Transformation And Upgrading Of Garment Industry: "Encircling The City From The Countryside"

If you want to rent a 300 square meter Street shop in Nanjing Road Pedestrian Street in Shanghai, the rent for a year is around 30 million yuan.

For Li Shilin, who wants to build his own clothing brand, the rent of 30 million yuan is prohibitive.

Li Shilin is the chairman of Zhejiang Pinghu Monte steward Clothing Co., Ltd. the revenue of the company is about 100 million yuan a year. The main source of income for foreign enterprises is garment foundry. The dilemma facing Li Shilin and other bosses is that the profits of garment manufacturers are getting thinner and thinner. Instead of moving forward and pforming into independent brands, it is difficult to stand in a big city like Shanghai.

The advantage of low cost is gone forever.

There are more than 1600 garment enterprises registered in Pinghu for industrial and commercial registration. The number of garments produced in the year reaches 300 million or so. According to the relevant local authorities, the number of garments produced in Pinghu accounts for 10% of Zhejiang's total, accounting for 2% of the country's total, accounting for 1% of the world's clothing output. Therefore, Pinghu is also awarded the double name of the manufacturing base of China's garment export manufacturing cities and China's export garments by the Chinese clothing (000902, stock bar) association.

A part of 002269.SZ is part of clothing made by Pinghu's clothing enterprises, but Zhou Chengjian, chairman of the American Apparel Company, announced this year that in the background of rising domestic labor costs and other factors, about 10% of the apparel in 2012 will be purchased outside China.

YOUNGOR (600177, 600177.SH), started with garment production, opened up all the industrial chains from textile mills to garment factories to retail outlets, but it can not fully digest the pressure of rising domestic costs. In addition to the high-end clothing products continue to insist on their own production in Ningbo, the general products are increasingly being pferred to the central and western regions of China and overseas markets to complete the processing flow.

For the unprecedented pressure on China's textile and garment industry, Wang Qian, an analyst at China's first textile network, pointed out that according to the enterprises in Jiangsu, Zhejiang and Guangdong, the recruitment of factories was only seven to 80% in the past year, or less than 50%.

Following the sharp increase in salary last year, the Yangtze River Delta and the Pearl River Delta have seen a general wage increase of 20%~30% this year.

Credit Suisse research shows that in the next 3 years, the annual wage increase of migrant workers will reach 30%, and the minimum growth rate will remain above 20%.

In fact, with the advent of the "Lewis turning point", China's demographic dividend will disappear in the "12th Five-Year" period, and the cost of raw materials will rise and the appreciation of the renminbi will influence the "low cost" advantage of "made in China".

In 2000~2005, the profits of garment enterprises above Designated Size in Pinghu amounted to 1 billion 660 million yuan. In 2006 ~2010, the sales volume of clothing enterprises above Designated Size in Pinghu increased by 87% over the previous five years. However, by the influence of wages, RMB appreciation and other factors, the profits earned only 1 billion 840 million yuan, increased by only 10%, and the profit margins of garments almost shrunk by about half.

And since last year's funding squeeze has made thin textile profits.

At present, the frequent tightening monetary policy has raised the financing cost of the industry too fast and the interest expense has increased significantly.

The increase in the reserve and interest rates of bank deposits and loans has increased the interest rate of private lending funds.

This will increase the financing cost for some textile enterprises, which are not smooth enough for bank financing and seek private financing.

According to statistics, in 2011 1~6 months, the financial cost of China's textile industry increased by 35.36% over the same period, much higher than that of the main business revenue growth (30.50%) 4.86 percentage points.

Among them, interest expenditure increased by 37.77% over the same period, accounting for more than 80% of the cost.

At the same time, the investment in textile industry has been affected by the tight funding environment, and the number of new projects has obviously slowed down.

According to statistics, the number of newly started projects in textile industry in 2011 1~7 was 8764, a decrease of 3.12% compared with the same period last year.

Under the background of tightening policy, most of the loans for small and medium enterprises come from family friends or folk usurious loans (more than 50% of the sample survey). The monthly interest rate of 5 points is the general market of private lending, the annual interest rate is 60%, the highest has reached 1 per month, while the average gross profit of textile SMEs is not more than 10%, and the result of the loss is no suspense.

Small and medium-sized cities or clothing industry

Transformation and upgrading of "fertile soil"

The decreasing profit margins of garment foundries have brought the industry to a marginalized position in some local economies.

Before 2008, the clothing industry has been the largest industry in Pinghu. In 2008, the dominant position of the garment industry was robbed by the opto electronics industry. In that year, the total output value of the garment industry in Pinghu reached 13 billion 434 million yuan, while the total output value of the optical and electrical industry reached 14 billion 247 million yuan, exceeding that of the clothing industry.

This year 1~4 month, Pinghu optical and electrical industry output value 6 billion 368 million yuan, clothing industry output value 3 billion 479 million yuan, optical and electrical and mechanical industry output value is almost two times of the clothing industry.

According to the people concerned, clothing orders processing is labor-intensive industries. The whole Pinghu now employs about 200 thousand of the labor force, and the number of employed workers in the garment industry accounts for half of the total, resulting in Pinghu's labor productivity ranking in a lower position in the whole Jiaxing. He said: "clothing companies are accustomed to doing the order processing, making the pformation of their own brands more difficult, but not turning around is waiting for death, turning the possibility of survival."

Li Rugang, vice chairman of YOUNGOR, described the plight of the apparel foundry business, saying that a shirt for others can earn a profit of 6 yuan and make its own brand. The profit of the same shirt is 30 yuan, and the amount of profit varies greatly.

In the first half of this year, YOUNGOR has voluntarily abandoned some of its low profit garment foundry business, and the income from the apparel foundry business has dropped from 1 billion 340 million yuan in the first half of last year to 1 billion 49 million yuan in the first half of this year, Li Rugang said.

Li Shilin does not have the strength to play a high role in the first tier cities like Shanghai in the same way as YOUNGOR. The brand of the women's clothing brand "Ni Lai Ya" has been avoiding the big cities of the big city. It is in the two or three line cities such as Jiaxing, Wuxi and Suzhou. The plan of Li Shilin is to make the brand of growth triangle first. Pinghu is the core, and gradually spreads to the four corners. After exploring the profit model, it will be promoted to the whole country.

Previously, Chinese and local sports brands such as Lining and Anta have avoided the big cities that Nike and Adidas occupy the dominant position. They have stood on the heels of the two or three tier cities, Nike and Adidas, and have grown and expanded. For those with limited capital, the pformation and upgrading in small and medium-sized cities of China, and "encircling the cities from the countryside" may be a more successful road to success. "Anta"