Huaqiang Plastics Co., Ltd., a major plastic bag manufacturer based in Suiping County, Henan Province, has recently announced the transfer of its operations. With an annual production value of 2.2 billion yuan and a business history spanning over a decade, the company—comprising Luohe Huaqiang Plastic Co., Ltd.—has been a key player in the industry. However, it has now halted production, raising concerns about the future of this once-thriving enterprise.
According to a report by a journalist on February 27, three main factors have contributed to the shutdown: the implementation of the "plastic limit order," which has restricted the use of non-environmentally friendly plastic bags; the new "Labor Contract Law," which increased labor costs; and the challenges faced by family-run businesses.
Over 20,000 employees have been told to take a break, with many leaving the factory. One former worker described how the factory used to be bustling with activity, with workers filling the streets. Now, the area is eerily quiet. Some long-time employees recall that the machines never stopped running, with shifts rotating around the clock. But now, the machines are idle, and the factory has announced a temporary halt in production.
At the Luohe Huaqiang factory gate, notices were posted announcing the transfer of equipment, including 1,600 blown film machines and over 1,000 bag-making machines. Online information also suggests a broader transfer plan for both Luohe and Zhangping Huaqiang, with a tentative post-tax transfer price of 280–350 million yuan, valid until November 12, 2008.
The company, which was previously one of the largest contributors to local tax revenue, had been profitable before the "plastic limit order" was introduced. According to a company representative, nearly 90% of its products fell under the restrictions. As a result, production was suspended. Although the company had initially planned to restructure as early as July or August, the official policy pushed them to halt operations entirely.
The new Labor Contract Law has also placed a heavy burden on the company. With more than 20,000 employees, nearly 2,000 could become permanent staff, costing the company over 10 million yuan annually. Additionally, the law requires companies to provide social insurance, adding significantly to operating costs.
Another factor is the low technical barriers to entry in the plastic bag industry. Many small, family-run workshops have emerged, competing directly with Huaqiang and affecting its sales.
Experts suggest that while non-environmentally friendly plastic bags may still have a market if priced appropriately, the industry must adapt to survive. Many companies are shifting toward biodegradable and eco-friendly alternatives. Industry insiders believe that environmentally friendly plastic products will be the future.
However, the transition is not without challenges. Raw material suppliers face uncertainty, and laid-off workers need support. The impact of the "plastic limit order" is expected to reshape the entire industry, forcing companies to rethink their strategies and invest in sustainable solutions.
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