Guandong near Hong Kong is one of China’s main shoe manufacturing hubs. The province is home to approximately 5,000-6,000 shoe factories. But they are going through a tough time. About 1,000 factories have gone bankrupt in the last year.

"There is no single reason behind the fact that so many factories have closed down," explains Wei Yafei from the Chinese Shoemakers’ Association in Beijing. "Trade conditions have simply changed drastically."

EU anti-dumping duties have certainly played a role. They were tightened in October last year to protect European manufacturers from cheap imports from the Far East. Ever since, imports have been closely monitored -- to make sure that the quotas for imported Chinese goods are not exceeded.

Small and medium size manufacturers have been particularly hard hit by these new regulations.

But the story doesn’t end here, said Wei Yafei: "Working conditions are the second reason. Since the new working conditions regulations were introduced, many factories have to meet social obligations, particularly towards their employees. Changing the working conditions incurs higher costs."

In the past, Chinese factories have tended to pay very low wages. But many workers have begun demanding better conditions and better pay. Suddenly, factories which were not willing to increase salaries have found themselves without a workforce.

Besides expensive pay rises, a general rise in prices has also made things worse, Wei Yafei explained: "The prices of raw materials are rising. We all know that oil prices are constantly rising and a lot of raw materials needed for manufacturing shoes are somehow connected with the oil industry."

Shoe factories, which used to sell their products at dumping prices, have not been able to keep up with the developments. But the Chinese Shoemakers’ Association does not fear a crisis in China’s shoe industry.

Altogether, 20,000 to 30,000 shoe factories in China employ about 3.5 million people. The Guandong closures have affected approximately 200,000 workers, which is a relatively small number in comparison. The factories, which have been forced to shut down, tended to manufacture poor-quality shoes.

But Wei Yafei thinks it is actually good that small businesses, which produce poor-quality goods under "miserable conditions" are being shut down.

"The fact that many small companies are closing down could result in bigger factories becoming more competitive," he explained."Our domestic industry should support high-quality manufacturers and reduce the production of poor quality goods. The closures of the smaller factories will lead to an overall qualitative improvement in the Chinese shoe industry."

Many Chinese-made goods have been recalled this year on the basis of being poorly-made or because they were toxic. The shoe industry, like Chinese industry as a whole, is trying to convince the world markets of its high quality.