Wenzhou Credit Revelation: Farewell Crisis And War Cost Pressure

Wenzhou

And when this crisis is fading away, it is hard for us to forget it.

Zhou Dewen, President of Wenzhou SME Promotion Association, said that this private lending storm will force financial reform and innovation.

We hope this can be achieved.

The successful reform will bring the gospel to the small and medium enterprises, and regulate private lending.

But more importantly, we hope that after the crisis in Wenzhou, we can get rid of the past.

After the international financial crisis, traps, manpower, procurement costs, high financing costs, and market volatility are testing Wenzhou and even the whole country.

The smooth flow of financing is only an integral part of the healthy development of enterprises. When the trend of rising costs is unavoidable, enterprises need stronger adaptability.

This is probably the important revelation of the Wenzhou debt crisis to the whole country.

In late September, the drizzle in Wenzhou is trying to pull people out of the hot summer season. Just like the changing weather, Wenzhou's private economy seems to have ushered in "chill."

Xiao Zhang, a driver who joined the French style group 1 years ago, has been in Wenzhou for 4 years. He knows that 2 counties in Wenzhou speak Minnan dialect, and the hot topic of Wenzhou recently.

"Every day a boss runs away."

Xiao Zhang Le, a hearsay, described his economic environment in Wenzhou, which was related to his livelihood.

Xiao Zhang is from Guizhou. When our reporter went to Wenzhou to interview the investigation service company, he often accompanied him in the crisis era.

Collapse tide appears

In the early autumn, it was difficult for Wenzhou to have "peace" in September. In September 26th, on the first day after our reporter arrived in Wenzhou, Wenzhou seemed to be anxiously awaiting the redemption of the outside world.

A day ago, Chen Derong, Secretary of the Wenzhou municipal Party committee, held a symposium with Wenzhou Municipal Commission of letters, finance office and bank, and asked the Wenzhou municipal Party committee and municipal government to set up a special task leading group and a special working group to introduce policies and measures in the aspects of enterprise support, private enterprise financing coordination, combating evil forces and the handling of bankrupt enterprises.

On the following day, the suicide of Shen Kuizheng, chairman of the Delhi footwear industry, raised the danger of Wenzhou enterprises to a new ladder.

A local entrepreneur representative told reporters the logic of the two things, "the government is still too late."

According to local sources, as of early October, at least more than 80 business owners in Wenzhou fled and businesses collapsed.

26 of them occurred in September, and only 9 owners in September 22nd saw a record of running.

A series of bankruptcies are testing Wenzhou's manufacturing economy. As a major industry in China's shoes and clothing industry, Wenzhou's garment enterprises can not escape. The difficult situation has also ignited people's worries about their survival reality.

National lending crisis

The worry for Wenzhou's clothing companies is the difficulty of financing and the high cost of financing.

Many banks are faced with tight capital chains because banks are reluctant to lend because of tight money.

On the one hand, under tight background, enterprises need to raise money to restore loans.

On the other hand, they need more money for the rise of many comprehensive costs, or the deficit of diversification failure.

However, the closure of the banking gate made many service companies have to turn to the private sector from the very beginning. Then, the further expansion of operating pressure expanded the debt expansion into a Wenzhou private lending crisis.

According to a survey conducted by the Central Bank of Wenzhou central branch in the first half of the year, the scale of the private lending market in Wenzhou reached 110 billion yuan, and 89% of households or individuals and 59.67% of the enterprises participated.

The official documents from Wenzhou also confirmed for the first time that the scale of local private lending accounts for about 1/6 of private capital, which is equivalent to 1/5 of Wenzhou's bank loans.

Wenzhou, which borrows from all the people, is being tested by the post financial crisis era.

Due to the sluggish overseas market, the continuous rise of manpower and procurement costs and the increase of financing costs, these challenges in the post crisis era are becoming increasingly grim, coupled with the tightening of domestic monetary policies, and the risk of fragmentation in the whole country's service enterprises is increasing.

