Zhejiang Enterprises Net Profit Plummeted 221% Manufacturing Industry High Cost Forced Pformation

The private economy has become an important part of our national economy. To understand the private economy, the private economy in Zhejiang can not be bypassed.

In Zhejiang, private enterprises have created over 70% of GDP, more than 60% of tax revenue, 76% of foreign trade exports, and 90% of new jobs. Among the 500 top Chinese private enterprises, Zhejiang accounted for 203 seats, ranking the first in the country.

However, with the change of the external situation and the adjustment of domestic macro policies and the advent of the high cost era of manufacturing industry, the financial cost of private enterprises in Zhejiang has risen sharply, and many private enterprises have been in financial crisis, and even some large private enterprises have broken the capital chain.

Recently, the China Economic Times reporter launched an in-depth investigation in the province, visited dozens of private entrepreneurs in Wenzhou, Taizhou, Ningbo, Yiwu and other developed areas of private economy, visited some local government departments and research institutions of private enterprises, in order to fully understand the financial situation of Zhejiang private enterprises.

"In the first half of the year, the potential loss of the company's profit actually amounted to about 19 million yuan, compared with 15 million 730 thousand yuan in the same period last year, down 221% from the same period last year.

Our main goal in 2008 is to strive for a guaranteed or less deficit throughout the year.

At present, the leading officials of the Zhejiang provincial Party committee and the provincial government have investigated the capital situation of enterprises.

Gao Zhiwei, chairman of Han Bo (China) Co., Ltd., reported the company's financial position to Zhao Hongzhu, Secretary of the Zhejiang provincial Party committee.

According to the company's data, in 2007, the company achieved gross industrial output value of 1 billion 180 million yuan, sales income of 1 billion 26 million yuan, and export delivery value of 135 million yuan, and realized profits and taxes of 138 million 950 thousand yuan.

Since its inception, the company has achieved a total output value of 6 billion 630 million yuan, realized sales revenue of 5 billion 810 million yuan, realized a profit of 620 million yuan, and accumulated a total of 500 million yuan in taxes.

In 1992, Han Po Co., which was invested independently by Hong Kong businessmen and invested in Zhejiang, is a foreign-funded enterprise in China. For many years, its sales performance ranked among the top 100 enterprises in the national garment industry. It has the reputation of "the largest industrial enterprise in three foreign-funded enterprises in Zhejiang province". The number of employees in the company is 8000, controlling 25% of the Chinese garment market of a listed company.

"Sales rise year by year, costs rise year by year, and profits decrease year by year," Gao Zhiwei, chairman of the board, summed up the biggest financial difficulty of the company in 15 words.

He said that in recent years, due to the politicization of international textile trade and the significant appreciation of domestic RMB, the state has made macro adjustments and controls, the price of raw and auxiliary materials has increased, and the cost of labor has increased.

　　人民幣持續升值

Since the reform of the exchange rate system in July 2005, the total appreciation of the RMB has reached 17.35%. The main export business of the company has been settled in US dollars in 100%, and exported to US $120 million in 2006, which has reduced the profit by 57 million 530 thousand yuan. In 2007, the export value of US $135 million has reduced the profit by 113 million 50 thousand yuan; the export of US $60 million 690 thousand this month has reduced the profit by 81 million 460 thousand yuan.

　　出口退稅率下調

As the export tax rebate rate dropped to 6%, in 2006, the profit was reduced by 36 million yuan. In 2007, the profit was reduced by 53 million 200 thousand yuan. In 2007 this year, the profit was reduced by 25 million 880 thousand yuan.

　　勞動用工成本上升

After the introduction of the new labor law, the rate of increase in labor wages is 9%. The average monthly wage increase is 136 yuan per person, increasing by 13 million yuan per year. At the same time, the old-age insurance is insured by the labor law, with an annual increase of 16 million 500 thousand yuan.

　　原材料價格上漲

Due to the rise in international oil prices, the price of raw material and chemical fiber raw materials has increased substantially, affecting the cost of enterprises to rise by about 2.5%, about 8 million yuan.

　　地方稅費增加

The Local Taxation Bureau has cancelled all kinds of preferential tax policies for foreign enterprises and doubled the tax and fee standards, which has further aggravated the current management pressure of enterprises.

Before 2007, foreign-funded enterprises were entitled to duty-free preferential tax on property tax and land use tax. After the cancellation of preferential policies in 2007, the company needed to pay 2 million 730 thousand yuan in property tax annually and 3 yuan per square meter in 2007 to 2 million 300 thousand yuan per square meter, while two items increased 5 million 30 thousand yuan in taxes and fees.

　　銀行貸款利率提高

The state's macroeconomic regulation and control has raised the reserve ratio of banks, resulting in a decline in bank profits and pferred to loan companies.

In addition to stipulate the upper limit of interest rate to the enterprise, the bank adopts loan, deposit ratio and various margin ways to raise loan interest rate in disguise.

The average monthly loan interest rate from enterprises to banks has basically reached 1.1%, and the cost of capital use is much greater.

Trade Union funding rises

Before 2008, enterprises were handed in at a basic rate of 150 thousand yuan per year. In January this year, the Federation of trade unions paid the total amount of 35% of the total monthly salary by the Local Taxation Bureau.

Trade union funds increase from 150 thousand yuan to 1 million 100 thousand yuan a year.

　　企業所得稅率上升

After the implementation of the new income tax law, the income tax rate of foreign-funded enterprises rose from 16.5% to 19.8% to 25%, and the preferential tax rate of the two export enterprises was abolished by 10.75%. The income tax to be realized in 2008 would be 85% higher than that in 2007.

Gao Zhiwei said that the concentration of the above factors has brought huge impact to enterprises, especially foreign-funded export-oriented enterprises, which has greatly squeezed the profit margins of enterprises and made the operation and management of enterprises face considerable difficulties.

Financial data can best illustrate the problem. Capital is the blood of enterprises.

People in the industrial, political and academic circles who interviewed this reporter generally believed that the breakup of the capital chain of Zhejiang's leap Group and Wujin group and the financial difficulties of the Han Bo company were only a few typical samples in Zhejiang's private enterprises, whose manufacturing industry is the core industry.

Private enterprises in Zhejiang fall into financial difficulties

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