How Hard Is Life In Dongguan?

As the forefront of Guangdong's clothing exports, the good days of Dongguan's clothing enterprises seem to come to an end since the beginning of this year.

"Since last year, the RMB exchange rate continued to rise, so that garment export enterprises are at a loss."

Pan Rihui, Secretary General of Dongguan Garment Association, told reporters that the business situation was very difficult. The situation is very serious. If the government and industry do not have a big move, the current situation of enterprises is difficult to improve. Dongguan's clothing industry will face a new shuffle.

Exchange rate pain

In Dongguan, the impact of the RMB exchange rate on clothing export enterprises is still obvious.

From the data of clothing exports in Dongguan in 1-5 months of 2008, exports to the EU remained stable and slightly increased this year, because the RMB exchange rate did not change much, and the EU did not have quota restrictions, and the administrative licensing system was implemented.

However, exports to the United States continued to decline, and the rate of decline was increasing month by month.

In addition to export quotas, "the renminbi has risen too fast against the US dollar."

Pan Rihui sighed.

A research report from Guotai Junan showed that when the appreciation rate of RMB reached 8%, 10%, 11% and 12%, the export products of cotton textile, household textiles, wool textile and garment industry began to turn from profit to loss.

An indisputable fact is that the rise of the RMB against the US dollar is fatal to purely export oriented garment enterprises.

Take a Dongguan port weaving enterprise as an example, the sweater and other products produced by the company are exported to the United States 99%, and the order is settled in US dollars. The appreciation of the renminbi is only one exchange rate, which allows the company to lose 5 million yuan a year, plus raw materials and labor costs rising by more than 20%. "Many enterprises are operating difficulties, and there are many textile factories around our company before, but now the closure of the closure and the relocation of relocation are left for us."

The person in charge of the enterprise said.

Reporters learned that, like the above, the export enterprises that can directly get first-hand orders are still relatively better, and those small businesses and workshops that only have to hand over "second-hand three hand" orders are difficult to figure out.

Some enterprises have failed to see the market prospect, and the enterprises that originally made technological pformation and imported equipment from abroad also temporarily suspended the plan.

"Enterprises must consider whether or not to expand production."

Pan Rihui said.

Fortunately, in the pain of the exchange rate, the business of the domestic brand oriented clothing enterprises has not been affected. Pan Rihui said, "at present, there are not many shutting down businesses in the more than 200 large-scale garment enterprises in Dongguan."

The situation in Humen, one of Dongguan's top garment industries, is more complicated. "By the end of 2007, a town in Humen had left 200 enterprises, which is more serious this year than last year."

An insider revealed.

For the recent rumors of textile and clothing export tax rebate rate increase, Pan Rihui believes that if the export tax rebate rate is raised, in the clothing industry's marginal profit margins are getting lower and lower, it will help the confidence of enterprises.

At the beginning of this month, the Dongguan Municipal Economic and Trade Bureau issued a policy to stipulate that the processing enterprises in Dongguan will turn to local enterprises.

The specific way of operation is: before the processing enterprises are cancelled, they can invest in the establishment of a foreign-funded enterprise with the same name as the original processing enterprise.

This means that after the processing enterprises are pferred to foreign-funded enterprises, they can enjoy the right to export tax rebates and open up the domestic market, and help enterprises change their business decisions.

In the past, processing enterprises pferred to foreign-funded enterprises must complete all processing trade contracts and levy taxes on machines that were originally bonded.

EIA and fire procedures must be re processed and enterprises must stop production.

The annual output value of the big textile company, which is undergoing pformation procedures, is 200 million yuan. If the production is stopped for one month, the loss will reach about 10000000 yuan.

This does not include losses caused by the failure of the company to suspend production.

At the same time, with the reduction of orders, the number of workers in garment enterprises is also decreasing. Compared with the same period last year, the number of workers in more than 20 enterprises surveyed by pan has been generally reduced by 20% - 30%.

The wages of workers are 1.5 times higher than that of the same period last year. Now the monthly wages of workers in an ordinary clothing enterprise in Dongguan have risen to 1200-1600, while the minimum living guarantee in Dongguan is 791 yuan.

Just when a reporter interviewed pan Lai Hui, a clothing company that had problems with funds made a telephone call to express his hope that he could seek support from Guarantee Corporation and obtain corporate financing with the help of Dongguan clothing association.

In recent months, local governments and enterprises in Dongguan have frequently received leading and staff members from the central, provincial and municipal levels in Dongguan.

"The difficult position of Dongguan's processing enterprises has attracted the attention of the higher authorities. In fact, we are only a microcosm of the industrial upgrading of the Pearl River Delta."

The insider said.

How hard is the life of Dongguan's clothing enterprises?

This is a problem that many people are very concerned about.

In this regard, in Pan Rihui's view, there is only a qualitative conclusion in Dongguan - the survival of enterprises is facing great difficulties and severe challenges, but there is not a quantitative investigation of the extent to which enterprises are hard to reach.

Pan Rihui told reporters that according to his understanding, there is no report in Dongguan that can fully reflect the actual living conditions of garment enterprises.

He said that no one has ever done such a survey.

For reasons, he said: "capital is a great difficulty."

He explained that the investigation of clothing enterprises in Dongguan was either a sample survey or a general survey, but the operation, execution and result analysis of the specific investigation process required experts' guidance throughout the whole process, or a professional investigation company.

3 years ago, Pan Rihui led the Dongguan garment industry association to investigate the clothing industry in Dongguan, but the investigation process was very difficult. Many enterprises did not want to reveal their actual situation.

The idea of an enterprise is still not open enough.

To this end, Dongguan clothing association spent 100 thousand yuan.

"As an association, it is difficult for us to provide the media with a very complete scientific survey report."

Pan Rihui suggested that the most important thing for the government is to pay such a survey to provide a solid basis for solving the industry difficulties.

Although the industry survey has not been carried out, the possibility of shuffling of Dongguan's clothing industry has been very large.

"This is not necessarily a good thing, it is also in line with the needs of Dongguan's industrial upgrading and Dongguan's policy of developing" cage changing birds ".

Pan Rihui said.

At present, the purpose of Dongguan's industrial pfer is to "change the cage and change birds", and shift some industries that lose comparative advantage to promote economic structural adjustment and industrial upgrading, make room for the development of high added value industries, and vigorously introduce and cultivate high-end industries represented by advanced manufacturing, high-tech industries, modern service industries and emerging industries.

In this campaign of "cage changing birds" in Dongguan, the future of the labour intensive clothing industry can be imagined.