Where Is The "Seven Inch" Of Chinese Shoe Enterprises?

The pricing power means that the company has the initiative to make the price of its products. If the price is changed, the demand will not be negatively affected. Having pricing power, in fact, they also have the right to allocate resources and control the profit of the core indicators of the operation of enterprises. Chinese enterprises lose their pricing power, saying that white spots lose their ability to control profits. The reasons for Chinese enterprises to lose their pricing power are manifold, such as the absence of China's industry management and the low concentration of industries, resulting in disorderly competition. For example, China's futures market started late and its development is not yet mature. For example, the monopoly of Chinese enterprises is not monopolized, and monopoly should be monopolized. But in my view, the most important point is that Chinese enterprises can not occupy the "seven inch" position in the global industrial chain until today.

"The pricing power of our country in the international trading system has almost completely collapsed." A few days ago, Yao Jian, a spokesman for the Ministry of Commerce, spoke frankly in public. The Ministry of commerce is the Department in charge of import and export trade. The spokesman made such a helpless conclusion on behalf of the officials, making every Chinese feel a bit cold.

The cold of heart is cold, but this kind of judgement is a real testimony to China's economic strength at the moment. Although China's GDP will overtake Japan as the world's second largest player this year, though China's export volume last year, Germany has become the world's top exporters. But under such a false aura, China actually has not received much real interest. Even Bo Xilai, who served as Minister of Commerce in previous years, has no choice but to admit that China needs 800 million shirts to exchange for an Airbus A380. This is only a comparison of the operating income. If we want to calculate the profit, it is estimated that 800 million will be less.

Because of the lack of pricing power, all kinds of industries in China are doing live Lei Feng, using their losses and small profits to exchange for huge profits from overseas enterprises. Iron ore is a typical example in this respect, especially on the import of scarce resources. Statistics show that in 2009, 71 of the key large and medium-sized steel enterprises accounted for 80% of the total output of the country last year, steel output increased by about 10%, but profits decreased by 31.43% compared with the same period last year, with an average sales profit margin of only 2.46%. In the world shoe industry, there is such a saying: 80% of the world shoe orders are in the hands of Chinese, and 60% of the world's finished shoes are made by Chinese factories. China is also known as the world's largest producer of shoes, the first consumer country and the first export power.

However, such titles are no longer giving people much glory, because the spectacular scenery and prosperity have been increasingly unable to cover the dull pain of China's manufacturing -- low end products, small profits, inferior position in the global value chain division of labor, no pricing power, vicious competition, and serious pollution caused by extensive overproduction.

In the theory of international trade, whether Adams's absolute superiority theory or Ricardo's comparative advantage theory, and Samuelson's Equalization Theorem of factor prices, will emphasize the theory of superiority. With the deepening of globalization, the current international trade is actually carried out around the industrial chain. In the industry chain, whoever occupies the "seven inch" position will have the advantage, and whoever will grasp the pricing power of the industrial chain. At present, what is the "seven inch" position in international trade, that is, core technology, rule making ability, scarce resources, brand and so on, while China's industries rarely occupy the "seven inch" position in international trade. Most of China's industries are in the middle of the famous "smile curve". It is difficult to grasp the two ends of the "smile curve" and will inevitably lose their pricing power.

As a labor-intensive industry, shoemaking industry is like "migratory birds". Its development and transfer are affected and restricted by many factors such as land resources, labor cost, raw material supply, environmental protection and sales market. Because of this, the focus of the global footwear industry is constantly shifting along with these factors: early in Italy, Spain, Portugal and other countries; in the 60s and 70s of last century, in Japan, Taiwan, Korea, Hongkong and other places, the 80 generation of the last century and the beginning of 90s moved to the coastal areas of the Chinese mainland until today.
With cheap land and labor costs, abundant industrial resources and perfect investment environment, by 1996, China has become the main exporter of footwear in the world, and has shown the industrial cluster development. In general, there are four major industrial clusters:

The first is the Guangdong footwear base, represented by Guangzhou, Dongguan, Shenzhen and Huidong, which mainly produces high and medium class shoes. The two is the Zhejiang footwear industry base represented by Wenzhou, Taizhou, Wenling and other places, mainly in the production of medium and low grade shoes; the three is the western footwear industry base represented by Chengdu and Chongqing, mainly producing women's shoes; four is the production base of shoes and shoes, represented by "Wei,", "Shi Shi", "Pu Tian" and other places, mainly producing sports shoes.

