The Dilemma Of "Spring Robbery" -- Pearl River Delta Survey: The Pain Of Trade And Textile Enterprises

Rising business costs, increasingly demanding customer demands, and fierce competition in the world

The Spring Festival in 2011 is about making clothes.

Desperate struggle, just got 60 thousand sets of tooling "big list".

No one can work at all. Zhang Jian said, "the wages of workers are rising year by year. They do not increase wages or rise too little, and workers are unwilling to do so. Every Spring Festival, a large number of workers will be lost."

But Zhang Jian's commitment to wage rises is not easy to export.

Just past 2010 is a year that affects the survival of processing trade operators.

The revaluation of the renminbi has made the settlement of Zhang Jian and his colleagues overseas business shrink suddenly, and the profits have been greatly reduced.

At the same time, in recent years, more and more prominent trade barriers, prices of raw materials, harsh customer conditions, and increased labor costs have all been swallowing the profits of processing trade continuously and rapidly, and the survival and development of processing trade enterprises have become extremely difficult.

After China's two exchange reform, the RMB continued to appreciate, and the profit margins of processing trade enterprises were constantly squeezed.

The relevant government departments have pointed out many times that the urgent issue for processing trade enterprises to achieve sustainable development is to achieve pformation and upgrading, or to extend to the high end of the industrial chain, enhance the competitiveness of enterprises, or turn the market from international to domestic and take the road of domestic sales.

However, for the Zhangjian who are very limited in scale and financial strength, pformation and upgrading is not easy. "Transformation or innovation requires a lot of money. We can't do anything without money."

The old road is full of thorns and difficulties, and the new road lies in unforeseen great risks.

At the beginning of 2011, Zhang Jian and his colleagues, who had worked hard for years in the processing trade, suddenly lost their sense of direction.

Difficulties of survival

"6.5"! This number is like an awl, which gives Cao Kai a sharp pain in his heart.

In Guangdong, Cao Kai and the number of clothing export business have been dealing with nearly 20 years, and every change in numerical value has made him tremble.

As long as I close my eyes, those numbers will be shaking in front of him.

"RMB has been 6.5 (US dollar to RMB exchange rate) since 2005."

"Appreciation is too fast! 3% of the profits will soon be lost!" Cao Kai said helplessly.

And the price of raw materials, staff minimum wage, water charges, electricity charges, equipment renewal fees and other rising numbers, let Cao Kai feel that profits have been pushed to the bottom.

Cao Kai belonged to a group of people who made early processing trade.

The earliest jobs were basically uniforms and uniforms.

"Incoming processing, 100 machines, 100 people, to ensure time and quality of goods, you can make money".

But now, factories that can pick up such jobs are everywhere.

In order to rush the order, he must purchase the fabric that the price constantly rises according to the customer's requirements, and then the workers will work overtime to produce the finished products that must be strictly inspected, and then deliver them with fear.

Processing trade enterprises, which are suffering from profits, are almost everywhere.

In January 17th, the China Business Daily reporter and Cai Hui Jian, manager of the Trade Department of Shandong Weihai Hai Fei Yi Fashion Co., Ltd., were already on the phone at 7 o'clock in the evening.

He had been busy in the workshop before.

When the reporter talked about the impact of RMB appreciation on enterprises, he obviously accelerated the speed of speech. "Of course, there is an impact! Orders are still the original prices, and cloth prices are constantly rising. It is becoming more and more difficult for enterprises."

Cai Huijian told reporters that when the business was good, the profit could reach 6%.

"But now that all kinds of costs are going up, and with the appreciation of the renminbi, enterprises earn a little bit of the" tax rebate ".

Cai Huijian said, "before tax rebate, enterprises basically do not make money or even lose money."

Hai Fei Yi Clothing Co., Ltd. is located in Weihai economic development zone. It mainly produces all kinds of garments and exports to Europe, America, Japan and Korea. It has over 300 employees.

Cai Huijian's "tax rebate" refers to a preferential policy of the state to promote exports to foreign trade enterprises, that is, the value-added tax and consumption tax on export goods returned or exempted from domestic production links and circulation links according to the tax law.

That is to say, zero tax rate is applied to export products.

However, there is no sense of security on the day of "tax rebate".

In September 2007, the tax rebate of clothing export dropped from 13% to 11%, and the export profits of Cai Huijian's enterprises were squeezed by 2%.

No one can say for sure whether it will be further lowered in the future.

Cai Huijian said.

Even if profits continue to go down, Cai Huijian is afraid to talk to customers about raising money. "Competition is too fierce. Some are processing plants. If you don't do it, people will change immediately".

Cai Huijian disclosed that because many companies were fighting for the market, the order in the company was less than 1/3 in the same period in previous years.

The recent rise in the renminbi has made Cai Huijian worry that they are losing their profits almost every day.

