Page last updated at 09:59 GMT, Friday, 17 October 2008 10:59 UK

Anger at China toy firm closure

Police at a Smart Union workers protest
Police protected a government building as workers demanded unpaid wages

A Chinese toymaker which supplied firms including US giant Mattel has gone out of business with the loss of up to 7,000 jobs.

Rising raw material and labour costs and slowing US demand forced Smart Union to close its doors this week.

Workers have since been protesting outside the firm's factories and a government building in Guangdong province to demand their unpaid wages.

More than half of China's toy exporters have gone bust so far this year.

Hard times in Toytown

The Chinese news agency Xinhua said 52.7% of the country's 3,631 companies making toys for export went out of business in the first seven months of the year.

It blamed rising production costs, the stronger yuan and tightened toy safety standards.

Smart Union's shares were suspended on the Hong Kong exchange on Wednesday and provisional liquidators were appointed by the High Court in Hong Kong on Friday.

The company's financial difficulties were clear from the results it released last month - Smart Union made a pre-tax loss of 201m Hong Kong dollars ($26m; 15m) in the first half of the year. In the same period a year earlier it had lost HK $2.5m.

Pay withheld

Former staff protesting outside one of Smart Union's factories were met with a sign which read, "Because business is bad, we are unable to give you your salaries," the Reuters news agency reported.

"I feel very agitated now," said factory worker Huang Luo Hui.

"We need money to pay for our housing and food. We have been waiting for a few days now. The government said they will solve this problem in three days. Today [Friday] is the third day and we have had no reply from them."



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