Guangdong Shoe Enterprises Suffer From "Growing Pains"

This is the general consensus of export enterprises in the Pearl River Delta region.

Raw material prices continue to rise, labor costs have risen significantly, export tax rebates have decreased, RMB appreciation has accelerated, the US subprime crisis has been affected, and trade wars between China and foreign countries have been frequent.

Layers of dark clouds over the sky, and Guangdong's export companies are experiencing an unprecedented cold winter.

That is to say, nearly half of the shoe companies in the Pearl River Delta have been killed in the war without smoke.

In fact, not only shoe making enterprises, but also other labor-intensive industries such as clothing, toy processing, electronic processing and so on, the same situation has emerged, many enterprises have begun to move out, and some have gone bankrupt.

What happened to the PRD, once known as the "world factory"?

　　內憂外患下，企業(yè)飽受煎熬

"The living environment of enterprises in the Pearl River Delta is just like an increasingly tight network."

Ding Li, director of the scientific research division of Guangdong Academy of Social Sciences and regional economics expert, described it.

The rising cost of production in the Pearl River Delta has made the company "unable to bear".

Fan Yanwei, general manager of Datong Jinwei Aluminum Industry Co., Ltd. calculated an account: 5 years ago, the wages of an ordinary worker was 600~700 yuan / month, and now it has increased to 1600 yuan.

Even so, the problem of recruitment has become increasingly prominent.

After the Spring Festival last year, 30% of the workers did not come back to work.

Obviously, cheap labor is no longer easy to find in the Pearl River Delta.

For enterprises, in addition to lack of jobs, pressure also comes from rising raw material prices, water and electricity charges, factory rents and so on.

Take Zhongshan toys as an example, most of the products belong to plastic toys, and the cost of raw materials for toys increases by 40% on average, influenced by international oil prices, of which plastic materials rise by 40% to 100%.

Although production costs have risen sharply, the price of products has not risen.

At the same time, the appreciation of the renminbi has also eaten a considerable portion of the profits of the export enterprises.

The head of a toy enterprise in Zhongshan said: the annual export volume of the company is about US $4 million.

As a result of the appreciation of the renminbi, the company's direct revenue will be reduced by about 2500000 yuan.

"For a small and medium-sized enterprise like ours, the loss of nearly 2 million yuan is simply an unbearable blow."

The export enterprises in the Pearl River Delta seem to have entered a strange circle: the larger the volume of exports, the less profit.

Raymond Lam (a pseudonym) is a manufacturer of plastic products in the Pearl River Delta.

In the early 90s of last century, he began to engage in the plastic products industry, and more than 90% of his products were exported overseas.

In his memory, export profits could easily reach over 10% at that time.

What made him lose is that the export volume of the products now is 10 times more than that of the original, but the profit has dropped to the pitiable 2%~3%.

"Enterprises may lose money if they are not careful."

Raymond Lam was worried.

To add insult to injury, the orders received by the export enterprises of the Pearl River Delta have also shrunk dramatically due to the subprime crisis in the US.

Barbara, chairman of Foshan Nanhai Shoes Co., Ltd., Zhan Yongrui, said that the shoes produced by the company are mainly exported to the European and American markets. This year, the US orders are less than 30%.

In the past, the American buyers had planned ahead of schedule, placing orders every three months.

Now it is sometimes four or five months before the next order, and the order is small.

Under the attack of internal and external troubles, export enterprises are suffering.

According to statistics, Guangdong, which accounts for nearly 30% of the total exports of foreign trade, began to show signs of export decline. In the first half of this year, Guangdong exported 187 billion 830 million US dollars, an increase of 13%, lower than the national growth rate, 13.5 percentage points lower than the same period last year.

     “以前的老路為何走不通了”

"No one is willing to go bankrupt, but it is still uncertain whether we can sustain it."

Like most manufacturers in the Pearl River Delta, Raymond Lam has long been accustomed to low-cost operation.

When the "low cost era" is fading away, he subconsciously feels that "life is bad".

In fact, Raymond Lam's worry is also a common problem faced by most export enterprises in the Pearl River Delta region.

There is no doubt that the "made in Guangdong" has been facing a big test.

Just in the first half of the year, the economic data showed that the Dongguan contract made the first negative growth in the use of foreign capital and the actual utilization of foreign capital in 30 years, and the investment contract was reduced by 57, the negative growth rate was 13% to 14%. From 1 to May, the total number of foreign-funded enterprises in the city closed down to 405, up 36.4%.

"Why did it suddenly get out of the way for more than ten years?"

Enterprises in the Pearl River Delta are also thinking hard.

Ding Li said that the manufacturing industry in the Pearl River Delta is at the bottom of the international division of labor. Most of them are labor-intensive enterprises mainly based on OEM. Low cost and low price are the basic strategies for their survival.

In fact, the real added value of the PRD export products is not high.

