The Burden Of "Three Highs" Is Getting Heavier And Heavier Than &Nbsp; Ningbo'S Well-Known Enterprises Are Struggling To Survive.

Walk in New York, Tokyo, Milan, or Berlin.

This was once a "OEM" mode of production which was proud of "made in Ningbo", especially for the production of international brands.

Like other cities in China, which export processing trade as the backbone, Ningbo has a large export volume of clothing, but still OEM processing. The delivery value of its own brand exports accounts for only 1% of the export volume.

With the increase of raw material prices, the sharp increase in labor costs and the increasing pressure of RMB exchange rate changes, the era of low cost competition has gone for the most export enterprises in Ningbo, and the brand enterprises with lack of core technology and their own brands are beginning to face a series of survival crises.

Change or death is a problem that most Ningbo textile and garment enterprises have to think about.

The growth of the domestic market and the development of independent brands have become the direction for some Ningbo textile enterprises to seek breakthroughs.

The "three high" burden is more heavy than a year.

Since last September, the renminbi has maintained a strong appreciation against the US dollar.

According to the data, the average profit rate of China's textile and garment enterprises is 3%~5%, and some enterprises are even far below the profit margin of 3%. Once the RMB appreciation is around 3%, the profits of the textile and garment industry are almost completely eroded.

"At present, China's textile and garment enterprises are dominated by small and medium-sized enterprises. More than 95% of the enterprises are low-end OEM products, and the bargaining power with foreign manufacturers is very weak. The losses caused by exchange rate can not be digested by consultation with customers, improving supply chain management and so on, and the possibility of raising prices is almost zero.

If the RMB appreciation rate is too large, it will cause a serious blow to China's textile and clothing exports. "

Chief editor Wang Qian pointed out.

Data show that if the RMB appreciates 1%, the profit rate of the garment industry will decrease by 1%~4%, and nearly 20% of the enterprises will have no profit.

However, "this year, foreign trade enterprises no longer mention the issue of RMB appreciation."

Yu Lida, deputy general manager of YOUNGOR Sino Japan Textile printing and dyeing Co., Ltd. introduced that when the RMB exchange rate rose from 8.2 to 6.8, foreign trade enterprises had already suffered the biggest exchange rate pressure. "But once we enter the 6.8~6.5 area, we see only 0.3 points in the middle."

Beyond the exchange rate, it is difficult for enterprises to bear the fact that "the increase in raw materials doubled last year, and some even doubled 3 times; on the other hand, the average annual wage of factory workers increased by 30%."

Yu Li Da has given such a set of data.

"Compared with the price increase of raw materials and manpower costs, the problem of RMB appreciation is not so serious."

Attached to Ningbo Zhoushan port, Ningbo's textile and garment exports account for 1/5 of Ningbo's total exports.

Under the "three high" economy, the inevitable result of the sharp increase in costs is to raise the price of products.

Yu Li Da said that the rising cost is a problem facing the entire Chinese textile and garment enterprises, and the product price increase is also an inevitable measure for every enterprise to digest the cost, so now it often turns into a test to see whether the customer can afford to raise the price and pfer it.

"OEM" is fading away

If the price of a shirt is divided into 3 pieces, that is, the cost of raw materials plus labor cost plus product added value.

In Ningbo, you can find shirts of ten yuan and one shirt, and you can also find hundreds of Yuan shirts, all of them have a market.

All are shirts. The reason why the price gap is so large is mainly concentrated on the added value of the products.

Today, most enterprises in Ningbo are still producing more than ten yuan and one shirt. Although the export volume of Ningbo clothing industry is very large every year, OEM production is still the main form, and it concentrates on low-grade regular goods. The delivery value of independent brand export accounts for only 1% of the total export volume.

"10 years ago, the market competition is not fierce. As long as raw materials and labor are cheap, enterprises will make profits and survive."

Zhang Xiaofeng, President of Ningbo clothing association, pointed out that in the case of fierce competition, business will not consider the pros and cons of business mode, as long as it can make money.

In the last century, in the 80~90 era, large multinational corporations in foreign countries shifted the low-end processing links to the Yangtze River Delta and the Pearl River Delta region. The local enterprises in Ningbo carried out production through OEM orders from foreign companies, which eventually led to "Ningbo manufacturing".

While working for foreign brands, OEM has made "made in Ningbo" but has also brought a dull pain to producers.

"OEM mode is often used for intensive consumption and intensive use of resources. In the case of increasingly scarce resources, the survival and development of OEM enterprises lacking core technologies and independent brands have begun to face a series of serious crises."

Wang Ruoming, associate professor of business school, Zhejiang Textile and Fashion College, told reporters.

