The Federation of Hong Kong Industries has said that it expected factory orders in the second half of 2011 and first half of 2012 to fall between 5% - 30%, Reuters reported.

Over 16,000 Hong Kong factories in China could downsize or shut by the end of the year if exporters are hit with rising costs and a slowdown in global demand for Chinese goods.

Chinese PMI hit a 32-month low in October dropping to 50.4% and hovering just above contractionary levels.

Wage inflation has been impacting businesses in China. And key factory sites in southern China could see an 18% - 20% hike in minimum wages on January 1.

This comes amid the European debt crisis and sluggish U.S. economic recovery which have lowered this year's Christmas orders.

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