Economic Pressure Stimulates Shoe And Clothing Industry &Nbsp; Behind The Shift Of Focus Is Intriguing.

In June 24th, as the most active Yangtze River Delta region in China's manufacturing industry, some small and medium-sized shoe and clothing enterprises were short of work and power shortage. Raw material Rising costs, financing difficulties and other factors have led to underemployment or even half shutdown and downtime. As a result, some shoe and clothing enterprises have shifted their focus to real estate, finance and so on. Investment The sector has also suffered from the credit crunch. financing Pressure.

Factor restriction

It is reported that some small and medium-sized shoe and clothing enterprises in Zhejiang and other places have been semi stoppage and shutdown. Ying Yunjin, director of the development planning guidance office of Zhejiang SME Bureau, said that at present, the plight of small and medium-sized enterprises such as shoes and clothing is mainly affected by factors. "Compared with the sharp drop in foreign demand and the reduction of orders in the financial crisis in 2008, there are many orders for SMEs in Zhejiang, but they are faced with factors such as lack of electricity and lack of jobs. The rise in costs has led to a decline in profits."

This year is the most difficult year for small and medium enterprises, which is even more bitter than the financial turmoil, said Li boss, a Wenzhou footwear family leader.

Li said that since the end of last year, a ton of shoe sole materials had risen by three thousand or four thousand yuan, equivalent to 3 yuan for a pair of shoes, glue had doubled, wages had risen by 20%, and no workers had been invited yet; in addition, Zhejiang's electricity was tight this year, and the power sector often slam the electricity. At the same time, under the credit tightening policy, some small and medium-sized traditional manufacturing enterprises financing is very difficult.

In the first quarter of this year, the Wenzhou economic and Trade Commission investigated 855 enterprises, and 74.5% of the enterprises said they were short of employment, an increase of 14 percentage points over the same period last year. Footwear, clothing, eyeglasses, locks and other labor-intensive industries, the situation of labor shortage is more serious, and the proportion of enterprises with more than 10% labor gap is over 80%, which is higher than the average 5 percentage points of the surveyed enterprises. At the same time, about 1/4 enterprises are afraid to take orders due to the shortage of production capacity, especially export oriented enterprises.

Many owners of shoes and clothing in Wenzhou reflected that their sales increased a lot in 2010, but their profits dropped sharply. Some even worse than the financial crisis. Zhou Dewen, President of the Wenzhou Association of small and medium enterprises, said that a large number of traditional SMEs now have only 1% to 3% gross profit margins. "The pressure of survival is even bigger than that in the financial crisis."

In the manufacturing capital of Wenzhou, part of the industry growth has entered a continuous downturn.

The statistics of Wenzhou economic and Trade Commission show that in the first 3 months of this year, the sales value of 35 export oriented enterprises in the city decreased by 7% compared with the same period last year, and the profit dropped by 30% over the same period last year. At the same time, the order amount of these enterprises is decreasing, and the average amount of single orders is 16.7% lower than that of the same period last year. These enterprises accounted for more than 1/4 of the loss, and only 3 of the profits were maintained. The average profit rate of the industry is 3.1%, and the profit margins exceed 5% of the enterprises are less than 10.

Traditional manufacturing industries such as shoes and clothing are becoming more and more difficult, making entrepreneurs less confident. Yang Yongjun, Secretary General of the Zhejiang Provincial Association of private enterprises, said that the leaders of the Zhejiang Association of enterprises held talks before, and agreed that the market demand was good. But in view of the rising cost, the profits of the enterprises had been very thin and thin.

Zhou Dewen, President of the Wenzhou Association of small and medium enterprises, said that the state should introduce investment policies to guide private capital as soon as possible, and put these policies into practice. He said he expects all ministries and commissions to run and local governments to come up with very good implementation rules and launch very good projects. But unfortunately, so far, he does not think such good news has yet appeared.

"Empathy and love"

Under the constraints of factors, some shoes and clothing traditional manufacturing enterprises have different living conditions, better and better, worse and worse. Zheng Chenai, chairman of the Wenzhou clothing trade association and chairman of the company, said that about 30% of the garment enterprises above Designated Size had better living conditions because of their relatively high product positioning and better brand marketing. {page_break}

Zheng Chenai is optimistic about the prospects for the development of the clothing industry, but he thinks that good companies will be better in the future, and poor enterprises will face spanformation and upgrading. He said that even in 2010, domestic clothing consumption was growing at a rate of 30%. "As long as the consumer market exists, the survival of the fittest will be normal." In order to avoid the shortage of labor and electricity, some traditional enterprises in the East have shifted to the West. According to the briefing, about 30% of the more than 2000 garment enterprises in Wenzhou have their own production bases in the central and western regions.

Nevertheless, in a situation of small profits and incapability of spanformation, many enterprises in Wenzhou turn their energies to real estate. As a result, many small and medium-sized enterprises try their best to go to bank loans, invest in real estate, private equity funds and so on. A person in charge of a foreign trade enterprise in Wenzhou said, "which enterprise owner of Wenzhou does not have two or three sets or 35 houses in their hands? Now that 3 years have passed, the housing prices have doubled and doubled, and they have all made profits."

As a result, the city appeared a "big business building, small and medium enterprises to buy a house" scene.

A Yueqing CPPCC official said that in 2009, they did a survey. "Over 70% of the profits of enterprises in Liushi town above the low voltage appliance capital" no longer invest in local industries, but spanferred to other provinces and cities to develop real estate and build high-tech projects, and there are also many funds for buying and mining. The CPPCC officials acknowledged that the business as a financing platform, in order to get a large number of bank loans to invest in real estate and other industries, this phenomenon is relatively common in Wenzhou.

