Corporate Profits Are Hard To Pick Up, And Companies Are Facing Challenges Of Survival.

After sending away a client in Dubai, Wang Xin Hua was still uneasy about the communication effect in the past 3 hours.

The guest in a white robe ordered 500 lights, although Wang Xinhua was still very concerned about the value of only more than 10 thousand dollars.

"In the second half of the year, the growth rate of orders is certainly not so fast."

Wang Xin Hua is the export manager of a large auto parts enterprise in Zhejiang.

He predicted to reporters that after the blowout at the beginning of this year, the next order would be reduced month by month.

At the same time, "only 500 of the workers coming back from the Chinese new year returned more than 300 this year, so they had to raise their salaries to keep people. The cost of labor was 20% higher than that of last year."

Wang Xin Hua said helplessly.

foreign trade

Corporate profits are hard to pick up

With the introduction of semi annual reports in 2010, the economic operation data of China's two major foreign trade provinces, Guangdong and Zhejiang, have been released in the first half of the year.

Data show that Guangdong's foreign trade data is not very optimistic, although reversing the first half of 2009 exports negative growth, but its total import and export volume is only 6.4% higher than that in 2008.

The Zhejiang Provincial Bureau of statistics released the first half of the year's economic performance data show that Zhejiang's gross domestic product of 11900 billion yuan, an increase of about 13% over the same period of the year.

To a certain extent, the current situation of a large foreign trade reflects China's status as a world factory.

"It is felt that consumption in Europe is still relatively low, and it is not out of the shadow of the financial crisis."

Wang Wei, chairman of Hongkong cordis International Limited, who has just returned from Europe.

According to Wang Wei,

"Although orders are much better than last year, there may be downhill risks in the second half of the year."

Wang Xinhua said.

In fact, 5% of the orders in the first half of Wang Xinhua's business were all losses.

Customs statistics show that in the first half of this year, the total value of Guangdong's import and export trade was 345 billion 230 million US dollars, an increase of 33.9% over the same period last year, accounting for 25.5% of the total import and export value of the country, of which 195 billion 570 million US dollars were exported, an increase of 27.5%, and imports of US $149 billion 660 million, an increase of 43.3%.

But these data are based on a more sluggish first half of 2009, and if compared with 2008, the total import and export volume is only 6.4% higher.

Li Miaojuan, director of the Guangdong provincial development and Reform Commission, recently proposed that the export situation of Guangdong in the second half of the year is not optimistic, and export enterprises will face more difficulties.

It is understood that at present, most of the labor-intensive enterprises in Guangdong export profit margins are only 3%~5%.

"In fact, for export oriented enterprises, we are still in the process of economic recession."

Wang Wei said that even if the order volume can be restored to the level of 2008 in the second half of the year, the profit will not return to the level before the financial crisis even in the next 10 years.

Hong Qihui, general manager of Dongguan run Tian clothing company, agrees with this statement. He said that in terms of order volume, the second half of the year is expected to grow by 10% over the same period last year, but due to the low profit, the order is actually losing money.

"The profits of some enterprises in the industry dropped by 70% compared with 2007 and 2008."

Hong Qihui said.

"The first half of the year's foreign trade account is much higher than the same period, but the profit margin of orders is not high. Some orders companies are afraid to pick up, because there are too many uncertainties and great risks.

Zhou Dewen, President of Wenzhou SME Association, described many export enterprises in Wenzhou today.

Declining entrepreneurial confidence

The research results released by consulting firm AlixPartners recently showed that China's position as the world's lowest cost component manufacturer has been surpassed by India and Mexico during the global economic crisis last year.

The latest two quarter business climate index released by the Zhejiang survey team and the Zhejiang Statistical Bureau showed that the confidence index of entrepreneurs has dropped.

The survey of 1477 enterprises in the whole province showed that the entrepreneur confidence index in the two quarter was 133.4, down 4.9 points compared with the first quarter, which is the first fall after the five quarter continuous recovery.

According to the survey team, the confidence index of entrepreneurs in the next quarter may further decline to 129.8.

Li Jianhua, chief executive of the silk weaving company, revealed that the profit in the first half of the group doubled, but he said that the export situation of the whole textile industry in the second half of the year would be even more severe.

"The reason is that our cost has gone through the rise in labor force and raw material prices, and it is very difficult to digest. These two price pressures are very great."

Li Jianhua said.

These costs include labor costs, raw material costs, RMB appreciation costs, export tax rebates, etc., but when these factors superimpose, the pressure on enterprises is enormous.

In the first half of this year, the most unexpected cost of many bosses was the sudden increase in labor costs caused by the "Foxconn incident".

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Wang Wei said that, unexpectedly, labor costs rose by 20% to 30% this year, which is much higher than we expected at the beginning of this year. This year's labor cost and labor supply will be stable. But after the "Foxconn incident", a series of chain reactions were generated, which had a great impact on enterprises.

In addition to labor costs, other statistics show that raw material costs increased by about 20% to 30% in the first half of the year, and the total appreciation of the renminbi has risen by about 5%.

It is estimated that if the renminbi appreciates 5%, the export losses of Guangdong's export enterprises will exceed RMB 30 billion yuan.

Hong Qihui said that in July alone, the yuan appreciated by 0.6%, and expected to rise by about 3% in the second half of this year, and labor costs soared nearly 30% in the first half of the year. "I estimate that in the second half of June to 2011 June, a number of enterprises will fail because of their failure to support them."