"RMB appreciation will be faster in the first half of this year, which will have some impact on foreign trade profits in Europe and the United States."

Guo Tianyong, director of China banking research center, Central University of Finance and Economics, pointed out.

But at the same time, Guo Tianyong said that the government departments will do well in this balance. After all, the RMB settlement business is relatively small in Europe and America.

Guo Tianyong's viewpoint has been recognized by Wei Yafei, director of the shoe making office of China Leather Association. "Foreign trade exports account for a large proportion of domestic GDP, and a large number of labor and employment have been resolved. The state will not ignore their survival problems and will control the appreciation of the renminbi."

The views of experts represent many of the expectations of many processing trade enterprises. However, policy regulation alone can not solve the problem of survival and development.

For them, the most important thing is to find ways to break the bottleneck restricting the development of the industry and get out of the predicament.

The premise is that they have to know where the bottleneck is.

Difficulties in pformation

Since the outbreak of the financial crisis, the volume of foreign trade in the world has decreased significantly. Due to the relatively healthy economic fundamentals, China is relatively less affected by the financial crisis, and exports to a certain extent are still on the rise.

However, the financial crisis has exposed many disadvantages of China's processing trade enterprises.

Due to the low end of the international division of labor, China's processing trade is basically OEM, with low technological content and added value, and the high-end processing trade is dominated by foreign capital, which results in the weak ability of the enterprises to withstand the pressure and is hard to bear the market changes. Once the economic situation is not good, the enterprises will soon fall into the predicament of shortage of funds and threaten to survive.

"We must pform," Yang Liqiang, director of the China foreign trade and Economic Research Office of the University of foreign trade and economics, said in an interview with the China Enterprise News. "Processing trade enterprises must be prepared for pformation and upgrading.

Or upgrade to the high end of the industrial chain, or pfer the business to the relatively low cost central and western regions or other developing countries, or completely pform the business to engage in other businesses.

Yang Liqiang's view is in line with our government's overall optimization of processing trade.

Jiang Yaoping, Vice Minister of Commerce, said in January 5, 2011 that we should actively promote the pformation and upgrading of processing trade, encourage processing trade to extend to the high end of the industrial chain, and actively explore policies and measures to pform domestic processing trade into domestic sales.

As the cost of raw materials and manpower continues to rise, a large number of multinational enterprises have begun to shift orders from OEM to Vietnam, Burma and India with lower cost.

To win orders, many processing trade enterprises have to migrate factories to the more remote western regions.

However, there is still a big trend of rising costs and appreciation of RMB in these places, and the processing trade enterprises still can not escape the threat of "ambush".

Under such circumstances, "building an independent brand from export to domestic sales" has become a new road widely praised by the industry.

However, in Cai Huijian and his colleagues, this road is also not easy to go.

"The first problem to be solved is the order problem, but this is not achieved in a short time." recently, the chairman of Beijing Eddie Yass Software Co., Ltd., Jing Bin, talked about "export to domestic sales", and made it clear that "it's not that easy."

Jing Bin's company is mainly for Japan to do software outsourcing business, compared with the European and American markets, the appreciation of the renminbi has little impact.

However, "Japan's economy is not good at the moment, and although it has not been exported to Europe and the United States, it is also affected."

Jing Bin said frankly.

Speaking of domestic sales, Jing Bin believes that if we do not understand the mainland market and blindly sell domestic products from abroad, we will not only mean the loss of customer resources that have been cultivated overseas for many years, but also because there is no source of tourists, which will weaken the scale and competitiveness of enterprises and make enterprises face greater crises.

Cai Huijian believes that the domestic market relative to the international market, the difficulty is obvious.

"The domestic market is more expensive, channels, human resources and brand influence and so on all need to invest, and need a lot of input, no financial strength is not enough."

Wei Yafei also believes that export to domestic sales is not realistic.

Because the competition in the domestic market has been very intense. He takes shoemaking enterprises as an example to point out that China is a big shoe industry. Many enterprises have their own brands. The mainland market is very saturated and the competition is fierce.

Enterprises that have been exporting abroad are hard to occupy a place in the domestic market.

Therefore, changing domestic sales does not mean turning around.

Actually, manufacturers of leather shoes who have tried domestic marketing are not uncommon.

Wei Yafei revealed that during the financial crisis, the foreign trade market did not work well, and many leather shoes manufacturers began to do the domestic market, but soon found that they were hard to build on the domestic market, and even more difficult than the international market.

As soon as the foreign trade situation is improving, many enterprises immediately return to the international market for export.

Although the foreign trade market is becoming more and more difficult, many enterprises are still sticking to it.

To cope with the impact of RMB appreciation, they are playing a hard game with their customers, and the chips are product competitiveness.

"We are working hard to negotiate with our customers and raise the quotation appropriately, and our customers also understand."

