"World Factory" Encountered Double Blow &Nbsp; Dongguan Mode Has Come To An End?

In the late July, the southern hot summer, the southern town known as the "world factory".

Within one or two months, two companies with thousands of staff scale went bankrupt.

There are also more obscure small businesses quietly shutting down.

This triggered a heated debate on the "closure tide" of Dongguan enterprises in 2008.

The official side of Dongguan is eager to refute the rumor, saying that there is no "collapse tide".

"The financial crisis in 2008 was only a deterioration of the external market.

Now, the external market has not improved, and domestic costs have risen substantially. Dongguan is facing a double blow. "

An official in Dongguan said to Caixin "new century".

Dongguan's industrial form is both export oriented and small and medium sized enterprises as the main force, and is most sensitive to changes in the external environment.

For business owners, business ups and downs are normal.

Someone thought, "it's good to get through this period of time."

How long they will last, their hearts will be bottomless.

Some people choose to evacuate: "this is not in the general sense.

The low-end manufacturing industry represented by Dongguan has been forced to enter the pition period without suspense.

The industry will struggle to avoid, and the radical change of business environment is also urgently expected: "we need to have a legitimate development environment, rather than a development environment with Chinese characteristics."

Double strike

On the surface, official data in Dongguan do not reflect the huge economic fluctuations.

According to the data of Dongguan foreign trade and Economic Cooperation Bureau, the number of foreign enterprises shutting down is at a normal level. In the first half of this year, 266 enterprises were shut down, down 11 from the same period last year.

The conclusion is that "a large number of enterprises failed to be found."

But that does not mean Dongguan.

"I'm closing down.

My client has been unable to recover money for three months, and he has to give money to suppliers.

The president of an electrical appliance trade company said.

All the manufacturers interviewed, including him, pointed out to the new century reporter of Caixin that the direct cause of the current difficulties is the deterioration of the foreign market and the rise in domestic costs.

Dongguan is an export-oriented economy with more than 2/3 of its products sold overseas.

According to data from Dongguan foreign trade and Economic Cooperation Bureau, Dongguan's total export volume was 22 billion 600 million US dollars in 1-4 this year, an increase of 19.5% over the same period last year.

However, an official of the foreign trade and Economic Cooperation Bureau felt no comfort at all.

These export figures are lagging behind, and some of the leading indicators monitored by the foreign trade and Economic Cooperation Bureau have deteriorated.

The Bureau's survey showed that over the 30% quarter of the two quarter, the number of orders declined because of a large backlog of dealer inventory in the US and Europe, which is now in a state of de stocking.

Jiang Lin, director of Finance and taxation department of South of the Five Ridges College of Zhongshan University, also pointed out that the external environment of Dongguan is stable than that of 2008, but there are unstable factors behind it.

"There is still a long way to go for the European and American economies to recover from the recovery, which will directly lead to the fact that Dongguan's processing export enterprises can not receive orders."

Even if the order is received, it may not be a good thing. "The price of the order is not only up, but also likely to decline, and the order is mainly three months short orders, and the long orders are reduced."

The continuous rise in operating costs has made Dongguan enterprises worse and worse, and even lead to orders from enterprises.

Respondents generally pointed out that the cost of labor and raw materials increased, plus exchange rate factors. Since this year, the operating cost of enterprises has generally risen by about 30%, while the cost of raw materials, which is related to oil and cotton, has increased by 100%.

"The profit of Dongguan's manufacturing industry is about 5%, and the cost is rising. Most enterprises are basically zero profits or losses. Even if orders are made, they are just to survive."

At the same time, the speed of enterprises' withdrawal of funds has generally slowed down.

The chief executive of a small local loan company in Dongguan said, "in the past, it was usually three months, and now it is six months. It used to be cash, now it is a bill.

The total period can be as long as nine months.

Jiang Lin pointed out that the recurrent funds used for recurrent expenditure (such as payments to raw materials suppliers), because of the relatively small profits, and can not get bank credit, enterprises basically have no money to make new orders.

The end of the Dongguan model?

Theoretically speaking, the rising cost of production can pfer the pressure of rising cost through the way of product price rise.

