Recently, a notice regarding the suspension of work and production leaves for Shenzhen Tonda Electronic Co., Ltd. (hereinafter referred to as "Shenzhen Tonda") has been circulating online.
According to a document bearing the seal of the General Manager's Office of Shenzhen Tongda Electronics Co., Ltd., overseas projects have been cancelled and the domestic electronic cigarette market is highly competitive, making it difficult to predict new projects. As a result, the company has decided to temporarily suspend work for the overseas project development team for six months. During this time, employees will receive their regular salary for the first month, followed by 80% of the local minimum wage for the remaining five months. The company will continue to pay social security and housing provident fund contributions throughout the six months, and employees are prohibited from establishing employment relationships with other companies during this period.
The reporter from Jiemian News in the Greater Bay Area contacted the Human Resources Manager of ShenZhen Tongda to verify this news, and the manager did not deny it. He explained that due to the lack of new projects, some members of the original research and development team were temporarily laid off and will return to work depending on the situation. However, other business operations at the factory are running normally, with workers reporting to work and receiving their regular wages.
When asked about the company's overall operational status, the spokesperson stated that they were only responsible for personnel matters and were not aware of the business situation. They added that the global economic environment was unfavorable and orders were not as high as desired.
The owner of a convenience store in the park stated that there are far fewer employees from Shenzhen Tongda nowadays and they are no longer hiring externally, relying mostly on internal referrals. Shenzhen Tongda employees confirmed this to the reporter and mentioned that there is less work to go around. The company has given some employees time off with a base salary while those still working are receiving normal wages. "Previously, the company had over a thousand employees, but now there are several hundred less." Regarding the hiring issue, they are still in the process of finding employees but are not bringing on many. "Now is the low season in June, July, and August, while September to the beginning of the year is the busiest period.
According to public information, Shenzhen Tongda was established in 2003 and operates in the retail industry. Its 2022 recruitment brochure for general workers shows that the company employs around 1000 people and specializes in the processing of precision plastic structural components, primarily for electronic product accessories and electronic cigarette accessories. Its main customers include Apple, Heyuan, and Microwell.
The announcement of cessation pertains to the electronic cigarette business sector, whose main clients, Maka and Heyuan, are leaders in the vape device manufacturing industry. Among them, the profit warning released by Smoore (Maka's parent company) on July 15th revealed that the first quarter of 2022 was negatively impacted by factors such as the Shenzhen epidemic, resulting in a decrease in net profit and comprehensive income of approximately 46.0% to 54.1% year-on-year. This may explain why the Shenzhen Tongda electronic cigarette business has ceased operations, as well as revealing the issue of overreliance on a few key customers.
Shenzhen Tongda is a wholly-owned subsidiary of listed company Tongda Group. The group was founded in 1988 and went public on the main board of the Hong Kong Stock Exchange in 2000. As of December 31, 2021, Tongda Group had 26,000 long-term employees and served as a supplier to enterprises such as OPPO, Haier, Lenovo, IKEA, and Guangzhou Automobile Group. Its products are mainly divided into four categories: mobile phone cases and precision parts, furniture and sports equipment, smart appliance cases, and network device and other products. Among them, the mobile phone case and precision parts segment accounts for the majority of revenue (as indicated in the 2021 annual report, generating 73% of total operating revenue).
In recent years, due to the impact of the international situation and the pandemic on the smartphone market, the group has shifted its business focus away from smartphones and towards non-phone-related sectors such as virtual and augmented reality products, home and sports equipment, and electric vehicles to counter the impact of declining smartphone business. One of the group's subsidiaries, which specializes in home and sports equipment, has applied to list on the Shenzhen Stock Exchange on November 5th, 2021.
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