In Wenzhou, this risk has emerged. More than 80 business owners fled and businesses closed down. The consequence is that Wenzhou, which is fully lending, has fallen into a "panic" crisis.

Obviously, Xiao Zhang also felt such a panic that he expressed a certain degree of understanding to his boss's escape. "If they don't run, what will they meet them?"

In the eyes of Xiao Zhang, many of the runaway bosses will return. "They need to hide their anger."

Credit policy encourages enterprises to speculate?

A large number of enterprises may have the risk of capital chain breaking, which constitutes the core of the "Wenzhou crisis". However, under the difficulty of financing the surface and the high cost of financing, the more important reason for the predicament of Wenzhou's clothing enterprises is the limited ability of the enterprises to resist the crisis, and the inadequate macroeconomic policies to help enterprises upgrade and enhance their competitiveness.

In a more serious crisis in Wenzhou, Merrill Lynch has released a report that Wenzhou's "grey loan" is just a "storm in teacup" for China as a whole. The real challenge for Wenzhou and China's coastal manufacturing centers is higher and higher labor costs and the urgent need to enhance the added value of products.

It is the lack of profitability of the enterprises themselves that makes the enterprises unable to cope with the rise of manpower, procurement costs, fluctuations in overseas markets and the rising cost of financing, which is called a challenge in the post crisis era.

The business crisis of some enterprises in Wenzhou, and even the so-called Wenzhou credit market crisis, is due to the failure of these enterprises in the face of challenges in the post crisis era.

In fact, in our interview with Wenzhou's clothing companies, we find that there are still a large number of high quality clothing companies outside the crisis. These enterprises negate the inevitability of "crisis" from the opposite side.

In the French group, Hu Chao, senior vice president of the company, told us that their domestic market has achieved more than 70% growth. They are faced with the problem of insufficient start-up and financial difficulties, but the upstream supply chain can not be matched in time. He judged that the domestic market growth of the first tier brands is generally over 50% at present, and even the supply chain of the first-line brand is also realizing the rapid growth of enterprises with record breaking capacity and profit performance.

In AOKANG group, they seem to be unable to understand the situation of their peers, and they are also private enterprises. They enjoy the service of the bank loan officer's active home loan.

As a result, the real crisis may not lie in the bank's credit crunch and market volatility, but the effective enhancement of the SME's operational capability. The key point is perhaps the effective guidance and supporting policy environment for the pformation and upgrading of small and medium-sized enterprises at the national level.

"For example, banks are increasing interest rates, and the interest rate that banks lend out, the general cost is 1 points, 5 to 1 points 8, a year up to 20%. In the current development stage of China, which manufacturing and brand oriented enterprises can achieve 20% annual profits, 8% are not.

Under such circumstances, there is no way for real enterprises to do so.

Peng Xing, chairman of the French group group, said: "this means that the manufacturing sector means that the national level is forcing you to enter the high-risk speculative field. Therefore, in this regard, the pformation and upgrading of SMEs need more effective policy support at the national level."

At the time of the press release, the debt crisis triggered by the breakup of some enterprises' capital chain and even the private lending crisis in Wenzhou benefited from effective regulation at the government and market levels. For example, the Zhejiang provincial Party committee and the provincial government issued more than 20 specific measures to solve the financing difficulties of SMEs and regulate the private financial order, and the 25 local banks in Wenzhou jointly issued the loan statement.

However, the problems caused by the debt crisis in Wenzhou are still worth pondering.

At the level of financing, the degree of activity of private capital in Wenzhou has raised us the topic of market regulation and risk control, and how to use it to better support the upgrading and development of small and medium-sized enterprises.

In the face of challenges in the post crisis era, the rise of labor costs and procurement costs is becoming a "fatal" trend for manufacturing enterprises. Can enterprises effectively control and pfer costs, and can their speed of improvement outperform the growth of cost?

All the revelations brought about by the Wenzhou debt crisis deserve our further consideration.