Chinese Shoe Industry: Variations In Banpo

Since the second half of last year, the whole Chinese manufacturing industry has gone through a major exam.

There are some enterprises that are closed, but far from thousands of them. The enterprises on the scale are very few. Most of them are small and medium-sized enterprises with neither technical strength nor capital strength.

If this exam is over, MadeinChina will be synonymous with quality in the future.

But now, most Chinese companies are still struggling on the half hillside.

Various difficulties and hardships

A few kilometres of narrow hills and hills, more than 3000 shoemaking or shoe material enterprises are distributed in different houses or factories. These buildings look like various proportions of cement blocks, cluttered on winding roads, surrounded by green fields, and more distant, rolling hills.

The first time I came to Jilong town was hard to shake.

It belongs to Huizhou, Guangdong. It was a village town 20 years ago, but now it is probably the highest density shoe factory in the world.

There are dozens of shoe factories in almost every building.

Although the brand of Chinese women's shoes production has been obtained two years ago, most of the shoe factories here can only be called family workshops, and several shoe machines and twenty or thirty workers are factories.

The biggest enterprise here is only medium size in Dongguan.

At the end of March, when a journalist came to visit, several leading figures from the local shoe industry gathered together.

Hours of chat, the expression of distress, helplessness and wry smile alternated, and the smile was hard to find.

"Now we are faced with wind, frost, rain and snow, that is, there is no sunshine."

The shoe factory owners who speak are counting fingers, raw materials prices rise, RMB appreciation, export tax rebate reduction, and labor contract law.

The people nearby remind that electricity prices have gone up and jobs are short.

"Wind, frost, rain and snow" add up, the cost rises almost 30%, is profits several times, the price cannot raise again, "does not have the order, also takes the initiative some, the hand has the order, how many losses how many."

The factory can not be built, or the workers are gone, with the right order can not be done.

The small workshops of several machines are all right. They can be closed at any time.

Even so, there is still trouble -- the workers are not enough.

There are fewer than 50 thousand local people in Jilong Town, but 150 thousand of migrant workers produce 600 million pairs of women's shoes and 80% exports each year.

The monthly salary has reached more than 1600 yuan, which is 200-300 yuan higher than that of the "Pearl River Delta region", but it is because of the rural areas, and the shortage of workers began in the first two years.

The trouble of rising costs is even less than that of lack of jobs.

People are missing everywhere.

A boss here has just put into operation the biggest shoe factory in the town last year, and now it is under 20%. "As long as there are workers, I am sure I can do it."

The shoe manufacturers in the town set up a group last year to recruit people from several provinces in the mainland and resentfully return. "The government of the mainland is very polite, but it is called labor service, and actually it wants to inviting business."

Many small factories are closed now. What they see is "darkness, no light."

How to live?

Migration?

How to move?

We are all farmers in Jilong, and dozens of people and dozens of people use pincers to make shoes and come step by step.

They are all in factories and equipment, and now they can neither sell nor sell them.

You can't walk. "

Upgrade?

Most of the Jilong shoe factories are still in the process of upgrading from workshop to assembly line.

Built a pipeline factory, "can only talk about survival", with what upgrade?

Pricing power?

"You tell me, how do we small grassroots enterprises get pricing power?

At the end of last year, Long Yongtu said in Dongguan that I could hardly hear the Chinese shoemaking enterprises get the pricing power.

He will try it himself.

The bigger trouble is ahead.

After the implementation of the labor contract law, the dispute between the workers and the boss is sure to be constant. Now many workers are "I tell you".

There is really no good news.

Is this miracle town going down from here?

Facing several dignified grassroot bosses, reporters could not bear to ask this question.

But a boss's murmur is still reassurance. "How did we get there?"

Hope, always belongs to self rescuer.

The final exam came.

More than 100 kilometers away from Shenzhen, the barometric pressure is far less than that of Jilong.

"Now MIC (made in China) is facing a big exam, not a general entrance examination, but a test of high school."

Fang Rong, deputy general manager of Shenzhen Rong company, has his own judgement on the situation in China.

Fang came to Dongguan in 1986 and managed a Taiwanese shoe factory, the first Taiwanese to mainland China.

He made only one industry in his life - shoemaking.

When he first came to mainland China, it was precisely because of the overall rise in costs that Taiwan's footwear industry moved out as a whole.

"Compared with Taiwan 20 years ago, now I see a more magnanimous road to the cost of mainland China."

He believes that this cost shock will bring opportunities for industry consolidation. It is a good thing. There have been too many small businesses fighting price wars and messing up the market. He used "Xiao Xiao" to describe them. Now, the truly capable enterprises in the industry will be able to play the best on the right stage.

"The industry will be healthier and MIC will play even louder.

Once upon a time, MIC is the pronoun of lower quality products. If this exam is over, MIC will be the pronoun of international quality.

In this sense, he welcomed the impact, he said.

He believes that the cost of pferring to customers will shift. MIC should be willing to raise prices. "If foreigners do not accept them, let them leave the Chinese market."

He is now a local company, but he is already the fifth largest sports shoe trader in the world. He has his own production line in Quanzhou, Fujian. The export price has increased by more than 20% this year. Now the order is too busy to do so. The factory leader has to work in Dongguan.

Fang's only concern is that the cost is rising too fast, which may make the general healthy enterprises unable to digest. Only a truly strong enterprise can go through the border.

