Chinese Shoe Enterprises: Variations On Banpo

Since the second half of last year, the whole made in China has gone through a big test. It is true that some enterprises have closed down, but it is far from tens of thousands. There are few accidents in large-scale enterprises, but most of them are small and medium-sized enterprises with neither technical strength nor capital strength. If you can pass this exam, made in China will be synonymous with quality in the future. But now, most Chinese enterprises are still struggling on the hillside

various difficulties and hardships

There are more than 3000 shoemaking or shoemaking enterprises gathered in a few kilometers of narrow and long hills and valleys. They are distributed in residential buildings or factories with different directions. These buildings look like cement blocks of various proportions, which are scattered on both sides of the winding road, surrounded by green fields. In the distance, the rolling hills are lush.

It is difficult for those who come to Jilong for the first time not to be shocked by the scene. It belongs to Huizhou, Guangdong Province. It was a small rural town 20 years ago, but now it is probably the place with the highest density of shoe factories in the world. There are dozens of shoe factories in almost every building.

Although two years ago, we got the brand of "Chinese women's shoes production base", most of the shoe factories here can only be called family workshops. A few shoe machines and 20 or 30 workers are just one factory. The largest enterprise here, in Dongguan, can only be regarded as medium-sized.

At the end of March, several leading figures of the local shoe industry got together when they learned that there was a reporter visiting. In a few hours of chatting, the expressions of distress, helplessness and bitter smile appeared alternately, and the smile was hard to find.

"Now we have no rain and snow." The boss of the shoe factory is talking about several fingers. The price of raw materials is rising, the RMB is appreciating, the tax rebate for export is decreasing, and there is the labor contract law. People nearby remind us that the price of electricity has gone up and the shortage of jobs should be included.

"Wind, frost, rain and snow" add up, the cost increases by nearly 30%, which is several times of the profit, and the price can not be raised again. "If there is no order, you should take the initiative. If you have an order in hand, you will lose as much as you can."

If you can open a factory, you can't stop working. Otherwise, all the workers will leave and you can't do it with the right order. The small workshop with a few machines is OK. It can be closed at any time. The large factory can only do it bravely. Even so, there is trouble - there are not enough workers.

There are less than 50000 local people in Jilong Town, but there are 150000 migrant workers. Each year, 600 million pairs of women's shoes are produced and 80% of them are exported. The monthly wage here has reached more than 1600 yuan, 200-300 yuan higher than that in the "developed areas of the Pearl River Delta". However, due to the fact that it is in rural areas, there has been a gradual shortage of workers in the first two years. The trouble of rising costs is not even as troublesome as the trouble of lack of work.

There is a shortage of people everywhere. A boss present here, who just put into operation the biggest shoe factory in the town last year, is now operating less than 20%, "as long as there are workers, I am sure I can continue to do it."

Last year, the shoe manufacturers in the town organized a group to recruit people from several provinces in the mainland. They came back indignantly. "The government in the mainland is very polite, but it's called labor service. In fact, it wants to attract investment."

Now many small factories are closed, and what they see is "only darkness, no light".

How to live?

Migration? "How? We are all farmers in Jilong. A few people or dozens of people have made shoes with pliers and come step by step. Property is in the plant, equipment, now sell also do not bid. You can't walk. "

Upgrade? Most of Jilong's shoe factories are still in the process of upgrading from workshops to assembly lines. Large factories that have built assembly lines can only talk about survival. What can be upgraded?

Take pricing power? "Tell me, how can we small grass-roots enterprises get pricing power? At the end of last year, long Yongtu said in Dongguan that if Chinese shoe-making enterprises want to get pricing power, I can hardly listen to it. He'll try it himself

More trouble is yet to come. After the implementation of the labor contract law, the disputes between the workers and the boss must continue. Now many workers are always "I sue you". In the next few months, they will be busy dealing with the disputes.

There is really no good news. Can this miracle town only decline from now on? Facing several dignified grassroots boss, the reporter couldn't bear to ask this question. But the murmur of a boss still makes people feel comforted, "how we came back, how we went." Hope always belongs to the self-help.

The big test is coming

In Shenzhen, more than 100 kilometers away, "air pressure" is not as low as that of Jilong. "Now Mic (made in China) is facing a big test, not a general entrance examination, but a high school entrance examination." Fang Zhigang, deputy general manager of Shenzhen Rongen company, has his own judgment on the situation of made in China. Fang Zhigang came to Dongguan in 1986 to manage a Taiwan funded shoe factory. He was the first batch of Taiwanese to come to the mainland. He only did one industry in his life -- shoe making.

When he came to the mainland, it was precisely because the cost of Taiwan's shoe industry rose in an all-round way and moved out. "Compared with Taiwan 20 years ago, the cost of the mainland is now greatly impacted. What I see is a more open road."

He believes that this cost shock will bring opportunities for industry integration, which is a good thing. For a long time, there are too many small enterprises fighting price wars and disrupting the market. He describes them as "gangsters". Now, the enterprises with real ability in the industry will be able to play their best on the appropriate stage. "The industry will be healthier and MIC will play louder. Once upon a time, MIC was the pronoun of inferior products. If we can pass this exam, MIC will be the pronoun of international quality in the future. " In this sense, he said, he welcomed the impact.

He believes that the cost that should be transferred to customers should be transferred, and Mic should have the courage to raise prices. "If foreigners don't accept it, let them leave the Chinese market."

His current company is a local company, but it is already the world's fifth largest sports shoes trader. He has its own production line in Quanzhou, Fujian Province. This year, the export price has increased by more than 20%. Now the orders are too busy to do, so the factory leader has to come to Dongguan to recruit workers.

Fang Zhigang's only worry is that the cost rises too fast, which may make the general healthy enterprises unable to digest. Only the really strong enterprises can pass the test.

