Leather Manufacturing In China: Real Pformation Takes 15-20 Years

Hulun Buir post manufacturing industry's "post collapse tide": starving to death and supporting small businesses?

Today we continue our series of reports, "the Chinese economy in their eyes".

Our topic today is the most proud gold medal in China's economy: made in China.

Chinese manufacturing enterprises are facing great pressure to survive.

Once, cheap labor costs, preferential policies and strong processing capabilities made China become the backbone of the world's manufacturing industry. However, in recent years, China's manufacturing industry has suffered many setbacks.

Quality problems, frequent recall

Deng Jinkun is the general manager of Guangdong Dongguan original pleasure toy company. As an early toy factory in Dongguan, his company once owned more than 60 products and sold well in Denmark, the United States, Russia and other countries. However, this is the company that he has worked hard for more than 20 years, but he failed a few months ago because of the difficulty in capital turnover.

Deng Jinkun, general manager of Dongguan original pleasure toy company: "then there was no way to do it. I couldn't do it. There was no money, nothing. Later, my sons and daughters said," don't do it. Forget it. That's all. I even sold the real estate. "

The direct reason for the bankruptcy of the fun toy company is the recall of the world's largest toy dealer, the US Mattel Inc. The recall caused by the falling of some toy magnets and the excessive lead content of the coatings involved 21 million products. Hundreds of toy enterprises were affected by the wave. Guangdong is the largest toy production base in the world. Dongguan's toy output accounts for about 60% of the whole Guangdong, but the current situation is that some enterprises have been unable to operate because of the sharp reduction in orders and the breakup of capital chain.

Xiao Senlin, chairman of Dongguan hid toys factory, said: "just last week, at least 5 large toy enterprises in Dongguan were closing down."

After the recall, the Chinese government has cleaned up all the toy export enterprises in Guangdong, and hundreds of enterprises whose products have hidden dangers or contain hazardous substances or quality are suspended and even cancelled their production licenses. This event has set a wake-up call for all toy manufacturers in China who are pursuing low prices.

Costs rise, business is tough.

Not only is the toy manufacturing industry, many are in different industries but belong to labor-intensive and low value added manufacturing enterprises. The living conditions are also worrying. Wenzhou's water head town is known as "China skin capital". There are only more than 500 leather making enterprises in the whole town, and the annual output value of leather is about 3000000000 Yuan. Leather products play an important role in the economic development of the whole water head town. However, in the past two years, many tanning enterprises have abandoned their old businesses.

Wenzhou Baoli leather factory staff on duty: "the boss is in Shanxi coal mine, not here, the boss went to Shanxi."

The management of Feng Li leather factory in Shui tou told reporters that the price of raw materials they had bought this year rose from thirty or forty yuan to eighty yuan per piece, double the number of last year, and the wages of workers increased by nearly 30%, all of which made the factory cost rise rapidly and profits dropped sharply.

Huang Kaifeng, general manager of Wenzhou Pingyang Feng Li Leather Co., Ltd.: "it's good to earn a quarter of a piece of leather like we made a leather skin. We only earn one or two yuan for a sheet of leather and one or two yuan for the cost of 100 yuan."

In fact, not only is tanning enterprises, but with the rising cost of raw materials and human resources, the manufacturing industry in Wenzhou is undergoing an unprecedented test.

Zhou Dewen, President of Wenzhou SME Promotion Association, said: "twenty percent of enterprises are in a state of shutdown or semi shutdown."

Similarly, in the town of Daling mountain, Dongguan, Guangdong, which is known as "the first town of Chinese furniture export", most furniture export enterprises have been struggling because of the rising price of raw materials and the lowering of export tax rebates.

Zhu Fozhang, chairman of Yuanda furniture, "now there is a saying that the more we do, the more we lose."

US dollar depreciation and subprime mortgage crisis

Guangdong and Zhejiang are the most concentrated provinces in China's export enterprises. Their current situation reflects to a large extent the embarrassment faced by the entire Chinese manufacturing industry. In the Canton Fair known as "China's first time", we are able to experience the decline of Chinese made products.

Li Keguo, general manager of import and export trading company 12.86,0.44,3.54%, "like last year's Spring Festival fair, we had about $twenty million to sign the bill, so I reckon it might be one thousand to $4 million this year."

Over the years, Chinese manufacturers have been lowering their supply prices in accordance with the requirements of purchasers from various countries. They have almost fallen back to the bottom, especially in the foreign purchases caused by the appreciation of the renminbi, the depreciation of the US dollar and the subprime mortgage crisis in the United States. A large number of Chinese export enterprises are experiencing a collective setback. At the Canton Fair, only two textile yarns, weaving fabrics and products were sold, and the turnover decreased by 6% and 24.4% respectively compared with the previous Canton Fair.

Yang Wensun, chairman of Meyer group: "it has been several years continuously, and this annual exchange rate, tax rebate and bank interest rate increase, the cost of labor force may lose nearly twenty million yuan a year in our group."