PRD Shoe Enterprises "Kill" Into The Domestic Market

The July 12th Pearl River Delta, known as the "world factory", is now out of the "storm eye" of the financial crisis.

What worries the government officials and the industry is that the outbreak of the global financial crisis in 2008 caused a strong impulse to export to domestic sales in the PRD enterprises.

When the shadow of the financial crisis is gradually disappearing and enterprises are no longer worried about the problem of overproduction, is there still a market for "export to domestic sales"?

The reporter found the answer from the second "Guangdong foreign investment enterprise products" exposition (hereinafter referred to as the Expo).

Mentality: "domestic sales" is no longer an expedient measure.

Dongguan port Jay Limited is a Hong Kong footwear manufacturer. Almost all orders are derived from overseas markets, with an annual export volume of about $50 million.

Compared with most Pearl River Delta enterprises, Hong Kong Jie's impact on the financial crisis is not large.

"Enterprises are mainly engaged in the production of special work shoes, and the foreign market is relatively stable."

At the Expo site, Liao Yongjie, manager of marketing department of Hong Kong Jie, told reporters that during the most difficult period of financial crisis, overseas buyers had not placed orders in 3~6 months.

However, when the inventory of the buyers cleared, the amount of orders returned in the past year was restored, and so did the Hong Kong Jie.

At present, with the gradual warming of the global market, the Pearl River Delta enterprises' overseas orders have exceeded the same period before the crisis.

From 1 to May this year, the total value of Guangdong's foreign trade imports and exports increased by 34% over the same period last year.

Exports rose by 39.7% in May, the highest monthly increase since 2008.

Like most enterprises, the Jay of Hong Kong also ended the days of big orders.

"Although the overseas market of Hong Kong Jie is bright, it is necessary to do domestic sales."

Liao Yongjie's reply is quite firm, and his words represent the aspirations of most of the PRD enterprises.

Reporters in the interview found that the current appreciation of the renminbi and the pressure of wage increases forced enterprises to choose the way of domestic sales.

Among them, the appreciation of RMB makes the profit margins of export-oriented enterprises smaller and smaller.

"Products exported to overseas are usually settled in dollars, euros, etc.

Thanks to the appreciation of the renminbi, the company's revenue has shrunk dramatically.

Liao Yongjie said that at present, fierce competition in overseas exports, the company did not grasp the price of the right to speak, can only bear this negative.

The biggest difficulty for enterprises is the general increase of wages in the Pearl River Delta.

"The company used to give workers a monthly salary of around 1500 yuan.

After adjusting wages, workers can get 2000 yuan a month.

Liao Yongjie analyzed that labor costs alone accounted for about 30% of the company's production cost.

And the 20% to 30% wage increase makes the company somewhat unbearable.

"Only from the original single international market to the international and domestic two markets, can enterprises survive."

Liao Yongjie said.

Similar to the situation of Hong Kong's Jay, more and more PRD enterprises realize that selling domestic products is no longer an expedient measure to deal with the decline of orders, but an inevitable choice to win industrial competitiveness.

Difficulties: lack of channels, enterprises' domestic sales, "acclimatized"

Compared with the outbreak of the financial crisis, the Pearl River Delta enterprises' willingness to sell domestically is stronger and stronger.

However, after interviewed several enterprises, reporters found that in the face of the huge domestic market, enterprises are mostly in the awkward situation of "do not know where to start".

At present, lack of channels and lack of brands are the biggest short selling of domestic enterprises in the Pearl River Delta region.

"The cake in the domestic market is big and difficult."

At the Expo, Wang Desheng, deputy director of the Department of Commerce and service management of the Ministry of Commerce, said that the biggest difference between domestic and foreign sales is sales mode: after receiving overseas orders, enterprises only need to be responsible for production, loading goods onto containers, and trading mode is simple; and enterprises in the domestic market are not simple, they need to build their own channels or use other people's channels.

"Let's not see from abroad to the mainland, but the market is different. This is actually a pformation from industrial mode to business mode, and there is an infinite market risk."

One industry pointed out that 100 enterprises can make processing, and 100 may succeed, but only 100 of the 100 enterprises are successful in brand and retail.

As early as six or seven years ago, the Hong Kong Jie captured the huge business opportunities in the domestic market and began to enter the domestic market.

"Gross profit for export is only about 20%, while domestic sales are as high as 30% to 40%, which has an attractive appeal."

Liao Yongjie recalled that the company registered its domestic brand and set up stores in major cities such as Beijing and Shanghai.

Because he did not understand the domestic market, he did not escape defeat.

The company spent millions of dollars in the end, and ended up losing money.

"Now the company's domestic sales are less than 1% of the total output, with an average of only a few hundred orders per month."

Liao Yongjie said.

Next, Hong Jie intends to fight the domestic market again, and is now preparing for the domestic sales department.

At the same time, the company also began to participate in some domestic exhibitions, such as Expo, China labor insurance products exhibition.

But for the long-term plan, Liao Yongjie is still at a loss.

"The failure of previous years left a shadow on the company.

Companies do not dare to throw more money shop sales channels, and can only rely on existing sales relations to do it slowly.