But in Dongguan, the "world factory", enterprises are suffering.

It is the traditional mode of processing trade in Dongguan that makes them face a passive situation and sink deeper and deeper when facing the external environment.

"Since the enterprises in Dongguan are mainly processed by materials, they are in the hands of foreigners, and their raw materials are in the hands of foreigners." they have the final say, and the sales market is also in the hands of foreigners.

The boss of the foreign trade company of the electrical appliance industry seems very helpless.

He pointed out that if you do not make a low order, someone will do it.

A Taiwanese businessman who has been in Dongguan for more than ten years has a deep understanding.

He used to be one of the shareholders of an electronics manufacturer. He sold his stake in the factory at the end of last year and moved to Shenzhen to develop the third industry.

"Our profit has dropped from the initial 30% to 15%, and then to 5% or even zero profit, not to mention the increase in prices, almost every year, prices are being cut."

In Jiang Lin's view, the difficulties facing Dongguan now lie in the fact that the competitiveness of processing export itself is not strong, labor prices are rising, and foreign businessmen are bargaining, and are facing competition from cheap labor force in Vietnam, India and Kampuchea. "These factors are pressing the survival and development space of Dongguan enterprises."

Jiang Lin said.

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In the face of difficulties, the choice of enterprises is different.

A more prominent view is that the Dongguan model is over.

There are many manufacturers who hold this view.

"I dare not say that Dongguan will decline, but its peak has already passed."

The Taiwanese businessmen pointed out.

He chose to evacuate.

His theory is that "no profitable business can be done for a while."

But now to the bottom of the valley, you must stop. "

For the processing trade model represented by Dongguan, he said: "before, I was in Huaqiang North (Note: the global electronic product distribution center in Shenzhen), I saw a group of" ant cargo army ", very moved, feel that China is rising; now look again, think of the United States have a rational freight logistics model, think of why China can catch up with people?"

According to its disclosure, about 30% of the Taiwanese businessmen he knew had left Dongguan, and about half wanted to evacuate.

A staff member of a Dongguan branch of a commercial bank told Caixin "new century" reporter that in the past, Tangxia in Dongguan was a gathering place for Taiwanese businessmen, "now the whole has withdrawn."

However, many enterprises believe that the Dongguan model is difficult, but it can last for a long time.

"We can continue to maintain and develop that way."

The general manager of the electrical appliance industry foreign trade company said.

In order to struggle to survive, he took the action of reducing clothing and reducing food.

"Reduce foreign employees, change to simpler offices, sell cars, etc."

The management of a Dongguan enterprise pointed out that what we consider now is how to keep ourselves.

In order to ensure that the capital chain takes risks, some enterprises "borrow some high interest loans".

However, "if the order is not paid in return, it will lose money or even go bankrupt."

Official data are more supportive of the latter option.

According to the Dongguan foreign trade and Economic Cooperation Bureau, more than 90% of enterprises clearly expressed their hope to take root in Dongguan.

At the same time, although foreign-funded enterprises were shut down in the first half of the year, foreign-funded enterprises also entered 846 new projects, which increased by more than half year-on-year.

According to the official of the foreign trade and Economic Cooperation Bureau, the reason for the new investment is mainly the influence of Japan's nuclear leakage incident, which made some Japanese manufacturers pfer.

However, almost all the manufacturers interviewed pointed out the premise of being willing to stay in Dongguan. "We need to have a legitimate development environment, not a development environment with Chinese characteristics."

A manufacturer said that if reversing the current passive situation, China's external environment must be improved.

The crux of the matter remains to be solved

Wang Lian, chief expert of Guangzhou Pan Pearl River Delta Urban Development Research Institute, still has positive significance behind the current predicament.

He pointed out that the slowdown in the growth of exports mentioned above is actually the trend of economic structural adjustment in Dongguan.

For manufacturers to evacuate and collapse, Wang Lian believes that the international mortality rate of enterprises is usually 13%-15%, and Hongkong has reached 18% before pformation.

"Quite a large number of enterprises should be eliminated. Enterprises that are not suited should consider changing careers."

Wang Zhaohong, deputy director of Dongguan development and Reform Bureau, also said that even bankrupt enterprises can be said to be part of upgrading and pformation.

