Excessive Expansion Brewing Bitter Fruit &Nbsp; Chinese Shoe Enterprises Encounter Financing Bottleneck

On June 10th, recently, many small and medium-sized enterprises in Zhejiang, known as "China's private economy vane", have experienced many cases of bankruptcy.

Excessive expansion of bitter fruit

In 2009, the collapse of Wenzhou's well-known shoe enterprises and the escaping of chairman Wang Yuejin of the company became the focus of media attention. At that time, the effective implementation of moderately loose monetary policy was

Because the profit margins of the shoe industry have been continuously compressed, the bully group, which has been plotting pformation, has bought some mines. The funds come from the industrial companies under the power of Buli, and the accumulated 100 million yuan loan from various banks. There is another small amount of private lending. But in the end, due to poor management, the capital chain is broken, and the result of insolvency ends.

Zhou Dewen, President of the Wenzhou SME Association, told reporters yesterday that the blind and excessive expansion of enterprises was the main reason for their financial failure and bankruptcy.

Monetary policy is loose and fashionable, and the problem is even more prominent once policy is tightened.

Zhejiang Jiangnan Leather Co., Ltd., Portman coffee and Yueqing three flag group's recent collapse has become the focus of media attention, and has been interpreted by some people as a big result of financing difficulties.

In response to some media reports about the "money shortage" that led to the closure of SMEs in Wenzhou, Zhou Qingming, the chief inspector of Wenzhou banking regulatory bureau, clarified that "the closure of these three enterprises is a case, mainly due to its own causes."

According to its introduction, the Portman coffee enterprises operating many companies have made mistakes in decision-making and the length of the front line has been too long, which has led to the breakup of capital chain. The three flag group of main wire and cable companies has been running away from the business due to blind cross industry operations, malicious corporate guarantees and bank loans.

The two companies were misled by poor management strategy, which led to the problem of capital supply. The collapse of Jiangnan leather was due to a huge gambling debt owed by their legal representative Huang He and fled in April of this year.

"Some enterprises have a foothold in the main industry, while others seek diversified development and risk diversification. Both have successful cases, and there are also cases of failure. For some enterprises, diversification is very necessary, but they can't spread too much."

A local SME Bureau official told reporters.

Zhou Dewen also said, "diversification does not matter whether it is good or bad. The key problem is that the expansion of enterprises can not exceed the scope of their own capabilities."

Zhou Dewen said that at present, 70% of Wenzhou's enterprises are still in normal production and operation. Although there are financial difficulties, they will not be in danger of breaking up the capital chain.

These enterprises either stick to their main businesses, or shrink their fronts during policy tightening, or further tap the potential to cut costs.

Enterprises should make preparations for rainy days

Guo Bingchao, President of Wenzhou Credit Guarantee Industry Association, told reporters that in 2009, Wenzhou enterprises could easily get a lot of cheap credit funds from banks. At the same time, the foreign government invested heavily in Wenzhou, and many Wenzhou enterprises invested in more lucrative industries such as real estate and minerals.

However, since the second half of 2010, with the tightening of monetary policy and the regulation of the real estate industry by the state, the market environment has undergone great changes.

{page_break}

There are many similar cases.

A former drill manufacturer in Jiangsu borrowed more money from the end of 2008 to 2009 to expand production capacity and turn into steel production. The accumulated loans from banks amounted to several billion yuan.

At present, the company is suffering from the pain of expansion too fast.

A local source told reporters that at present, the profits of the company are not enough to pay interest on banks, and the development is in a predicament.

A food company in Guangdong also failed to resist the temptation of cheap credit in 2009.

The enterprise loans and expanded capacity in 2009, but recently, because of the excessive increase in raw materials, the price of the company has not changed much, the profit space has been greatly reduced, and the capacity to build up has not been digested, so the repayment of loans has become a tremendous pressure.

Li Youhuan, director of the comprehensive development research center of the Guangdong Academy of Social Sciences, said: "after investigation, we found that in the environment of loose funds in the past few years, many enterprises appeared irrational investment impulse, and put on some projects under the idea of" go all out and hurry up ", which caused many sequelae.

Li Youhuan said that many enterprises that were blind expansion were faced with the problem of inability to digest capacity and tight capital chain.

The head of a car accessories company said, as the person in charge of the enterprise, when the macro policy environment is loose, we must also take into account the tightening of policies, so that we can prepare for the rainy days and enterprises will not be caught off guard when developing environmental changes.

For the current situation of enterprises, the person in charge said that if enterprises want to get long-term development, they need to rely on industrial pformation and upgrading to grasp development opportunities instead of blindly expanding.

In the case of car sales bottlenecks, the company turned to high-speed rail, aircraft accessories, the company has some loans in the bank, but the demand for funds is not so urgent.

However, this person also expressed his dissatisfaction with the "big family" of banks. Especially during the period of policy tightening, SMEs encountered more financing bottlenecks.

Li Youhuan also believes that the "money shortage" encountered by some small and medium-sized enterprises is mainly due to the banks' unwilling to lend to SMEs. When SMEs face the pressure of rising costs, they want to pform and upgrade through loans, but they can not get the support of banks and get into a survival dilemma.

For this reason, experts call for the credit policy to be differentiated, supported and controlled, while reasonably reducing the scale of credit, especially for small and medium-sized enterprises that are in line with the direction of industrial development and have growth.