Shandong Weihai Kaihua import and Export Co., Ltd., a person in charge of the surname Liu said, "although the foreign market is somewhat difficult to do, but because the enterprise has relatively large investment in R & D and innovation, the product is still very well received by customers."

Mr. Liu said, because of the stability of orders, the company is still mainly export oriented, less likely to consider domestic sales.

However, for many small and medium-sized enterprises, there are also many difficulties in innovation and upgrading.

Cai Huijian counted out such an account for journalists: every payment is settled back, besides all kinds of costs, a fee must be set aside to make preparations for the cost of the next order. The money is always spent like this, and the funds used in product innovation can only be zero.

Products are not competitive, and they are naturally passive in front of customers, which leads enterprises to fall into a vicious circle.

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Where is the way?

Despite the difficulties, the achievements of the processing trade enterprises are still very strong.

Data from China Customs show that in 2010, the total value of China's foreign trade imports and exports was US $2 trillion and 972 billion 760 million, an increase of 34.7% over the same period in 2009.

Of which, exports amounted to 1 trillion and 577 billion 930 million US dollars, an increase of 31.3%.

At the same time, the international trade situation is haze, and all kinds of trade friction and trade barriers are ravaging the nerves of processing trade enterprises.

Information from the Ministry of Commerce and the Fair Trade Bureau showed that from 1 to November in 2010, China's products accounted for 47% of the total 459 textile and apparel products recalled by the EU, up 100% from the same period last year.

Since July 2011, consumer goods sold in France must have a carbon footprint label.

In addition, more officials pointed out that once the multinational anti counterfeiting trade agreement came into force, China's processing trade enterprises will be on the verge of risk.

Transformation is difficult, and pformation is not easy. How should we pform the processing trade? How do we pform it? These issues have been heated debates in the industry.

Yang Liqiang's answer is walking on two legs.

"Domestic sales is actually a very good policy, which gives processing trade a flexibility, and enterprises can adjust at any time according to their needs and reduce operational risks."

Yang Liqiang, for example, said: "if the international market is good enough, enterprises can continue to do the international market. Once the international market is fluctuating, enterprises can immediately turn to domestic sales to make up for the risks."

And through product competitiveness to win more discourse power, enterprises continue to export rules are highly praised by Wei Fei.

She believes that by improving the competitiveness of products to expand the foreign market, and gradually increase the proportion of foreign markets, the export market is still a good way to go.

"This is more realistic than going back to the domestic market and is more conducive to industrial development."

But for Cai Huijian and others, these two roads do not seem to belong to them.

Because most processing trade enterprises do not possess this ability and foundation.

It is understood that although China's processing trade enterprises are developing rapidly, most enterprises still belong to small and medium-sized enterprises with limited capacity.

Take the export large footwear industry as an example, 70% of the enterprises in this field are engaged in processing trade. In this group, the proportion of small and medium-sized enterprises accounts for 90%. These enterprises are short of capital and lack of technology, so for them, the pformation of innovation is only a "beautiful expectation".

"In the process of pformation, we will definitely eliminate competitive weak enterprises."

For this problem, Yang Liqiang and Wei Yafei both expressed their reluctantly.

No one can deny that the processing trade enterprises play a decisive role in China's economic stage.

Because of the agglomeration of processing trade enterprises, the economy of Dongguan in Guangdong is soaring rapidly, and the Pearl River Delta has become the largest processing trade base in the world because of the rise and prosperity of processing trade enterprises in Guangdong and Dongguan.

Today, the processing trade enterprises bear the heavy pressure of survival due to the high cost and backward production mode. Under the tide of inevitable pformation and upgrading, every step is running on thin ice.

Mei Xinyu, a researcher at the Ministry of Commerce, also takes a cautious attitude towards the pformation of processing trade enterprises. "The upgrading and pformation of processing trade is of vital importance to the national foreign trade. It is based on previous achievements, or on a higher level.

Speaking of the pformation and upgrading of processing trade enterprises, Mei Xin Yu's language is sharp. "No matter how to improve the level of processing trade products, create independent brands, extend the value chain or take into account the internal and external trade, it is from the whole region and the whole country level, and it does not mean that all enterprises should embark on such a road."

Mei Xin Yu believes that in the pformation and upgrading of processing trade enterprises, it is not necessary to follow a certain fixed mode, but according to their own conditions and different characteristics, they should choose the road suitable for their pformation.

For example, enterprises that have accumulated enough strength can choose to create their own brands in the domestic and foreign markets. For enterprises that do not yet have corresponding strength, the government should promote and encourage them to support and OEM processing for the powerful independent brand enterprises.

There is no doubt that it is no longer important for processing trade enterprises to turn left or right. What is important is that they must go forward actively because pformation and upgrading is the trend of the times.