Rising Raw Materials And High Oil Prices Have Led To A Sharp Increase In Shoe Companies' Costs.

The problem of soaring raw materials and appreciation of the renminbi has put pressure on enterprises.

Ceng Heping, vice president of Galanz group, said.

Galanz, located in Foshan, Guangdong, is one of the largest household appliance manufacturers in China, with an annual export volume of US $500 million.

Ceng Heping said that copper prices surged from more than 30000 to more than 90000 per ton, and international crude oil prices were also close to 100 US dollars per barrel.

Plus the appreciation of the RMB, the rate of tax rebate dropped by 4 percentage points, making the production cost at least 30% - 40% increased.

Galanz's problem is also a common problem faced by China's manufacturing industry.

Over the past two years, the price of raw materials has skyrocketed, the prevalence of international trade protectionism and the appreciation of renminbi have almost appeared at the same time. The difficulties faced by enterprises can be imagined.

According to the National Bureau of statistics, in the 1-10 month of this year, the price of manufactured goods (PPI) rose by 2.8% over the same period last year, and the purchasing price of raw materials, fuels and power increased by 3.9%.

In the three quarter, the cost of production (operation) in Guangdong continued to rise, and the rise in purchasing prices of raw materials and energy was the main reason for the increase in costs.

In addition to the household electrical appliance industry, the textile and clothing industry and the footwear industry also suffer a great deal.

"The price of raw materials has gone up sharply this year, and the company's production costs remain high. Although we have adopted various measures to increase efficiency and reduce expenditure, our export sales have been affected."

Guangdong Zhongjie shoe industry Limited by Share Ltd chairman He Yuling said.

"As a labor-intensive industry, profits are very limited, only 2-3%.

Now the appreciation of the renminbi, the increase in raw material prices has increased the production cost by 3-4%, and the labor cost may increase by 6-7%. If the export price can not be raised, the enterprises may not survive. "

He Yuling said.

According to the insiders, in recent years, production materials, labor costs and energy costs have gradually increased, and the intensification of market competition pressure makes it impossible for enterprises to pass on the cost of product prices, so that the proportion of sales cost in sales revenue increases year by year, and the profitability of the industry gradually weakens.

Besides, the high freight price brought by high oil price also makes the profit margin of enterprises smaller and smaller.

In October, the price of container shipping from Shanghai to Dubai has risen from 900 yuan to 1500 yuan, and nearly doubled in two months.

Soaring shipping prices have weakened the "made in China" price advantage.

Lai Zhaosheng, deputy general manager of the international logistics center of China Textile City, thinks that the ratio of oil price to shipping cost is about 10%, and that the rising oil price and higher cost are the biggest reasons for the rise of freight rates.

Faced with challenges, many enterprises began to try to raise prices.

The executives of Zhongjie shoes and Galanz said that enterprises are reducing the impact of rising raw materials by raising export prices.

However, it is difficult for enterprises to increase export quotas year-on-year in the light of the increase of raw materials.

For most SMEs, however, raising prices means losing some customers and markets.

He Yuling, chairman of Guangdong Zhongjie shoe industry Limited by Share Ltd, said: "if the unit price can not be raised, we can only reduce orders, because the more we receive, the more we lose."

Rising raw materials and high oil prices have forced Chinese manufacturing enterprises to change their traditional business models, from "extensive" to "intensive", and adopt modern management to expand profit margins.

Ceng Heping, vice president of Galanz group, said that in response to the challenges brought by the increase of raw materials and high oil prices, the internal enterprises must reduce the cost of management and reduce production costs through human resources and process optimization.

The international bidding method is adopted to reduce the price of raw materials through three goods stores.

Professor Li Jun, an expert on international economy and trade at Guangdong University of Business, believes that rising raw materials and rising international oil prices will create huge cost pressures on "made in China" and will gradually weaken the international competitiveness of Chinese made products.

"Chinese manufacturers should pay more attention to the effectiveness of management and introduce the modern enterprise system to create a favorable environment for" made in China "exports.

Li Jun said.