Beijing - Thousands of workers were made redundant in southern China after the global recession and rising costs forced more than 3,000 toy makers out of business, state media said on Friday.

More than 6,000 workers at two plants lost their jobs this week when Hong Kong-based company Smart Union closed two toy factories in Dongguan, Guangdong province, the official China Daily said.

"The main reason for the closure is that we are too dependent on the US market, which has become sluggish," the newspaper quoted Xu Xiaofang, a Smart Union personnel officer, as saying.

The managers of the plants had "disappeared" several days ago, it said, confirming a report by the Hong Kong-based Information centre for Human Rights and Democracy.

Police arrested 20 people after about 1,000 workers from the plants blocked local roads on Monday in an effort to get the local government to help them, the information centre said.

Guangdong borders Hong Kong and is China's most important manufacturing region.

Thousands of workers were still gathering at the factories on Thursday, China Daily said.

"We were making toys on Tuesday, and we didn't know the boss had gone into hiding until Wednesday," the official Xinhua news agency quoted factory worker Du Haiqun as saying.

Earlier state media reports quoted customs data as showing that 3,631 toy exporters had shut down this year - 53 per cent of China's total.

Most of the failed toy makers were small producers with annual exports valued at less than 100,000 dollars, and 3,507 toy exporters remained in business, the agency said.

It said the exporters were also hit by China's rising yuan and higher production costs.

Xu said the same factors had affected Smart Union, which reported a loss of more than a 201 million Hong Kong dollars (25.9 million US dollars) to the Hong Kong stock market exchange for the first half of this year.

Trading in its Hong Kong-listed shares were suspended on Wednesday.

"The cost for each worker has risen more than 12 per cent since the labour law took effect at the beginning of this year," the newspaper quoted Xu as saying.

The agency quoted a local government official as saying that workers at the company's two factories had not been paid since August.

The government had been unable to contact the factory owners but allocated 23 million yuan (3.3 million dollars) to start paying the workers' wages from Friday, it said.

Toy exporters were already badly hit by a series of safety problems last year.

The government said it suspended or revoked the export licences of 764 toy factories in Guangdong late last year, following months of quality problems with toys exported to the United States and Europe. (dpa)