Is The Transformation And Upgrading Of Textile And Garment Industry A Way Out?

In the current domestic economic field, "transformation and upgrading" has become a fashionable slogan. As a long tail of the industry, small and medium-sized enterprises, "transformation and upgrading" has become the main way out, so that on one occasion, an enterprise manager asked the author's question: "where should the transformation and upgrading of small and medium enterprises go?"

It must be admitted that the author was asked dumb by this question. What is the answer? The key is if SMEs are called sunrise industries in some areas, can SMEs have the ability to achieve them? And if many enterprises turn to this field, will they become overcapacity red sea again? For example, in the field of solar power generation, is that so?

In fact, as a long-term industry observer, I have never thought that transformation and upgrading are absolutely not the same thing. Transformation is to abandon the industry currently engaged and move forward in another area. Upgrading is to create unique competitive advantages in the industry, consolidate its industrial status and achieve long-term survival.

The reason why "transformation and upgrading" has been put together as a slogan is probably because of the existence anxiety of SMEs. Casually speaking of several industries, there are thirteen thousand enterprises in the liquor industry in China, eleven thousand enterprises in the feed industry, three thousand enterprises in the communications industry, the oldest demand, the lowest threshold in the clothing industry, and five enterprises on the scale. A large number of peers gather together, and inevitably there is anxiety about survival. Collective bargaining and massive upstream demand increase the price of raw materials, making SMEs, as the long tail of the industry, do not know what will happen tomorrow. Just like being tied to a car, it is clear that this car is going to the wall, but no one can get down. What can we do? A simple way to solve this anxiety is to give a slogan, so "transformation and upgrading" should happen.

Why are there so many small and medium-sized enterprises in all walks of life in China? This is related to the history of reform and opening up. In general, we must admit that many industries in China are history of "imitation". Some of the so-called advantage of late development is to introduce foreign technology into products on the basis of not respecting intellectual property rights. On the premise of such industry, you imitate me, and we all use the remains of the starting point of reform and opening up - low wages and a large number of cheap assets, including inadequate land and factory buildings, and a part of the equipment of state-owned enterprises to form products, so as to reduce costs on the basis of scale and lay a solid foundation for propaganda. In this process, enterprises have grasped a lot of opportunities to make bigger ones and form their own advantages. Most of the enterprises stay in simple duplication. In the increasingly abundant supply, the large number of suppliers of enterprises have become problems.

Difficult to break the strange circle

In theory, the fundamental solution to this situation is elimination. That is to say, when it is time to decide whether to win or lose, enterprises that fail in industrial competition should now close down and go bankrupt. In the aftermath of overcapacity pressure, Chinese manufacturing is likely to become China's creation. The existence of large quantities of low quality and low price products is unfavorable to the competition of the domestic market economy. In the apparel industry, managers have said such a case. On the export side, textile and clothing are the dominant industries in traditional China. But because of the existence of a large number of small businesses, the price of buyers has become endless. At the Canton Fair, buyers turned to small businesses and asked for a price to negotiate with the dominant companies. It is clear that the dominant companies do not do what the purchasers bid, and buyers have a large selection of objects as long as they slightly lower the quality requirements. This is the biggest cycle of the domestic economy.

The main character to maintain this strange circle is the local government. The local government's fanatical pursuit of GDP is hampering the elimination, or the impulse of local government is hindering the evolution of the industry. On the one hand, the number of officials is promoted, and the promotion of officials is highly related to the local economy. On the one hand, the huge expenditure in the government system, the rigid head fee and the flexible performance project expenditure all push the government to need more enterprises and better operational efficiency, because this means more taxes. Therefore, as long as the domestic small and medium-sized enterprises are on the scale (the scale is also getting lower and lower), it is very difficult to die according to the natural law. Because the government will have various kinds of support.

One day does not go out of this strange circle, the domestic economy will not enter a virtuous circle one day. The continued application of the advantage of backwardness will become a backwardness.

China's industry

At this historic moment, human instinct is to look back and see if there are precedents. In this regard, Japan and Korea, which also use the advantage of backwardness as China's starting point, have gone out of two different paths. Japanese road is an industrial management revolution. With meticulous management, Japan has gone out of a new path in industry. Although we always have complex feelings about Japan, we have to admit that Japan's fine management helps Japanese products become winners in overseas markets. Unlike Chinese products, Japanese products do not win at a low price but win by quality.

