HONG KONG - A TOY factory in southern China has gone bankrupt leaving 900 workers jobless, a report said on Wednesday, just days after a major toy maker went under as a result of the financial crisis.

Hong Kong-owned Chong Yik Toy Company, has shut down its factory in Shenzhen, in Guangdong province, the South China Morning Post reported, citing local officials who had paid the workers from emergency funds.

'The workers got payments ranging from a few hundred yuan to nearly 8,000,' Qiu Weiquan, a district labour official, told the Post, adding the local government had paid a total of 3.4 million yuan (S$744, 583) in compensation.

One worker told the paper that he was owed four months' salary.

'I have been so worried about that for a long time. I'm so lucky to have the payout,' he said, according to the Post.

The closure comes days after Hong Kong-listed Smart Union closed its factory doors in Dongguan, also in Guangdong province, and went into liquidation leaving up to 7,000 people jobless.

Southern China has enjoyed an export-driven boom in recent years supplying the world's cheap toys, gadgets and clothes.

But a combination of rising labour costs, expensive raw materials and the appreciation of the Chinese currency, coupled with the recent downturn in demand from the US have all put the area's factories under pressure.

A total of 3,631 mainly small enterprises that made toys for export, or 52.7 per cent of all such companies, had gone out of business in the first seven months of the year, Xinhua news agency reported earlier. -- AFP