Shenzhen Shoe Enterprises "Matthew Effect" Intensified

A group of Shenzhen shoemaking enterprises grow in difficulties and challenges.

The picture shows a promotional shoe product from a department store in Shenzhen.

Newspaper reporter Ding Qinglin photo Cartography: Yan Qingxiong

The "Matthew effect" in economics, the phenomenon of the weaker Heng Qiang and the weaker man, has intensified in Shenzhen since last year.

Last August, there were four or five hundred people of gaoheng Hengsheng shoe factory closed in Longgang.

Last year, a total of more than 200 shoe factories in Shenzhen collapsed like Hengsheng.

In the same year last year, BELLE international, which was founded in Shenzhen with BELLE shoes, was successfully listed in Hongkong. It soon became the largest consumer market in Hongkong capital market.

In 2007, BELLE International's turnover and net profit increased by 87% and 102.7% respectively.

Faced with this phenomenon, Liu Weidong, Deputy Secretary General of Shenzhen Leather Industry Association, believes that the changes in the market environment and the intensification of competition have allowed resources to tilt to large enterprises. The scale of the dominant enterprises is bigger and bigger, and the development situation is good.

"In fact, the overall size of the industry has not decreased, and exports and sales are still growing.

The footwear industry in Shenzhen is undergoing structural adjustment. After this painful period, it will develop better in the future.

Liu Weidong added in particular.

Factories are closing down.

"Yesterday, a Taiwanese capital factory closed down in Ping.

The factory originally had more than 10 production lines, thousands of workers! "

On the morning of July 2nd, Liang Huinan, President of Longgang Footwear Association, told reporters about the incident when he received a telephone call from the journalist.

At the beginning of this year, the industry association of footwear industry in Pearl River Delta region found that in 2007 years, more than 1000 out of five thousand or six thousand shoe factories in Guangdong were closed down.

"This collapse is very evident in Longgang district."

Liang Huinan said.

Longgang district is the most concentrated area of leather and footwear industry in Shenzhen, with more than 500 shoemaking enterprises. "But last year, only more than 20 of our member units closed, and some moved to other places.

Now the shoe factories in Longgang have been reduced to 400.

"Most of the failures are shoe factories that rely solely on production orders."

Liang Huinan said.

More than 70% of Longgang's shoemaking enterprises are exported, mainly exported to the United States, followed by Europe and Asia.

Since last year, the RMB has been appreciating continuously, the price of raw materials is rising, the cost of wages is rising, the export trade is restrained, the new labor contract law and the new deal of "two taxes combined" have made a lot of enterprises overwhelmed, and the profits are greatly reduced and even losses.

The head of the marketing department of a shoe factory in Keng Zi told reporters, "the profit of shoe factory can still be 8% to 10%. Now the price of raw materials has skyrocketed, and the appreciation of the renminbi has been so fast. It is often the last month's receipt. The delivery will be lost next month."

He said that bosses had been worried for months, and had been struggling to keep them close.

"Closing the door, according to the labor law, the worker's compensation will be several million.

Hard to support, then watched every month in a loss.

It's really hard to decide. "

Liu Weidong believes that from the current trend, SMEs will be more and more difficult to do, many enterprises have entered a life and death period.

"Shenzhen shoemaking enterprises have been reduced from more than 1200 at the highest level to 800 now, with a reduction of more than 30%, which is expected to decrease this year."

Large scale expansion of advantageous enterprises

What is quite different from this is that some large and powerful enterprises have taken the opportunity to expand rapidly and embark on the road of becoming bigger and stronger.

Since last year, BELLE International's website has been flooded with news about mergers and acquisitions.

After the listing, BELLE has acquired European FILA's operation rights in China, Hongkong OSS Footwear Group, Jiangsu's shoe industry, Hongkong beauty Po group and so on. It has become the first and second largest footwear business chain group in China.

Shenzhen's new BELLE shoes, BELLE, Staccato, Teenmix and other women's shoes, are among the top ten sales in the country in 2007, of which BELLE brand ranks first in China's women's shoes sales for 12 consecutive years.

"From today's perspective, BELLE's success has many advantages such as capital operation and supply chain management, but the most fundamental point is to build its own brand from the very beginning."

Liu Weidong said so.

When BELLE was founded in 1992, it was only a small factory with an investment of only 2 million yuan.

At that time, the current BELLE international CEO Sheng Bai Jiao, as well as the boss of BELLE shoe industry and Deng Yao, a Hongkong industrialist, conducted a long-term analysis and judgement on the Chinese footwear market.

They think that the raw material processing has neither its own brand nor the domestic market, and profits will become thinner in competition.

At the end of 1992, Sheng Bai Jiao established the direction of BELLE's future development, that is, "based on the mainland market, creating BELLE brand, and opening up a chain store of shoes."

From then on, BELLE products gradually moved to the front of the market and started their own brand business.

Throughout the footwear industry that stands fast and expands in Shenzhen, most of them hold this brand "sharp sword".

Shenzhen Yao Qun industry is a strange enterprise among consumers, but it is almost unheard of about Daphne, Qian Baidu, Kang Li, sun Da, Baidu and honey Si Luo Ni.

Yao group is doing behind the scenes work for the design and production of these brands.

Yao group now has tens of thousands of employees, and the technical staff who manage and design make up 14% of the total number.

In addition, there are a number of Shenzhen shoe enterprises in the popularity and market share, are rising rapidly, such as Fuling Mingda, Ali Li Da.

And a group of enterprises specializing in the processing of famous domestic and international women's shoes brands, such as Sheng Feng, Bao Kai, Tai Wei, Jia Hao Yun and faction, are attacked by this round of industrial adjustment storm.

Taiwan long Dian group, one of the world's second largest sports shoes manufacturing group, has two major shoe factories in Shenzhen, including two workers and nearly 40 thousand workers. It is the main processing factory of international brands such as Nike, Adidas, NewBalance and K Swiss.

Now, they are going to "enclosure" in Guangdong, Boluo, Vietnam, Mexico and other places to prepare for the expansion of a larger production base.

In June this year, "Shenzhen leather 30 anniversary celebration and Shenzhen Leather Industry Association 2008 annual meeting", as the Shenzhen leather industry association president Sheng Bai Jiao made a move that "very good" and "very encouraging" speech.

He said that although the leather industry in Shenzhen is facing unprecedented difficulties and challenges, the advantages of China's manufacturing industry will not change, and the overall market demand will not change.

The present situation is not only a game between enterprises and buyers, but also a spontaneous adjustment process of the survival of the fittest in the industry. The enterprises that can survive will surely get better next year.

How do you do that?

Liu Weidong, Deputy Secretary General of the association, said that the core is "industrial upgrading".

In the 2007 annual industry report of the leather industry association, a chapter is devoted to the essence: "in order to maintain the sustainable development of leather industry in Shenzhen, industrial upgrading is imperative."