If we look at the ROK, what is the overall choice of the industry after the same catch up? From the path of South Korea, there is a large number of cases of collusion between government and business in the path of large-scale industrial enterprises. Political scandals show that the competitive advantage of big enterprises is to obtain government resources individually. In addition to causing a series of political scandals and successive government downturns, this path ends with continuous business failures. The bankruptcy of large enterprises means a great deal of waste of social resources, and the Korean path ends with the great waste of social resources.

At present, the domestic industry and commerce industry is in the process of choosing the path to Japan and Korea. In the fierce competition of almost zero profits, quite a number of well chosen businesses have chosen to join hands with the government to get individual support to expand themselves. Choosing this easy path can be achieved by a large number of loan support, preferential tax rates and higher media exposure, but the general rules of society are disrupted. The domestic government has always been the most powerful participant in economic activities, and has a large number of social resources in its hands. It is easy to build up a group of so-called star enterprises. But usually, there will be no good end to the supported enterprises. Under the strong government support, the industry loses the resource constraint control and the prudent mindset under normal circumstances. Bankruptcy of the last large-scale enterprises often occurs. At the same time, the government's support as a public resource will be questioned about its legitimacy.

Companies that choose more difficult roads are more or less like Japanese companies choosing management revolution to work hard in the depths of industry, but the road is even more difficult. What can be seen now is that a group of enterprises such as COFCO, orient hope, Vanke Group and so on have chosen the way of competition in the so-called industrial chain. Their common path is to open up the industrial chain and lay their own businesses on the whole industry chain. With low labor elements and more stringent quality control, we can win the brand appearance in the long run to avoid the more and more frequent economic fluctuations in the globalized environment, and to support the application of science and technology in the enterprise with higher profit levels and the freedom of the whole industry chain.

Obviously, it can be seen that the latter road is a Chinese enterprise road that can obviously go through the road. After absorbing the essence of industrial development in various countries, the development of China's industrial and commercial development beyond the border has reached a crossroads, or there has been a breakthrough of its own, which has made a contribution to the development of the world economy, or has fallen down in the face of brutal competition, and there has been a great regression in domestic economy.

In the usual sense, the economic crisis is a liquidation of the accumulated capacity over a long period of time. Next we can see that many small and medium-sized enterprises have been eliminated. Unlike domestic media complaints about "retreating", we believe that this is a normal result of economic activities. The so-called transformation and upgrading is not a way out for most enterprises. Compared to large enterprises alone to open up the industrial chain, the formation of industrial chain alliance among small and medium enterprises is a possible path. In this regard, private enterprises in Zhejiang may have found a better way for a large number of small and medium-sized enterprises in China.

Zhejiang's economy has never been eye catching. Zhong Pengrong, a famous domestic economist, compared the small and medium-sized enterprises in this area to "puppy economy". There is also a slight disregard for the vitality in a word. But surprisingly, the puppies are now living very well. In the economic fluctuations, puppies do not seem to be afraid of natural disasters but grow healthier.

In fact, generally speaking, Zhejiang is not exactly the exact economy of the puppy economy. The industrial cluster formed by a small and medium-sized enterprise community in a town or a rural area is actually a natural ecosystem formed by the domestic economy under the premise of relatively high tax system and industry lagging behind the West. The inherent mechanism of this natural ecology is that due to the similar physical distance, the finer division of labor in the final product, and the more intense internal competition, the survival ability of the enterprises guided by survival will be stronger. Thus, the products formed by the enterprises cluster are more flexible in price because of their stronger cost advantages, which makes these clusters become the objects of immortality.

It is undeniable that the lack of respect for intellectual property rights and the avoidance of suspicion to a considerable extent are a core issue in the development of SMEs in Zhejiang. However, from the perspective of competition, the dominant position of industrial clusters is not only in these two aspects, but in the reality of a large number of small and medium-sized enterprises in China. To maintain their future living space, the internal mechanism of Zhejiang's economic and industrial clusters provides at least one possible reason.