CitypaysRMB10mtoworkersoffailedfactory

From: Shenzhen Daily

Updated: 2009-02-05 00:02

THE Longgang District Government has paid back wages to more than 2,000 employees of a bankrupt foreign-invested leather furniture factory, whose Italian CEO hasn"t been seen for over two weeks.

Sources familiar with the matter said that DeCoro, one of the world"s largest leather upholstery producers, had shut down its Shenzhen-based factory in mid-January, the only DeCoro factory on the mainland, owing 10 million yuan (US$1.46 million) in unpaid wages to its employees. The district government has paid the back wages to the workers, said Qin Xiaogang, spokesman for the district publicity department.

However, the Shanghai-based National Business Daily, which first reported on the matter, said, citing insiders, the amount of back pay owed to the employees was as high as 20 million yuan.

CEO Luca Ricci from Italy and other company executives were believed to have left China. "They haven"t shown up since Jan. 15," said a manager of the Shenzhen Grand Industrial Zone, in which the factory was located.

The manager, who asked not to be named, said DeCoro"s employees have been on vacation for a couple of months, and the factory has been vacant.

The Longgang People"s Court has sealed off the factory and is conducting a liquidation procedure of the company"s assets, an unnamed spokesman for the Longgang District Government confirmed.

The Daily quoted a member of the industrial zone"s management board as saying that the capital chain of DeCoro was broken as early as October last year amid the financial crisis.

According to some of its employees, the company"s orders from Europe and the United States had fallen by half to 20 containers per day.

However, in a Jan. 16 interview with Furniture Today, Ricci denied that the company was bankrupt but said that it would liquidate. "The assets are much bigger than the liabilities so we think we can make money and pay all our suppliers," he said. "We want to be correct and pay everybody."

At its peak in 2006, DeCoro had production facilities covering 269,419 square meters and global sales of about US$300 million. DeCoro struggled in 2008 because of tough global business conditions.

Shenzhen Daily