Yangtze River Delta: Small And Medium-Sized Garment Enterprises Profit Fell To 5%

In early April, Shanghai ushered in a long sunny day. Xiao Li (a pseudonym) finished his resignation formalities. When he left the Shanghai man sang Clothing Co., Ltd. for a year, his legs were as heavy as marsh.

What brought him such an unrelieved feeling was a massive dismissal of employees in the company.

Since the end of last year, the clothing company has adopted the "one size fits all" approach to dismiss hundreds of workers from the factory floor to the workshop workers, and the company's explanation is: "the business is not good enough to face the downtime."

Everything is not a case.

Faced with factors such as rising raw materials and appreciation of the renminbi, the current wave of enterprises' shutdowns and closures has spread rapidly in the Yangtze River Delta region.

Crisis stretches

Xiao Li's clothing business is located in Jiuting Town, Songjiang District, Shanghai. On weekdays, it is mainly engaged in the export trade of clothing, mainly exported to the United States, Belgium, South Africa and other countries.

In the past few years, the life of the enterprise has been very moist, and the turning point began last year. The labor contract law, the change of exchange rate and the soaring of raw materials made the company start a large loss.

It is understood that after the loss, the company has made corresponding adjustments, trying to "turn the tide."

Mainly through layoffs to solve the problem of funding, the layoffs continued from the end of last year to date, even the factory director has been cut off, and the employees who have been laid off are in arrears of wages for several months.

Now, small and medium-sized enterprises like mulberry clothing in Shanghai are facing a similar predicament. One of the Shanghai government insiders who once studied it told reporters that the profits of some small and medium-sized industries in Shanghai had a huge decline. In the process of investigation, it was found that many enterprises stopped and closed down because of capital problems, and the profits of most garment enterprises even dropped to below 5%. "This is undoubtedly a dangerous signal for small and medium-sized enterprises."

The expert said without worry.

And Wenzhou, which is thousands of miles away from Shanghai, is also suffering from "cold current".

The small and medium-sized enterprises here were once the most energetic part of Wenzhou's private economy, such as Jun Yao group, Delhi and so on. Large enterprises started from family workshops and grew bigger. In a sense, Wenzhou's SMEs have always been a "giant" incubator.

According to the data of Wenzhou SME Promotion Association, there are more than 30 SMEs in Wenzhou, and nearly 20% of them are facing downtime or bankruptcy. If they are calculated according to this data, nearly 6 SMEs will face difficulties.

According to a set of data released by the Wenzhou industrial and commercial department, only 3579 businesses were canceled last year, and the number is increasing rapidly as the crisis worsens.

Moreover, apart from clothing, shoes, electronics and other traditional labor-intensive enterprises shutting down a lot, now some of the characteristics of light industry in Wenzhou also began to crisis.

Zhou Dewen, President of Wenzhou SME Promotion Association, has become the busiest person in recent days. He travels to various small and medium-sized enterprises every day to investigate questions, and then reflects these information to government agencies. "This year, SMEs in Wenzhou are facing the biggest crisis in recent years. These enterprises are at a crossroads of life and death."

Zhou Dewen told reporters.

Chain evolution

It is understood that a set of data released by Wenzhou industrial and commercial department in March 18th showed that last year, the city set up 10046 new domestic funded enterprises (excluding branches), but at the same time, the Wenzhou industrial and commercial sector also released the first SME life cycle report, which shows that nearly half of the local SMEs have "survived" for less than 4 years.

"In the past, small and medium-sized enterprises were small and good turn around, but now they are too small to withstand wind and waves."

Zhou Dewen said.

According to Zhou Dewen, one of the biggest problems facing SMEs in Wenzhou is the rising raw material prices.

According to the reporter, in the past year, the lighters in Wenzhou went bankrupt 80%. The main problem is that the prices of raw materials such as zinc, nickel, platinum and copper rose last year. The original copper was twenty thousand yuan per ton, and now it has risen to 70 thousand yuan. Zinc has also risen from 8000 yuan to nearly 40 thousand yuan per ton.

Zhejiang's toy companies are also facing difficulties, with nearly half of them losing money.

Zhou Bin, a chief executive of a toy business in Hangzhou, complained to reporters that all kinds of raw materials, including steel products and petroleum products PVC, have risen sharply this year. The stuffing of toys has increased by 100% in a catty, and the steel has increased by more than 30%. The profits of the toy industry have been reduced to the lowest level.

"The key point is that although the price of raw materials has increased, the price of many terminal products has never been up.

The problem now is that many enterprises do not rise in price and wait for death. The price rises faster, and the low price and low cost competition plan adopted by the original Wenzhou enterprises has completely failed. Some small factories without strength have been eaten by big factories, and it is difficult for them to survive.

Zhou Dewen told reporters.

And this influence is beginning to loom in the upstream of the industrial chain. A company that supplies raw materials to toys in Zhejiang is also having a bad time. "Our shipments this year have dropped by about 50% over the same period last year. This is unprecedented."

The head of the company's marketing department told reporters.

The manufacturing industry in the Yangtze River Delta is facing not only the crisis of rising raw materials, but also the pressure of rising labor costs. This year, the introduction of the labor contract law has brought new challenges to enterprises.

A garment manufacturer in Zhejiang, who had done the foundry for many brands such as Nike and Adidas, told reporters that because the characteristics of garment enterprises are labor-intensive, labor costs generally account for more than 60% of the total cost. "Labor costs are now rising on a large scale, and our overseas orders have lost 60%."

According to the small and Medium Enterprises Promotion Association of Wenzhou, after the introduction of the labor contract law, the cost of enterprises has increased by 20%.

In addition to raw materials, labor costs and other factors, the RMB appreciation has also had an impact on many enterprises in Wenzhou enterprises, which have always been dominated by overseas markets.

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