Can Chinese Small Businesses Bear The Pressure Of "Raise Salary"?

In 2009, the Chinese economy completed the task of "ensuring eight" under very difficult conditions.

The Wall Street journal in August 2nd entitled "

China's wage surge and monetary policy have created waves in many textile and garment production factories in the eastern provinces.

In the other regions, small businesses that have developed quite successfully before will be challenged.

There are hundreds of small garment shops in Zhili, Zhejiang. It seems that every business is more or less involved.

Over the years, the wages of Chinese workers have been increasing. But because of the shrinking number of young workers in the family planning policy, the rebound in China's economy is facing labor shortage.

Large foreign companies have already felt the impact. Toyota Auto Body Co and Honda motor's local businesses in China have been hit by workers strike, and Hon Hai Precision Industry Co, the world's largest electronics producer, has promised to raise at least 30%.

However, it will undoubtedly be China's about 10000000 small business households, which will constitute 60% of China's economy and 80% of its jobs.

Many small light manufacturing enterprises constitute a highly divided "cluster", especially in the eastern coastal province of Zhejiang.

"We have to improve.

Zhang Xiaobo, an economist and research group at the International Food Policy Research Institute, who has an impact on rural development, said that these small businesses in China are labor-intensive.

The real question is whether they can survive in a new environment where labor shortages and labor costs rise.

This is an important period of pition.

Some clusters will survive, while others will collapse.

Zhang Xiaobo said that the combination of clusters helps Chinese entrepreneurs overcome all kinds of obstacles to running enterprises in the state dominated economy.

The start-up cost is low, because each enterprise can only specialize in a very narrow field.

In the case of production division by many enterprises, each enterprise can give customers credit opportunities, and they can also credit from suppliers, which relieves the burden of financing.

Buyers like clustering because they can find everything they need in one place.

Since the end of the last century, Zhili has been focusing on children's clothing production. A local factory found that children's clothing was more profitable than pillowcases, and people soon followed suit.

As weaving became famous, it attracted more clothing companies.

Nowadays, there are low houses everywhere in the weaving area, both home workshops in the alleys and larger factory areas.

Li Qiang started his children's clothing in his hometown of Inner Mongolia. He moved to weaving 11 years ago.

Because businessmen know of weaving, he can sell more clothes than in his hometown.

In addition, he said, the local government will help, and the people here are honest.

Now, Li Qiang says, what is hindering development is to find enough workers.

In the case of rising raw materials and labor costs and squeezing profit margins, he needs to increase sales to maintain profits.

However, Li Qiang can not find enough skilled workers, even though wages here are already 40% higher than those in other provinces.

In addition, it is also difficult to abandon the relationship network in the Zhili and move to a lower labor cost Province, which requires large investments.

In order to solve the problem of shortage of young workers, many factories in Zhili now employ more than 30 year old married couples.

Lin Yunjiang, general manager of Huzhou howdeli Garments Co. Ltd., said that almost all of his 240 workers were married couples.

He has pformed his staff housing from separate quarters to independent couples' apartments.

Other owners began to try to get rid of the low cost labor force by investing more capital equipment.

Six years ago, Best, who founded the Ningbo Textile Co., Ltd. with his sons, said that he invested about 20000000 yuan in the production of high quality cotton production equipment. At that time, most local clothing factories only invested less than 500 thousand yuan.

As a result, his factory now needs only 70 workers.

If more factory owners follow suit, they will need a better financing way, because China's banking system favours large state-owned enterprises.

Fortunately, the government has promised to improve the status quo and said that the current growth rate of small business loans in China is faster than that in large enterprises.