A manufacturer of lamps and lanterns in the Pearl River Delta has calculated to reporters that a 2U energy-saving lamp tube costs about 5.8 yuan, the factory price is 6 yuan, and the retail price of the other party reaches 16 yuan after the international brand is posted.

That is to say, the other party earns a profit of 10 yuan, and we only earn 2 cents for processing fees.

Ding Li told reporters that with the gradual loss of the comparative advantage of cost and price, the competitiveness of such "Guangdong manufacturing" overseas is declining.

It is highly dependent on overseas markets, and has no opportunity and ability to take the initiative to attack overseas markets. This is the biggest weakness of Guangdong's manufacturing.

Lang Xianping, a famous economist and professor of Chinese University Hong Kong, also expressed the same view that the dilemma of manufacturing industry is basically the result of the mistake of positioning itself in the international industrial chain.

The international industrial chain includes 7 links of "6+1". "6" refers to manufacturing plus product design, raw material procurement, warehousing and pportation, order processing, wholesale operation, terminal retail, etc. while "1" means manufacturing, and many domestic enterprises still remain in the "1" stage.

The characteristic of "1" is not only the low value creation, but also the waste of resources and the destruction of the environment.

A simple example is the Bobbi dolls produced in Guangdong, which cost nearly $10 in the US WAL-MART retail market.

The value of the middle 9 dollars comes from all aspects of "6", and the process of creating 9 dollars is Lang Xianping's competition in the industrial chain.

In his view, if Chinese enterprises want to break through the current predicament, they must enter "6" from "1" and carry out industrial chain integration.

      生存考驗：遷移，還是升級？

Over the past more than 20 years, "made in Guangdong" has been around every corner of the globe, relying on the "cheap and fine" pass.

Under the pressure of rising production costs, the increase in "made in Guangdong" has become inevitable.

According to the statistics of Changan customs in Dongguan, in the first 5 months of this year, the Pearl River Delta's largest shoe-making base, Dongguan, exported 250 million pairs of shoes, with an average price of 4.1 US dollars / double, up 27.3%.

Ding Li said that although the PRD enterprises have obtained certain bargaining space, most enterprises do not have the pricing power.

To increase the unit price according to the actual cost increase, it is difficult to achieve at present.

Raymond Lam told reporters that after numerous rounds of bargaining, foreign buyers reluctantly took up half of the cost of rising production costs. "For example, we proposed a unit price plus 0.5 dollars, and customers only agreed to add $0.25".

"Only by mastering the brand, the market, the sales channel, and so on, can the enterprise really grasp the pricing power."

Ding Li believes that this is a long-term process.

Against this background, many experts prescribe medicines for the Pearl River Delta enterprises either to migrate or upgrade.

In order to cope with the pressure of rising costs, pferring to lower cost places has become a common choice for many PRD enterprises.

But facts have proved that industrial pfer is not just once and for all.

As early as six years ago, Huajian group, one of the world's largest women's footwear manufacturers, began to move to Jiangxi to survive.

Unexpectedly, the company, which originally intended to no longer migrate for at least 15 years, is now likely to "degenerate again by cost".

Hua Jian realized that only shifting is not enough. Transfer can only solve the problem of survival and competitiveness comes from industrial upgrading.

The industry's shuffling and adjustment has become a prelude to industrial upgrading.

Toy manufacturing base in Dongguan, after last year's special rectification, toy export enterprises reduced from more than 700 to 472 now. But in the first half of this year, the number and value of toys exported to Dongguan port increased simultaneously, and the value of goods increased by 22%.

"Many of the orders that were originally produced by small enterprises were gradually carved up by large enterprises, so that the competitiveness of large enterprises was stronger and grew faster, and the gold content of export toys was also rising, which is why the export volume did not change much."

The head of Guangdong inspection and Quarantine Bureau explained.

For industrial upgrading, Dingli put forward the "production, market, and innovation" syllogism.

"The biggest problem with Guangdong's manufacturing industry is" sitting on business ", which is too dependent on brokers' orders.

Ding Li believes that most of the PRD manufacturers are still in the "production" stage with a single function. In the future, if they do not strengthen their capability of facing the market in a timely manner, they will become a complete enterprise with both production function and sales service function, and will inevitably be eliminated.

For most enterprises, the first consideration should be to change the dependence on middlemen's orders, step over the threshold of intermediaries, from passive orders to active orders.

A furniture manufacturer in Dongguan shares the same feeling: "if the price of a mattress is $100, it will be sold more than three times by the importer, wholesaler and retailer at the price of $336.

If the intermediate links can be reduced, the selling price will be reduced by at least 30%., so that the products will have a price advantage.

Ding Li also suggested that for the large number of processing enterprises in the PRD, no technology will always be controlled by others. The government can encourage enterprises to embark on the road of independent innovation by providing bank loans, tax relief, preferential land prices and other means.