The biggest problem of OEM is that it looks red, but its earning power is not strong. This makes Ningbo's apparel industry at a disadvantage in the game with international brands.

Wang Ruoming pointed out that, on the one hand, the OEM of large international companies can introduce advanced international production technology and management experience to enterprises, but the short-term interests of OEM will affect the long-term development of independent brands.

The short-term benefits brought by many foreign trade orders make the international OEM "OEM" flourishing in the clothing industry of Ningbo, while cultivating its own brand requires a lot of capital and time to spend. OEM production has delayed the cultivation and growth of Ningbo's independent clothing brands to a certain extent.

"The export of Ningbo's textile and garment industry is above 50%, and the exporting countries are mainly in Japan, the European Union, the United States, ASEAN, Latin America and other regions."

Zhang Xiaofeng said.

"This reflects two points. First, the degree of integration of Ningbo's textile and garment industry into the world economy is constantly improving, and the demand of foreign markets has become an important driving force for the economic growth of Ningbo's textile and garment industry. On the other hand, it reflects that Ningbo's textile and garment industry has a high degree of dependence on the international market. Under the current situation of high energy and resource commodity prices in the international market, the risks to the world economy are also greater."

Zhang Xiaofeng pointed out.

"At this time, enterprises need to consider how to sell products even if they want to survive."

Yu Li Da points out.

The international high-end customers take Polo, CK and Burberry as an example. Because of the high added value of the brand, the raw material cost accounts for only about 30% of the total cost.

"When the cost of raw materials doubled, our price increase was only 30% of the original price.

However, the cost of raw materials for some low-end products is too high to reach 60%, and once the cost of raw materials is doubled, it must be raised by 60%.

Yu Li Da points out.

Wang also believes that for textile enterprises, high-end customers' ability to bear is better than that of low-end customers, so the ability to bargain for high-end products is higher than that of low-end products.

In addition, with the rising cost of land and labor in our country, the advantages of the main competitors in the vicinity appear.

Data show that Bangladesh's labor cost is US $0.22 per hour, Kampuchea is US $0.33 per hour, Vietnam is US $0.38 per hour, India is US $0.51 per hour, and China is US $1.08 per hour.

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"No wealth but no wealth"

In the foreign trade industry, there is "no external instability, no internal but not rich" argument.

Now, how to further open the domestic market is becoming a test question for textile enterprises.

Due to the large volume of foreign trade orders and stable orders every year, "regular orders are required for factories to operate smoothly."

Orders can ensure the operation of the factory.

However, in the eyes of Yu Li Da, the profits of the domestic market and the profits of the export market are quite different.

"For factories, export orders increase factory efficiency and reduce costs overall; domestic orders are raisins on grape cakes, ensuring factory profits.

Internal and external integration and mutual balance will be easier to tide over.

YOUNGOR has its own brand, and its export proportion is around 50%.

"The only growing market now is the domestic demand market.

YOUNGOR maintains 20%~30% growth every year, and the ability of domestic consumers to accept price increases is stronger than that of the European and American markets.

Yu Li Da said that no matter whether the export market of Europe and America is shrinking, YOUNGOR has begun to take the initiative to compress the European and American market orders, leaving the capacity to the domestic market.

"This structural adjustment has begun in 2007."

The "three high" economy has an impact, but the problem for enterprises to consider is to run faster than their competitors.

Yu Li Da thinks.

He told reporters that among YOUNGOR's customers, there was a factory that went to Europe every year to see the fashion trend of the new season. The cost of research and development of the more than 300 small factories was millions of dollars a year. However, compared with the annual income of the same size factory, the annual profit of the factory owner is between 15 million yuan and 20 million yuan.

Yu Li pointed out that there are many ways to do domestic sales, do well in the field of subdivision, increase the R & D strength, and the market will be willing to purchase such intellectual property products.

At the same time, in Wang Ruoming's view, it is a shortcut to narrow the gap between the textile industry and the international level by employing foreign R & D personnel to implement product innovation, get rid of the vicious circle of low price competition, and coexist with product innovation and industrial upgrading.

Just before that, the Ningbo municipal government issued a number of opinions on promoting the construction of "brand capital", and further clarified the basic train of thought and Countermeasures for the implementation of brand strategy.

Wang Ruoming pointed out that many Ningbo enterprises have embarked on the route of brand internationalization. In the past two years, many OEM producers have launched their own brands.

According to its introduction, take Ningbo Noble clothing company as an example, it has always been processed to make OEM, and now it is engaged in the research and design of sample clothes, and has pformed into ODM (original design manufacturer), and the export profit of the company has been greatly increased.

The average sweater export price is 3~5 dollars / piece, and Noble's sweater export price is 15~20 dollars / piece, which is about 10% higher than the average export price of ordinary sweater.