In fact, many years ago, officials and entrepreneurs in Dongguan had put the industrial pformation on the agenda, trying to avoid the current dilemma.

Put forward the idea, or to sell domestically, or to make brand, or to do research and development, clear direction, but also good intentions.

The official of the Dongguan foreign trade and Economic Cooperation Bureau said that recent surveys have shown that the earlier the pition is, the less affected the business is.

Judging from the quantitative indicators, there are 1.3 foreign-funded enterprises in Dongguan and 1.1 in processing trade.

In the past, about 6000-7000 enterprises belonged to the "three to one supplement" enterprises, and they did not have the legal person qualification, only the workshop concept.

Now the number of enterprises of this type has dropped to 3000-4000.

The pformation of the legal person from the workshop to the form of a limited company will enable the company to turn to domestic sales and develop its own brand.

This is also an important qualitative measure for the government to face pformation.

Statistics show that before 1998, the GDP of Dongguan was the same as that of Guangdong, South China Sea, Shunde and Zhongshan. In 2010, the GDP of Dongguan was almost the sum of three places.

Now, as a model of rural urbanization, the peak period of processing industry in Dongguan has passed, and the period of relying on external development has passed. "Now it has entered a stable period.

It is not necessary for the government to measure economic growth by export volume. "

Wang Lian said.

But in practice, both the government and enterprises are facing many difficulties in pformation.

Jiang Lin pointed out that at the government level, the government at the township level and the municipal government have different views on the pformation. For the township government, the pformation can turn around, because the pformation of enterprises will bring about the decrease of labor employment and land lease, which will also have an impact on local food and beverage.

Transformation is not just a move for Dongguan.

Taking domestic sales as an example, the cost of entering the mainland market is very high. Jiang Lin said that local protectionism (non-tariff barriers) and quotas need to be solved.

In addition, the domestic taxes and fees are very high, the circulation links are quite complicated, and the squeeze from the sole agency established by the government is not so easy to convert into domestic sales.

The feedback from the business community is more direct: "no pformation, no talent and money."

Raw materials and core technologies are controlled in the hands of Europe and the United States.

Transformation is only an expert theory. It takes 50 years.

One interviewee said impolitely.

The Taiwanese businessmen also pointed out that Taiwanese businessmen had the motive force of pformation as long as profits were thinned five years ago, but they were not feasible.

First, "there is no R & D talent in Dongguan, and if so, we are willing to relocate Taiwan's R & D base to Dongguan."

Second, "Dongguan and even the domestic business environment is too bad.

In addition to high taxes, every government department can collect money from you.

Previously, profits were high enough to share with them, but now profits are so low that they can't beat them. "

Third, "policy opaque, dare not invest in updating equipment, tens of thousands of dollars of equipment to vote, do not rest assured."

Based on this, he pointed out that enterprises have money to invest in Chinese real estate, and foreign companies do the same.

He even suggested that the phenomenon of "hollow enterprises" is obvious.

The revision of government orientation and function has become an urgent demand of the business community and academia.

Wang Lian told Caixin "new century" reporter that for the upgrading of enterprises, the government should take two measures: one end is to try to improve creativity and technology, and the other is to manage the livelihood of the people at a low end, such as the treatment of workers' wages and re employment after the failure of enterprises.

He suggested that the government should strengthen risk management and conduct a thorough investigation of the market by entrusting the third party advisory bodies to assess the industry and enterprises in the whole city, so as to identify the key monitoring enterprises and publish the catalogues. At the same time, the pition from government management to social management should be realized.

The government should also set up three funds, namely, the pfer upgrading fund, the support fund (supporting the development of new industries) and the market guidance fund (through the subsidy and entrust the third party advisory body to find new industry directions with increasing points, so as to provide guidance for enterprises.)

A Taiwanese businessman believes that what the government should do is to do its job well and improve the business environment of Dongguan.

"If pformation is profitable, enterprises will naturally find ways to pform," he said. "Stimulating the domestic market is not a long-term strategy. It stimulated in 2009 and stimulated in 2010, but now it has not worked.

If we want to have a long-term development, the government must pform.