Photo: bankruptcyinfo

The Vice President of the highest People’s Law Courts in China, Chi Shaoming told reporters that due to the changes and conflicts in the international and domestic economies, there had already been a noticeable effect in China’s legislative domain, with foreign companies packing up shop and ‘doing a runner’ with capital taken from China. According to official Court statistics, the number of cases of this nature from Feb last year to Feb this year had risen by 19.62%.

Chi Shaoming is of the opinion that the cases the Chinese courts are seeing now are different from before in that they show a marked increase in defaulting over business and loan contracts, fake mortgage requests, foreign companies shutting down and leaving the country and a general increase in businesses declaring bankruptcy. Over half the number of foreign companies involved in the business closure figures have disappeared into the night.

On February 17th Chaoyang District People’s Court announced information concerning the case of Korean funded supermarket C-Smart and the extraordinary case of withdrawal of investment. On Christmas Day 2008 the supermarket, located in one of Beijing’s smartest department stores, Shin Kong place, suddenly and for no apparent reason closed its doors.

The three Korean owners where also no where to be found, and had seemingly vanished. According to employees of the supermarket, Chaoyang court had filed 32 lawsuits up to February this year on behalf of over 10 Chinese companies that had made investments in the closed supermarket. It is estimated that the closure has had an adverse effect on over 200 people and monies owed total over RMB 10 million.

This comes at the same time as reports from the three main areas of China that see foreign investment, i.e. the Pearl River Delta, the Yangtze Delta and the Shandong Peninsular that increasing numbers of multi-nationals are pulling the plug. When the figures are made public, it is clear that the majority of these firms are Korean, and that it is the Shandong Peninsular, that due to its proximity to Korea has seen the greatest amount of Korea money, now feels the pinch as over 200 ROK based businesses have moved out.

Photo: yuyesf.com

In the Guangdong region statistics show that in the last 10 months the number of organizations with 30 or more employees that have had cases brought against them for defaulting on salary payments is 251, an increase of 92%. The majority of these cases are in export manufacturing and construction companies.

Furthermore, in Zhejiang province the numbers paint an even more depressing picture, with over 1200 businesses declaring bankruptcy, with a third of those being foreign enterprises.

How safe do you feel the Chinese economy to be? Do you have a business here in China and has it been affected by the recent events. Leave anonymous comments at the bottom of the page.

See the original article at Huanqiu Huawang

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