Another Taiwanese man in Dongguan also holds the same view.

He was in charge of a big shoe factory in Taiwan, and in the same life, he only made a shoe making business.

Ye believes that the mainland's current cost increase is even more intense than that of Taiwan. "So many kinds of costs have gone up at the same time, never seen."

40 years ago, the Japanese handed the footwear industry to the Taiwanese. 20 years ago, the footwear industry in Taiwan turned to the mainland as a whole. "In another ten years, Taiwanese will hand over the rods to the mainland people."

Nowadays, it is difficult for the footwear industry to see Taiwanese around 30 years old.

The biggest regret of Taiwan shoe makers is only processing, no brand.

It is not that we have never tried the brand, but "our generation is endorsed and grown up, without imagination, and the market is small, and the Taiwan government does not support it".

Mr Yip believes that the mainland people may make up for this regret. "The mainland is a big market, and the younger generation is very young, less bound than ours. If the government supports it, it will have its own big brand."

As for the current situation, he is worried that the price fixing game with foreign buyers will be too long.

Shoemaking is a labor-intensive industry, which is most impacted by this cost increase.

Obviously, the price game is tilting towards the balance which is conducive to the manufacturers. According to customs statistics, the average price of shoes exported to Dongguan increased by 27.3% in May this year.

Rumors of a large number of bankruptcies in Dongguan last year have been widely disseminated.

Officials interviewed by the Dongguan government believe that some enterprises are closed, but far from thousands of them, most of them are "physically weak" SMEs. The number of enterprises on the scale is very small, and the problem of the whole industry has not yet appeared.

Officials said that their key words are not "survival" but "promotion". What concerns more is not how to save physically weak enterprises, but how to help the surviving enterprises to improve their technological content and brand value, so that the production oriented design links can be more pferred to Dongguan, and Dongguan can become a high-quality global manufacturing base.

Never underestimate the strength of China's manufacturing.

Now, we turn to Taizhou, Zhejiang, thousands of miles away.

Taizhou entrepreneurs have the best classroom, the surrounding businesses are ups and downs, almost every day is a realistic version of the MBA curriculum, everyone is seriously discussing business, no matter what the business is.

PE, a private equity fund manager who has often come to Taizhou, told reporters that we must not underestimate the strength of China's manufacturing.

People's shoes, textiles and toys are not representative of China's manufacturing. In the past, most of the Chinese made were to earn processing fees (such enterprises are not very few). But in reality, the industry is upgrading, bosses' horizons are widened, and good businesses and industries are emerging one after another, bringing surprises and confidence to people.

The customer manager of Taizhou commercial bank said that the profits of banks this year are still very good. From a fundamental point of view, most of the enterprises can still maintain, and those who have lost their patience and conscientiously do a good job in the first two years. There are so many opportunities that many entrepreneurs can hardly concentrate on one field and make outstanding achievements in their own fields.

"The collapse of an enterprise is like the collapse of a building in an earthquake. It 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 at present, while capital intensive ones are generally labor-intensive ones.

Although pformation and upgrading are not so simple, Taizhou is on this road.

For example, making handicrafts can be turned into Automobile decorative parts; plastics also do, toothpaste making basins, and stalls are all filled with such goods in Taizhou.

The more advanced medicine is the same, starting from the chemical industry, then the raw material, then the finished product.

"As for the low-end manufacturing industry, it can only be pferred to the central and western regions."

Zhang Ruimin, director of the Taizhou economic and Trade Commission, admitted that Taizhou enterprises did have difficulties, showing a decline in growth rate, a decline in efficiency and a shrinking investment.

"But I think the slide is reasonable and normal. It's not normal to not slide down. It means that this place is in a vacuum, or it's cheating."

But the viability of Taizhou enterprises is stronger than that of other enterprises.

The whole problem is the sewing machine industry.

As the textile and garment industry is generally depressed, the sewing machine industry has experienced an overall shrinkage.

Zhang Ruimin said that the problem of the company's capital chain that had been widely watched was partly due to the overinvestment in research and development and the tightening of money.

The chip of the electric sewing machine was imported from Japan, and the right to raise the price was in the hands of others. Sometimes the whole sewing machine could not be assembled for the chip.

So they invested more than 200000000 yuan to cooperate with the Chinese Academy of Sciences in developing chips.

In research and development, banks can not borrow money and can only use the liquidity when capital is loose.

The two hundred million investment there has not yet produced any benefits. When the money is tight, the capital chain is tight.

In reality, it can be seen clearly that the ability of technological innovation and the ability of technological innovation have already formed the market capacity. The brand can basically overcome the effect of rising costs.

Enterprises with higher added value have stronger ability to raise prices, and now it is an opportunity for them.

Hai Zheng pharmaceutical is such an enterprise.

Its 52 consecutive years of no loss record and sustained growth are regarded as the pride of Taizhou.

In 1970s, when it first stepped into the field of medicine, it opened the way for domestic enterprises to buy technology at home. It spent more than 90 thousand yuan on the purchase of a new drug product for production.

Now, they are very firm in advance in product storage development and new product development.

"Now our annual R & D investment accounts for 8% of sales. Last year, we reached 9%, and developed countries do not have such a high proportion."

The manager of Hai Zheng is proud to conclude that the experience of Hai Zheng is: the wind and waves are coming.