Encounter The Capital Chain Crisis And How To Break The "Life And Death Bureau"

According to people familiar with the matter, there is a "sewing machine king" called Leapfrog Group in Taizhou, Zhejiang, but recently there have been news, due to problems in the capital chain, "leap" has owed about 1000000000 yuan of bank loans.

At present, the relevant government departments have been involved in the formulation of the rescue plan.

Taizhou economic and Trade Commission official said in an interview with reporters, because of the impact of the macro level, this year, "leap" to survive is indeed difficult.

The person said that the bank's "leap" loans did not stop.

Will the flying group suffer from the failure of funds to become another failure specimen in this industry?

What warning can Zhejiang enterprises get from it?

What happened to the leap?

Information display of leap Group, since its establishment in 1986, the group has formed a complete system from product development to whole machine, mold and parts manufacturing, quality control and after-sales service.

In the field of sewing machines, "leap" almost covers all types of products. Now it has 31 large series of more than 300 varieties, and produces 2 million sewing machines annually. Among them, super high speed sewing machines and sewing machines account for 50%. of the world's total output. In recent years, the development of "leap" has extended to food machinery, bags and other fields.

In 2002, "leap" reinvested huge sums of money into the central air-conditioning and textile machinery industry, and developed into a large scale comprehensive modern enterprise group integrating research, production and international trade.

However, in May of this year, some netizens posted on the Internet saying that "leap" was due to the fact that they were heavily indebted and filed for bankruptcy. This is confirmed by the June 5th daily economic news report.

According to reports, the leap group that produced 2 million sewing machines annually appeared a problem in the capital chain at the beginning of this year. The head of the group office said in an interview with the media that due to the influence of macro policy, there was a certain problem in the group's funds, but within the controllable range.

It is understood that since the second half of 2007, under the influence of a series of unfavorable factors such as rising prices of raw materials and energy, appreciation of the renminbi, reduction of export tax rebate, and rising labor costs, the "leap" as the industry leader has never felt the pressure.

Public data show that in the first quarter of this year, the total output of Enterprises above Designated Size in Taizhou was 1 million 15 thousand and 600, down 15.3% from the same period last year, and the output value and efficiency also decreased significantly.

In addition, data from Taizhou foreign trade and Economic Cooperation Bureau of Zhejiang province showed that the total export volume of the group jumped from 18 million 480 thousand to 33 million this year, a 44% drop from the US $33 million in the same period last year, which is only 1/5 of that in 2007.

Due to the "mottle" of "leap" assets and the degeneration of profitability in recent years, the enterprise is in a state of tight funds, and its asset liability ratio remains high.

A local financial personage revealed that at the beginning of the year, joint-stock banks would no longer renew loans after their maturity.

Qiu Jibao, a family member, said in an interview with relevant media that technical barriers to trade have reduced export market share, lost a lot of trade opportunities, weakened the competitiveness of products, and brought about a relatively long-term negative effect on exports.

In fact, it is not just the leap group that faces business difficulties, many small and medium enterprises are facing survival crisis.

It is understood that there are also 7 enterprises in Taizhou overnight shutting down business "strange phenomenon."

In March of this year, Guangdong Dongguan Fu'an textile printing and dyeing Co., Ltd. suffered serious difficulties in production and operation, and laid off 3395 people at once.

Following the "Fu'an", in April, Shandong Sakura textile group was unable to turn around because of over expansion and liabilities of 890 million yuan. It was reorganized by Shandong Ruyi group.

Where is the crisis of Zhejiang enterprises?

"This year, I am afraid, is the most difficult year for China's economy."

This is Premier Wen Jiabao's speech at this year's "two sessions".

As a large private enterprise in Zhejiang Province, under the pressure of inflation, many small and medium enterprises, especially foreign trade enterprises, may face a "life and death bureau".

According to Cai Zhangsheng, director of the office of Zhejiang provincial SME Bureau, Zhejiang economy is facing "four challenges". From the international situation, since last year, energy prices of international oil, steel and other energy have risen, bringing the soaring prices of domestic production raw materials. The US subprime mortgage crisis has led to a rare "recession" phenomenon in the US market, and the world economy has also been deeply affected. The export trade industry of Zhejiang, which is still as high as 60% of foreign trade, has also caused a very heavy blow.

