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Private firms strategize to survive financial crisis

(Xinhua)
Updated: 2008-11-17 18:47

FOSHAN - Thousands of workers at the Guangdong Real Faith Enterprises Group Co. here have been living a more relaxed life lately, working strictly 40 hours a week.

That's not because they've suddenly gotten lazy. It's because the board chairman, Liang Fengyi, has cut overtime amid slumping orders. It's part of a three-pronged survival strategy, which also includes conserving cash and restructuring internally.

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"In the past, workers seldom put in only 40 hours a week. They always worked extra time, as there were too many orders, and I had to pay more wages for their extra work," said Liang.

During the past several months, the company's orders have dropped 30 percent because of the global financial crisis.

"So I had to find solutions to survive. In normal times, the workload for managers and workers at my company was quite heavy, since we had to do our utmost to compete with our rivals. Now we can have some leisure."

It might not have been exactly the kind of leisure the company would have liked, but it's one of those things Chinese companies are doing to survive the global market downturn.

Guangdong Real Faith is a private company in the Nanhai District, here in Guangdong Province, China's economic powerhouse. It makes a variety of products, ranging from electronics to metal products and lamps.

Liang's decision made life easier for workers and lowered costs. But she has more confidence in the value of conserving cash and avoiding debt.

"In fact, my company spent more than a year developing high-quality LED lamps and originally planned large-scale production in the second half of 2008," Liang said.

An LED lamp uses light-emitting diodes (LEDs) as the source of light, rather than the electrical filaments used in arc lamps such as fluorescent lamps. LED lamps have huge market domestic and foreign potential, as they are energy-saving and environment-friendly. "But I have to be careful and curb my wishes to expand production at such a tricky time," Liang said.

"To avoid the risks of financial turmoil, private enterprises should ensure a safe capital chain," she explained.

Liang's strategy is typical of private companies in the Pearl River Delta. Experts said domestic private enterprises are less affected by global financial and market conditions than overseas-funded ones, because they are more likely to expand using internal funds rather than loans.

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