In the following 10 years, the development of China's shoemaking industry is progressed by leaps and bounds. Every year, the development of China's footwear industry is growing by 10%~20%. According to statistics, the annual output of Chinese shoes exceeds 10 billion pairs in the world's annual output of 15 billion pairs of shoes. Among them, in 2008, exports amounted to 8 billion 120 million pairs, amounting to $28 billion 800 million, domestic consumption reached about 2000000000 pairs, and footwear retail sales amounted to 300 billion yuan. As officials of the United Nations Industrial Division say, for a long time, it is difficult to find a better country for shoes development than China.

Now, however, behind this prosperity is hidden crisis. The crisis had alarmed three years ago.

In October 24, 2007, like Yuyuan, Huajian and Xing Heng, Chang Deng footwear industry, a symbol enterprise of Dongguan footwear industry, suddenly changed its job, and ended its course in the footwear industry at a cost of more than 4000 yuan. This scene took place two months before the real implementation of the new labor contract law 06 days.

In September of next year, the financial crisis triggered by the subprime mortgage crisis began to sweep across the globe. At this point, China, known as the "world factory", has obviously felt chill. The shoe-making enterprises dominated by low-cost production are in a panic.

Li Peng, secretary-general of the Asian Footwear Association, said in an interview that the competition pressure faced by Guangdong shoe enterprises was at least 10 times that of 90s.

That year, "thousands of shoe enterprises in Dongguan went bankrupt" and "2/3 of Wenzhou's enterprises became the missing persons of shoes capital" and so on. You know, there are thousands of shoe leather enterprises in these places, and hundreds of thousands of workers are producing shoes here and there.

On the issue of China's footwear industry, economist Ai Feng concluded: first, the production volume is large, but the product grade is low, the technology content is low, the added value is low, and the export can only be sold at a low price. The two is heavy manufacturing, but the R & D capability is low. The three is strong production, but poor marketing. The whole industry lacks unified coordination, and the export market is too centralized. In order to compete for export market, local enterprises are competing against each other to reduce prices. The four is heavy products, but brand building is weak. Most enterprises are very weak in brand awareness. Some enterprises want to brand but lack strength. Some enterprises have strength, but they are reluctant to invest more in their brand building.

In the era of heavy and far weight, China's economic development model of weight and weight, the trade mode of losing pricing power, and then going on is a typical appearance and scenery. So this pattern must be changed. But how can we change the pricing power? Yao Jian issued a prescription on behalf of the Ministry of Commerce, such as the effective use of the anti-monopoly law and the WTO rules, the use of China's big market position, the adoption of various financial means, the establishment of a futures market and so on to enhance the impact on prices, etc., to reduce dependence on the international market, to diversify the import channels, to strengthen industry integration, to improve the concentration of industries, to transform the mode of economic growth, and to enhance the competitiveness of products.

But these methods have long been cliches, and countless facts have shown cruelly that China is not getting closer and closer to the price right now, but is getting farther and farther away.

For example, China's steel industry last year, China's Rio Tinto's Hu Shi Tai sentenced ten years, the action can not be said, but still can not help this year's iron ore prices continue to soar. On the one hand, Rio Tinto has "seven inches", and on the one hand, China's iron and steel industry continues to expand significantly, and a country produces 50% of the world's steel, resulting in a 3.2% rise in energy consumption in the first quarter of this year, which will directly crush the energy consumption target of the Chinese government's ambitious 11th Five-Year plan. Under this background, a fool will know that he will take advantage of the fire to deprive Chinese enterprises of the right to speak and squeeze the profits of China's iron and steel enterprises.
As a matter of fact, these measures for Chinese shoe enterprises to get pricing power need time, and they can not be achieved overnight.