In Dongguan, another Taiwanese, Mr. Ye, holds the same view. He was the director of a large shoe factory in Taiwan, and he was also "only a shoe maker in my life". Ye believes that the current cost rise in mainland China is even more severe than that in Taiwan in those years. "Such a variety of cost increases have never been seen."

Forty years ago, the Japanese handed over the shoemaking industry to the Taiwanese. Twenty years ago, Taiwan's shoe industry as a whole shifted to the mainland. "In another decade, the Taiwanese will hand over the sticks to the mainland." Now, it's hard to see Taiwanese in their 30s in the shoe industry.

The biggest regret of Taiwan's shoe industry is that it only has processing and no brand. It's not that we haven't tried the brand, but "our generation grew up with endorsement, without imagination, and the market is small, and the Taiwan government does not support it.".

Mr. Ye believes that the mainland people may make up for this regret. "The mainland itself is a big market, and now the growing generation is very young and less constrained than we are. If the government supports it, we can have our own big brands."

As for the current level, he is worried that the stalemate period of price game with foreign buyers will be too long, "it is better not to let others give in and pour too much first."

Shoe making is a labor-intensive industry, which has been hit the most by the rising cost. Obviously, the price game is tilting in favor of manufacturers - according to customs statistics, the average unit price of shoes exported from Dongguan increased by 27.3% in the first five months of this year.

The rumor of a large number of enterprises in Dongguan went bankrupt last year and was widely spread. According to the interviewed Dongguan government officials, there are some enterprises that have closed down, but it is far from tens of thousands of them. Most of them are "weak" small and medium-sized enterprises. There are few accidents in large-scale enterprises, and problems in the whole industry have not yet occurred.

Officials said that their key word now is not "survival", but "promotion". They are more concerned about how to help the surviving enterprises improve their technology content and brand value, so as to transfer more production oriented design links to Dongguan and turn Dongguan into a high-quality global manufacturing base.

Never underestimate the strength of made in China

Now, our eyes turn to Taizhou, Zhejiang Province, thousands of miles away.

Taizhou entrepreneurs have the best class. The ups and downs of enterprises around them are the real version of MBA courses almost every day. Everyone is seriously discussing business, no matter what it is.

A PE (Private Equity Fund) manager who often came to Taizhou for research told reporters that we should never underestimate the strength of made in China. The shoe industry, textiles and toys in people's impression can't represent made in China. In the past, most of them made in China earned some processing fees (such enterprises are not a few). But in reality, the industry is upgrading and the boss's vision is widening. Good enterprises and industries are always emerging in an endless stream, bringing surprise and confidence to people.

The customer manager of Taizhou City Commercial Bank said that the bank's profit has been very good since this year. From the basic point of view, most enterprises can still maintain, and those enterprises who have lost the patience to do a product conscientiously and lonely are often lost. In the first two years, there were so many opportunities that it was difficult for many entrepreneurs to focus on a certain field and make outstanding achievements in their own field The results. "The collapse of an enterprise, like the collapse of buildings in an earthquake, is due to a variety of factors."

Zheng Jianping, director of the Taizhou Municipal Development and Reform Commission, said that in Taizhou, the technology intensive industries are very good, the capital intensive industries are not so good, and the labor-intensive industries are not so good.

Although the transformation and upgrading are not so simple, Taizhou is on this road. For example, handicrafts can be converted to Automobile decorative parts; the same is true of plastics. In the past, they used to make toothpaste washbasins, and there were such Taizhou products on the floor stalls, which spread all over the country, but now they have basically switched to making water pipes, plastic parts for automobiles and motorcycles. The same is true of higher-level medicine, which starts with chemical industry, then raw material medicine, and then the finished product medicine. As for "the manufacturing industry in the Midwest can only be transferred to the low end."

Zhang Ruimin, director of Taizhou Economic Commission, admitted that Taizhou enterprises have indeed encountered difficulties, which are manifested in the decline of growth rate, the decline of efficiency and the shrinkage of investment. "But I think the decline is reasonable and normal, and it is not normal if it doesn't slide down, which means that this place is living in a vacuum, or is making a fake."

But the viability of Taizhou enterprises is stronger than that of enterprises in other places. The sewing machine industry is the only one with problems. Due to the general recession in the textile and clothing industry, the sewing machine industry has shrunk as a whole.

Zhang Ruimin said that the capital chain problem of Feiyue company, which had been widely concerned before, was partly due to the excessive investment in R & D and the tight monetary situation.

The chips of electric sewing machines were originally imported from Japan, and the right to raise the price was in the hands of others. Sometimes, for the sake of chips, the whole sewing machine could not be assembled and produced. So they invested more than 200 million yuan in developing chips with the Chinese Academy of Sciences. To engage in R & D, banks can not afford loans, but can only use the liquidity when funds are loose. The two hundred million yuan invested there has not yet produced any benefits, but the tight money supply and tight capital chain.

In reality, it is obvious that those who really have the ability of technological innovation, which have already formed the market ability and have brands, can basically overcome the impact of rising costs. Enterprises with relatively high added value have a strong ability to raise prices. Now it is an opportunity for them.

Haizheng pharmaceutical is such an enterprise. For 52 years in a row, it has no record of loss and continued to grow, which is regarded as the pride of Taizhou.

In the 1970s, when it first set foot in the field of medicine, it opened the door for domestic enterprises to buy technology. It spent more than 90000 yuan to purchase a new drug achievement for production. Now, they are very firm in the early investment in product storage and development and new product development. "Now, our annual R & D investment accounts for 8% of our sales. Last year, we reached more than 9%, and the proportion in developed countries is not so high." Haizheng's management staff are very proud to sum up that Haizheng's experience is: when the storm comes, it depends on the temporary