Reply #15 Weelock's post
Weelock--- Personally, I think the sex trade in DG is more than 10% of it's GDP. Sure there are places like Chang An and Houjie that have thriving factories of different tech and textile sectors. However, DG has the most amount of star hotels in the nation only behind Shanghai and Beijing. A third tier city to have that many hotels signifies that the sex trade is significant part of the economy. I believe the GDP numbers would be closer to 25%. I'm talking about Hotels, Restaurants, Clothing stores, foot massages, Saunas, Shopping Malls, Movie theaters, Supermarkets, taxi drivers and Real Estate in general all taking a significant hit! You take a look around DG towns, which I've been to 20 of the 26 or so towns and it is just pitiful! Shopping malls closing down, restaurants, movie theaters where movies are cancelled because there isn't enough customers to watch and they cancel it to save electricity and hardware stores all closing shop with empty apartments and retail fronts all over....and this is BEFORE this crackdown. Can you imagine how bad business would be overall after this crackdown?
Sure there is still a manufacturing sector in DG; however, you have to realize that many people came to DG to set up factory not just because of it's relatively easy logistics, but also because DG has a bustling sex industry. That's how DG was able to attract investors in the first place. It was so boring back 30 years ago that they needed to provide entertainment for business investors and factory owners to pass time and thus allowed all of this illicit sex industry to blossom. Otherwise there tons of other places in China where labor is cheaper and overhead is lower to set up your factory instead. For those of you who are in import export industry or manufacturing, you all know that zhejiang Yiwu has already outprices DG manufacturing sales prices by at least 10% or lower. Meaning you can get the same exact product in Yiwu as in DG and it's 10% and sometimes even 30% cheaper. Guangdong with it's high overhead and fix costs as well as high labor costs no longer has the competitive advantage to compete with other provinces. But people still come to DG to set up factories because sex is much more readily available. If you take this competitive advantage away then DG economy will crumble from the inside.
DanShui in Huizhou did the same tactic to try to attract investors to set up factories there by offering saunas in all the hotels there. They realized the easiest way to attract investors was to lure them in by sex. Thus you saw that there were up to 50 plus saunas a few years back. After this crackdown it'll hit DG an DS especially bad.
You have to realize there is no real reason to set up factories in DG. The factory rental and fixed costs are expensive and you can't even get factories to work for you for less than 2500 RMB these days and it's harder and harder to find workers. Whereas other provinces are relatively poor and wages are lower, and their local govt give you kick back and incentives to set up factories there and employee retention is higher because they aren't too far from home.
So as I see it, it's more of a domino effect. Factories owners buy up or rent real estate from local Dongguan people which help the economy have capital influx. Then they higher employees which also need to spend and thus help local stores nearby. Employees at factories want a better life and become a WG and it's easy to become one in DG. Increase in quantity of WG helps DG attract mongers to town which increase fix asset investment like Hotels and apartments and taxi drivers. Mongers bring money into town to spend and romance the WG which help with restaurants, footies, shopping malls and movie theaters. Monger wants to sponsor a WG and that helps with apartments and real estate and also rental rates. Mongers essentially put forth tons of money from outside DG or China to stimulate the local economy. Now..you take away the WG from the equation and then you see how it affects the whole dynamics. Raids=No WG= No MOngers= no money for restaurants and stores=making DG more like a ghost town and causing fear from immigrant works=no factory workers= increase in wages from factory owners to attract workers=factory owners closing down shop because they are not competitive= local DG people lose rental income from factory, store fronts, apartment buildings= financial catastrophe.
just my two RMB on this issue
AsnDragon | |