Among the top 100 enterprises in Wenzhou, 2 other Real Estate Company and 6 construction companies, more than 40 other manufacturing enterprises have been involved in real estate development in 2010. Take enterprises and projects as financing platforms to obtain large bank loans and invest in real estate and other industries. In addition, there are at least 7 large scale real estate development companies founded by manufacturing enterprises in Wenzhou, with a capital scale of over 3 billion yuan per household. There are also a handful of investment companies formed by manufacturing enterprises. Registered capital is generally in the hundreds of millions of yuan.

The high rate of return on investment in real estate makes shoes and clothing manufacturers "empathize".

Shen Youxin, Secretary General of Anhui Zhejiang business association, said that there are more than one billion enterprises with an annual output value of more than RMB yuan in Zhejiang, Anhui Province. The development situation is very good, and local banks will take the initiative to give loans. He is worried that these large scale enterprises are not in the main business, but go outside for other investments.

With the help of industrial capital, housing prices in the East are rising steadily.

From 5 to August 2010, the average price of commercial housing in Wenzhou was about 28 thousand yuan per square meter, which was higher than that of Shanghai and Beijing, ranking first among all the major cities in the country. At the end of November 2010, the original "Wenshi yuan" plot was taken down by the real estate and the floor price was as high as 37 thousand yuan per square meter. It is understood that the trust property by a number of manufacturing enterprises Baotuan set up, has been in the urban areas of Wenzhou, suburban lots, is currently a large real estate development company.

In addition, many manufacturing enterprises invest their capital in the capital field, such as private placement, stock market, futures, gold, silver and so on. It is understood that there are more than ten private equity funds in one place in Wenzhou. Because of the ups and downs of the stock market in the first half of this year, most of these private equity funds are in a state of loss. In addition, Wenzhou gold and silver trading ranks among the highest in the country. In May this year, silver plunged sharply, and investment enterprises generally did not make money.

Wenzhou, as the birthplace of China's private economy, is worried by the investment diversion of some manufacturing enterprises. Before, the people's Bank of Wenzhou issued an early warning of "hollow industry" and "hot money of funds".

Tight funds

"The main problem is money." Ying Yunjin, director of the development planning guidance office of Zhejiang SME Bureau, said that for a long time, small and medium-sized shoe and clothing enterprises were accustomed to survive and develop under the loose monetary policy, so every time the macro-control was accompanied by tight money, some enterprises suddenly died overnight. "Fund management is the weakest among SMEs." When credit is loose, businesses are busy expanding their loans. {page_break}

"An enterprise with an annual output value of about 100 million yuan can get 1 billion yuan of credit from the bank, which undoubtedly has great potential financial risks." A Yueqing CPPCC official said anxiously.

Similarly, last year, a Wenzhou people's Bank reported that under the loose monetary policy, banks took advantage of the loan market share and increased the financing channels of some manufacturing enterprises. The liabilities were too heavy and exceeded their actual bearing capacity, for example, the total liabilities of some enterprises exceeded their annual output value. "This kind of over financing manufacturing industry often exists cross industry and different place investment behavior."

It is worth noting that these loans generally exist in the "long loan short" phenomenon.

An official data show that last year, the balance of loans in Jiangsu was about 42121 billion yuan, of which short-term loans were about 17689 billion yuan, medium and long-term loans were about 23164 yuan, and the balance of loans in Guangdong was about 51799 billion yuan, of which short-term loans were about 232 billion 300 million yuan, and medium and long-term loans were about 35838 billion yuan. Unlike Jiangsu and Guangdong, in the balance of loans of 46939 billion yuan in the past year, short-term loans amounted to 26045 billion yuan, and medium and long-term loans were only 18800 billion yuan, and the continuity of funds was difficult to guarantee.

With the passing of time, the credit crunch is coming.

Since the beginning of this year, small and medium-sized enterprises such as shoes and clothing have to go to private financing when the bank loans are difficult to continue.

A survey conducted by the Wenzhou economic and Trade Commission showed that in the first quarter of this year, 42.9% of the surveyed enterprises were found to have tight funds, and the average business gap was about 10%, while the loan satisfaction rate of the enterprises was only 57.4%.

According to the investigation of the people's Bank of Wenzhou, it is found that the loan interest rates of all major banks have been floating up to 30% to 80%. The bank's statistics also showed that at the end of 3, the comprehensive interest rate of Wenzhou's private lending market was 24.81%, a monthly interest rate of more than 2 points, creating a new record in Wenzhou since the monitoring of private lending rates. In the first quarter, the overall interest rate of private lending in Wenzhou rose 11.91% in the single quarter, up 8 percentage points higher than the fourth quarter of 2010. On the other hand, the monthly interest rate has risen from 2.2 points last year to 3 points.

Some traditional manufacturers of shoes and clothing have little profit, and they need high interest financing to operate other projects. This undoubtedly has great risks.

In fact, the pressure of small and medium-sized enterprises such as shoes and clothing is too high, which has attracted the attention of the relevant ministries and commissions.

In May 4th, the Ministry of industry and Commerce issued a circular calling on the provincial, district and municipal authorities to conduct an investigation on the financing situation of SMEs. 15 days ago, the local investigation report was submitted to the Ministry of industry and information. The survey involves 16 elements, namely, the gap between small and medium-sized enterprises, the real interest rate of private lending, and the number of small and medium-sized enterprises collapsed. At the same time, the National Federation of industry and Commerce spent more than 2 months before conducting a systematic investigation of SMEs in 16 provinces, including Guangdong, Zhejiang and Jiangsu. It turned out that the situation of small and medium-sized enterprises such as shoes and clothing, especially small and micro enterprises, may be more difficult than the 2008 financial crisis.