China'S Textile And Leather Industry: Passive Pformation Rather Than Active Pformation

Over the years, many small and medium enterprises in Zhejiang have developed so successfully that they have benefited from large volume exports and seized market share at a low price.

Today, the road of "small profits but quick turnover" to fight the world is going to come to an end.

The survey found that since last year, due to the adverse factors such as export tax rebate, exchange rate changes, raw material prices and tight money, a considerable number of SMEs face the dilemma of constantly compressing profit margins or even going bankrupt.

In order to find a way out, some enterprises have chosen to pfer most of their businesses to those relatively low business costs in the Midwest.

However, Ge Licheng, director and researcher of the Institute of economics, Zhejiang Academy of Social Sciences, seems to be "shortsighted" and may lose the opportunity to develop new industries.

He suggested: "instead of choosing a horizontal pfer for a temporary respite, it is better to take the initiative to pform and seek long-term development."

Passive horizontal pfer to avoid risks

Due to the change of the comprehensive environment and the increase of business cost, some large energy intensive and labor-intensive enterprises begin to shift outwards.

In Zhejiang, such traditional industries as leather, textiles and so on have been pferred to factories in the central and western regions such as Jiangxi and Anhui. Their reason is that Zhejiang itself is not rich, and the price of raw materials has not shown signs of decline. In order to achieve stability, the cost of selecting raw materials such as yarn and leather is low.

Mr. Li is a member of Li Xin Certified Public Accountants Management Co. Ltd., which is mainly responsible for the audit work of some listed companies and listed companies in Zhejiang province.

She told our reporter that the relocation of some small and medium-sized export enterprises in coastal areas such as Zhejiang, mainly due to tight money, shortage of labor structure and rising prices of raw materials, had created a threat to the capital chain and tight profits.

However, most of these enterprises retained the base of their original province when they were developing abroad. When expanding their scale, they chose to invest in other provinces, and the proportion of overall migration was relatively small, with a quantity not exceeding 10%.

From the relevant people in the Zhejiang provincial economic and technological cooperation office, it is a conservative estimate that at present, the scale of investment by Zhejiang enterprises outside the province is about about 300000000000 yuan.

Not only is Zhejiang, Guangdong, a survey also shows that in 2006, a total of 119 enterprises in Shenzhen had planned or moved out, but the value added of industrial added value accounted for only 0.95% of the city's industrial added value, and the 500 top 500 enterprises invested in Shenzhen did not move out.

Wu Gong Quan, director of the Guangdong provincial port office and deputy director of the Department of foreign trade and economic cooperation, said in an interview with our reporter that the relocation enterprises are mainly labor-intensive enterprises, their industrial added value is relatively small, and the proportion of quantity and output value is not large.

In March 13, 2008, the Hongkong Federation of Industry issued the Pearl River Delta business environment survey report, saying that 60% of Hong Kong businessmen chose to upgrade their industries in the Pearl River Delta, and 40% of them would leave.

Temporary breather may lose the opportunity.

"Horizontal pfer, simple replication, to the lower cost of business areas, and then put in, it can also make room for these small and medium enterprises to survive, there is also a profit margin, but to consider the cost of doing so."

Ge Licheng worried that this would "lose the initiative".

Some of the small and medium-sized export enterprises interviewed by reporters have such a mentality: "as long as there is a single, other first ignore."

Because the entry of large orders will enable them to operate at full capacity at least for the time being, and the normal production and operation can go on, and the basic profits can be guaranteed.

But Ge Licheng warned, "there are two risks hidden here."

First, the largest entry into the region and capital into the region is different, capital into this place, the risk can be shared.

For example, the supply and demand in the international market has changed, and there are new substitute products in the international market. If the order enters the region, it will not take the risk. The risk is entirely borne by the enterprises themselves. For the enterprises, the withdrawal of orders will be all over.

Two is for different types of enterprises, now a large number of orders into the future, it is likely to make these enterprises from second to third categories of enterprises.

In Zhejiang, a large part of enterprises have been in the second category after thirty years of development. They used to be called "former shops and post factories". Later, they were called "production bases + specialized markets". They had a production base, and they had their own outlets in the whole country, and had the ability to invent their own product development. The third type of enterprises only did simple processing, that is, a production workshop.

"Making orders, which may damage the long-term competitiveness of enterprises, is very uncertain."

"Enterprises should pay attention to this problem."

Ge Licheng said, but it is unrealistic to let enterprises withdraw all orders, so it is necessary to take both the immediate interests and the long-term development into consideration.

Instead of horizontal pfer, active pformation is better.

Ms. Zhu, director of a foreign trade company in Suzhou, Jiangsu, told reporters that in 2005, a pair of socks sold for only 1 dollars, and the necktie was 1.6 dollars each.

She asked reporters how much cultivated land she needed to produce thousands of pairs of socks and how much raw materials she needed.

At the same time, it will cause great environmental pollution, but the final profit is very small.

Ms. Zhu realized that the development way of "large resources consumption and little income" has been unable to afford our resources or environment.

Coupled with the lack of support from national policies, this development is doomed to a dead end.

Ge Licheng said that the increase in business costs brought challenges to enterprises in the Yangtze River Delta and Pearl River Delta region such as Jiangsu, Zhejiang and Guangdong, but also brought new opportunities.

It will force enterprises to eliminate and pfer backward production capacity, seek more technological changes, and enable powerful enterprises to stand out. These will be conducive to upgrading the structure of enterprises and the whole industrial chain.

Ge Licheng believes that enterprises should take the initiative to pform and seek long-term development, from "small profits but quick turnover" to "high profits and low sales".

At the government level, no matter whether the new labor contract law or the macroeconomic regulation and control is put in place, while putting pressure on some enterprises that consume large resources and small profit margins, we should guide them to take the road of resource conservation and new industrialization, and develop scientifically and achieve sustainable development.