At the same time, there are many unfavorable factors in China. Financing costs, labor costs, export costs, production resources costs and energy saving and emission reduction costs are increasing.

The national credit policy tightened up and increased the cost of venture capital. In 2007, the financial cost of Industrial Enterprises above designated size increased by about 30% compared with 2006. After the implementation of the new labor law, the employment cost of enterprises increased, and the labor cost of enterprises increased by about 10% in 2007 compared with that in 2007. The state lowered export rebates, implemented export restraints, blocked textile and processing enterprises, and greatly increased the utilization cost of domestic and foreign market resources. The government implemented energy conservation and emission reduction, and some small and medium-sized enterprises with serious pollution were facing closure or pformation.

Coupled with the impact of heavy snow on the beginning of this year, a lot of small and medium sized private enterprises have been struggling.

As the appreciation of the renminbi and the dollar shrank rapidly, the time for foreign exchange settlement was prolonged.

A Pinghu luggage enterprise has about 15000000 yuan owed by overseas customers. The owner of the business exclaims: "in the 6 years of running an enterprise, it has been done for 4 years."

A public document issued by the Taizhou Economic Commission in May this year also indicated that due to the excessive investment in the technological progress, industrial upgrading and internationalization, and the excessive front line, the production and sales of some products dropped sharply, and the tight monetary policy brought great pressure to the capital chain of enterprises.

It is not just "leap" that has the problem of capital chain. At present, some enterprises are faced with such a problem.

It is understood that the United States has already owed $100 billion of foreign exchange to Chinese enterprises, resulting in the slow recovery of corporate capital and even the phenomenon of chain breaking. For a big province of foreign trade, the crisis of Zhejiang enterprises is particularly serious.

Risk prevention awareness can not be less

"In the current economic environment is relatively weak, to control the development of enterprises, and not blindly expand too quickly, the funds can not keep up, enterprises are very dangerous, this risk prevention awareness can not be less."

Li Guofu, general manager of Xi De Bao import and Export Co., Ltd. told reporters.

"Leap" suffered from the financial crisis. Many people believe that an important reason for the breakup of the "leap" capital chain is that the industry development is too big and the industrial chain extension is too long.

What is the warning of "leaps" to Zhejiang enterprises?

Reporters interviewed a number of experts in Hangzhou, we all think that enterprises to develop, we must strengthen corporate risk prevention awareness and industrial innovation awareness.

"When the dollar is shrinking, it can be appropriately contracted in the US market, and then turn the market to Southeast Asian countries, which can also avoid foreign trade risks."

Wang Shuifu, chairman of Xizi United Holdings Limited, expressed this view to reporters.

As for the risk prevention awareness of enterprises, the industry also cited a typical case: the Nan Wang Group, which specializes in remote image surveillance equipment in Hangzhou.

In the early days of "Nan Wang", due to the proper investment, the small businesses whose initial registered capital was only 5 million yuan rapidly expanded into a large private enterprise group with a registered capital of up to 240 million yuan in just a few years.

However, "Nan Wang" has been involved in many unfamiliar hydropower stations, real estate and other industries. As a result, the project has been overoccupied by funds and has not been able to repay in return.

The problem of "Nan Wang" is definitely the result of internal and external forces.

A shareholder of Nan Wang said that the external cause was the credit crunch environment this year and the rise in prices of various means of production.

The internal cause is the high-tech enterprise's short debt and long investment, without risk and blind diversification.

Reporters interviewed in the Hangzhou Economic Commission learned that at present, the Hangzhou municipal government has seen the current situation, is also embarking on a series of guidance plans, and launched the "Hangzhou growth oriented small and medium industrial enterprises five year training plan (gazelle program)".

The plan shows that the government will further strengthen the funding and awards for growth oriented SMEs, further improve the financing environment of small and medium-sized enterprises, strengthen the construction of SMEs' service system, promote independent innovation, increase support and reward to credit guarantee institutions, and enhance enterprises' ability to resist risks.