter to all Labor Relations Employees” to all employees on that day. This announcement quickly spread on social media platforms.
The announcement revealed that the shareholders’ meeting had decided on August 29 to dissolve the company ahead of schedule, citing “severe operational difficulties faced by the company, continued operation would increase business risks, potentially leading to greater loss of shareholder interests.” Additionally, the company was to establish a liquidation team to clear existing assets and handle debt claims and liabilities, with employee salaries to be settled through bank transfer.
The announcement also urged employees to retrieve their personal belongings as soon as possible and provided a consultation hotline. When contacted by a reporter, a woman from the company’s office briefly replied, “The company is handling it in accordance with the Labor Law.”
On September 4, a crowd gathered in front of the factory building. Videos and photos circulated on the internet showed hundreds of workers in light blue overalls congregating at the entrance, with some looking up at the building, while others engaged in hushed conversations. A female worker expressed, “We were working late last night to rush orders, and today they want us to leave. What kind of treatment is this?” Another young male worker sat on the ground smoking, shaking his head repeatedly, saying, “We were discussing a raise just last month, who would have thought today we’d be out of a job. It’s like a sudden change overnight.” Comments left by employees in the feedback section indicated that there were no relocation measures in place, and it felt like a sudden dissolution on-site.
Established in 2012, Yongsheng Electronics primarily engaged in cross-border e-commerce and export processing, supplying household appliances and small electrical products to European and American markets. The company employed over 600 workers at its peak.
A former member of a labor organization in Shenzhen, Mr. Wang, told reporters that in recent years, China’s foreign trade growth has slowed down, and foreign trade enterprises in Shenzhen, Dongguan, and other areas have seen a significant reduction in orders. Wang mentioned, “Some factories can’t sell their products, orders are shrinking; some can’t receive payments, and the supply chain is immediately cut off. I know of a company that couldn’t recover over 1.5 million dollars in unpaid bills and had to close down in the end.”
He also noted that Yongsheng Electronics had been facing difficulties for the past two years, with employees resigning one after another to seek alternative paths: “Around 2017, this factory had about 800 workers, but now only a fraction remains. Last week, several factories in Zhuhai closed down as well, similar situations.”
An industry insider revealed that Yongsheng Electronics was once seen as a “star factory” in the South China cross-border e-commerce circle, but since last year, orders had drastically declined, the company delayed salary payments, and ultimately could not sustain itself.
Shao Jun, a Chinese labor relations research scholar (pseudonym), stated that this was not an isolated case but a microcosm of the overall predicament faced by China’s export-oriented manufacturing industry. He analyzed, “For every 1% decrease in Chinese exports, more than one million people could potentially become unemployed. These companies heavily rely on the international market. Once external demand weakens, the supply chain quickly ruptures. Look at the massive unemployment from last year until now, but the issue is that most workers lack transitional skills. When a factory dissolves, employees instantly lose their livelihoods. Returning to rural areas offers no work, and the most affected are the grassroots.”
According to estimates by China’s Ministry of Commerce around 2015, for every 1% decrease in exports, approximately 180,000 to 200,000 jobs could be affected, highlighting the high-risk nature of labor-intensive manufacturing.
Shao Jun warned that authorities need to address the labor risks resulting from the wave of foreign trade enterprise closures: “If there is no reemployment support and social security after workers lose their jobs, the problem will only escalate. Social tensions will increase, and political risks will grow.”
China’s employment crisis is no longer limited to domestic manufacturing; multinational tech giants are also downsizing operations in China. Recently, the American company Oracle reportedly initiated a new round of layoffs in its China region, offering compensation under an “N+6” program. According to reports from Sina Finance, on September 9, Oracle released a list of layoffs involving customer support services and global customer service departments. While the company only responded externally with “details are currently unclear”, it extensively advertised positions in artificial intelligence and cloud solution fields on recruitment platforms, with monthly salaries reaching up to 70,000 yuan.
Some scholars point out that Oracle’s simultaneous layoffs and new recruitments reflect its shift of resources from traditional support positions to emerging areas. This move follows Oracle’s massive withdrawal from China’s research and development center in 2019, indicating a declining role for the Chinese market in its global strategy.