Hong Kong-based toy manufacturer Harbour Ring Crown Ace, which counts Mattel (MAT.N: Quote, Profile, Research, Stock Buzz) and Hasbro (HAS.N: Quote, Profile, Research, Stock Buzz) among its clients, is bracing itself for a tough Christmas season and an even worse outlook for 2009, as the global recession worsens.

"Everyone is just holding their breath to see how the Christmas season goes. The signs so far are not very encouraging, people are talking about more than a serious recession," Richard Ellert, Harbour Ring's chief executive officer, told Reuters in an interview on Sunday.

The company, one of the world's biggest toy makers on an original equipment manufacturing basis, has cut output and is currently employing only 3,500 staff at it's  Dongguan factory in the Guangdong province, part of southern China's manufacturing belt. That's compared with 4,400 this time last year and peak season in June to September, when they employed 8,000.