Liao Yongjie has some helplessness, this method is rather stupid, but in order to reduce the risk, we have to do so.

The difficulties faced by small and medium-sized enterprises such as Kong Jie are very common in the Pearl River Delta enterprises.

"It is very difficult to open channels and make brands for domestic sales, but without going out this step, you will always be at a low level of competition and will pay a higher price.

If we have been in a low level of competition, there will be no hope of industrial upgrading.

Jiang Lin, director of Finance and taxation department of South of the Five Ridges college, Zhongshan University, said.

Breakout: tug "kill" into the domestic market

The Pearl River Delta business has entered the domestic market in a tortuous and arduous way.

If a company operates alone, it will surely be very thin.

Reporters found that more and more enterprises began to realize the power of Baotuan, and in order to break through the difficulties of channel and brand.

Dongguan is a famous shoe manufacturing center in the world. It is only a shoe industry. Houjie produces more than 1 billion 500 million pairs of shoes annually.

The Dongguan footwear brand alliance is launched by the world shoe industry headquarters base in Houjie. At present, there are more than 40 shoe enterprise alliance members.

"In order to compete for the domestic market, almost every shoe enterprise has registered more than one brand.

But the average age of the brand is only 1~2 years old. The shortest time of birth is only a few months, and the longest is only 9 years.

Wen Haibin, managing director of the world shoe base, told reporters.

Most shoe companies do not have high brand awareness, and their growth is faced with the problem of time lag.

If there is no protection in the fierce competition in the domestic market, it will soon die.

And business together, like a scattered finger together as a fist, more powerful.

The advantages of the regional brand alliance and more important is to attract the eyeballs of large domestic purchasers.

Wang Hui, deputy general manager of excellent footwear industry in Dongguan, is very optimistic about this: "before we wanted to enter a shopping mall, it was difficult to see the Department Manager of the shopping mall. The reason is that the strength of a single brand is too small.

Now that there is a brand alliance, the footwear industry in Dongguan has joined forces, and can even directly talk to the chairman of the mall.

Last year alone, the Dongguan footwear brand alliance won more than one hundred million yuan of orders.

Brand alliance also enables enterprises to have more voice in domestic sales and enhance their bargaining power with large buyers.

Wen Haibin, for example, said that the biggest headache for shoe manufacturers to switch to domestic sales is entry fees and shopping malls.

According to the industry's rules, shopping centers will pick up 28% to 35% points of sales.

And through the negotiation of the brand alliance, the discount point of the shopping mall can be reduced to about 22%, which is very important for the shoe enterprises.

In the economic map of Guangdong, there are more than 100 industrial clusters: appliances in Shunde, aluminum materials in the South China Sea, lights in ancient towns, wool in Dalang, clothes in Humen, underwear in Yanbu, etc.

The output of many products reaches 30% to 50% of the total volume of the country, and some products even reach 80% of the world's total.

At this point, it is undoubtedly the best path to open the domestic market with regional brands.

Foresight: "post factory" should also have "front shop".

"In the next 10 years, if there are 10 million migrant workers pforming into urban residents every year, there will be 100 cities with more than 100 thousand people.

If the consumption capacity of each peasant worker will be increased by 3.5 times, the cake in China's domestic demand market will increase by 3.5 times, which will support China's development in the next 30 years.

At the Expo, "foreign enterprises expand the domestic demand market Summit Forum", Zhang Yansheng, director of the Foreign Economic Research Institute of the national development and Reform Commission, said.

China's "domestic demand era" has arrived.

Whether the Pearl River Delta enterprises can break out of tight encirclement and rush into the domestic market has become a new topic for testing the government.

Last year, Guangdong issued a series of policies on promoting foreign investment and processing trade to expand domestic sales.

The pattern of over reliance on external demand has changed over the past year since the introduction of "combined boxing".

According to statistics, the total domestic sales of foreign-funded enterprises in Guangdong accounted for 32.7% of the total export volume of the province in 2009.

The dependence on foreign trade decreased by 22 percentage points in 2007 before the outbreak of the crisis.

And the newly closed Expo is even known as the "domestic version" Canton Fair, opening the door to the domestic market for enterprises, with turnover exceeding 50 billion yuan.

"The Expo is only four days away, and the amount of your order is bigger. The problem is also limited. After that, where does the enterprise go direct?"

The question of enterprises in the Pearl River Delta deserves our government's consideration on how to extend the function of the Expo.

Reporters found that the Pearl River Delta, which has been playing the role of "post factory", has been hoping to become a "front shop" to help tens of thousands of enterprises set foot on the road of domestic sales.

According to the insiders, most of the commodities in the Yiwu small commodity wholesale market come from the Pearl River Delta, the most important of which is Dongguan manufacturing.

Dongguan has the advantage of manufacturing and its location is even better. Why can't we build a big market to serve Dongguan?

In Dongguan, four new factory outlets and three small commodity markets will be launched, including the new Southern China MALL and the big wool weaving trade center, trying to dock with the Expo and extend it into a "never-ending" Expo.

It is worth noting that the government's guidance to the "front store" is indispensable, otherwise the blind layout and lack of planning will bring huge waste of resources.