Analysis Of The Fact That The Footwear Industry In Wenzhou Is Affected By The Credit Crunch

Which bosses may "escape" and how to stabilize these enterprises and help them tide over difficulties?

In the afternoon, in Wenzhou Longwan industrial area, Guo Ming, a boss of bags and bags, had been staring at the rain outside the window.

He has been a factory for more than 10 years and has been running at a loss.

Stick to the same, the enterprise can only linger, but if it expands like other enterprises, will he become the next "runner" Hu Fulin?

Hu Fulin's run and return stimulated many Wenzhou businessmen like Guo Ming.

This is the eighteenth year for Guo Ming to be a boss. 40 years old, he looks older than his real age.

Recently, he felt an unprecedented pressure. Facing reporters, Guo Ming lit a cigarette and could not say a word for a long time.

Guo Ming's factory is located in the industrial area of Longwan, with its own factory building and its staff of 130 people. Its bags are exported to European countries.

"2004 to 2005 is the most profitable time, but now the business environment is getting worse."

Guo Ming said that in 2008, he suffered a financial crisis, because the company's main business was to do foreign trade and suffered some setbacks, but "it is only a bad sale, and gross margin is about 5%".

"The current business environment is even worse than in 2008!" Guo Ming said. The labor cost of the company rose from 1800 yuan per person per month to 2500 yuan, while material costs and electricity costs increased significantly, resulting in a gross margin below 3%.

"Now, we have tens of millions of sales per year, but the profit has dropped from several million to millions, and then reduced to several hundred thousand. Until now, it is basically a loss making operation."

Such a business situation has long left Guo Ming's heart and soul to shake the company's main business.

And many of the owners who started with him have already entered the high profit industry such as real estate and new energy, and more friends have entered the guarantee.

"There were friends who asked me to share money in the company and lend money to Guarantee Corporation."

Guo Ming said frankly that it was a great temptation to him at that time. After all, "many friends really made money for usury", but in the end, he gave up when considering the excessive risk.

But sticking to his main business has made him more and more disappointed.

"Although orders have been put to the end of the year, enterprises are losing money", and "so many workers have to eat, and enterprises that have been working for so many years can not turn them off because of temporary difficulties."

Although Guo Ming said that if the factory changed hands, some people would take over. But, "what do I do after the company is sold?" Guo Ming admitted that he once thought he was "too conservative at times to lead to sticking to this low profit labor-intensive industry".

"It is hard to develop our industry, blind expansion and bankruptcy."

Guo Ming still hesitated between advance and retreat.

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Guo Ming's troubles, Hu Fulin, chairman of Xintai group, may have suffered.

Ms. Hu Fulin, an eyeglasses dealer who intersect with Mr. Hu Fulin for 20 years, said that the failure of the company lies in "blind expansion".

Hu Fulin, who started working in his father's shop at the age of 16, has completed the layout of the whole industry chain in all aspects of research and development, production and chain sales of glasses.

However, the very low gross margin of the eyeglasses industry prompted Hu Fulin to diversify.

After entering the military and real estate industry, in 2008, Xintai group entered the new photovoltaic energy industry in large scale, and successively invested in many photovoltaic enterprises such as Zhejiang silicon New Energy Company and Wenzhou silicon technology company, and invested hundreds of millions of yuan.

"The Hu Fulin line has been stretched too long and the pace of diversified expansion is too fast, which is the root cause of its plight."

Ms. Chen said that when Xintai met with the credit crunch, "many projects invested half of them, and Hu Fulin had to borrow usury".

An insider told this reporter that at that time, the bank pulled out of the funds reached 60 million, and eventually led to the collapse of Xintai gold chain, "this is the last straw to crush Hu Fulin".

Now, Hu Fulin of the running road has returned, and the two circles of Wenzhou politics and business are also actively promoting the reorganization of Xintai.

However, more "runner" may not be as lucky as Hu Fulin.

Wang Hexia, general manager of the giant shoe industry, was an example.

When she disappeared in July 27th, she never showed up again.

According to the Longwan footwear industry association, the reason for Wang Hexia to leave is that he has "set foot in an illegal Guarantee Corporation". Because of Guarantee Corporation's boss's escape, Wang was forced to disappear.

According to a local shoe business owner, Wang Hexia is involved in Guarantee Corporation, in fact, a few people gather money to raise "usury".

The general practice is to make some money out of it, then raise the interest from one to half to two points from the private sector, and then lend it to others with a high interest rate of three or four points or even higher, and make profits from it.

Allegedly, Wang Hexia's missing, involving an amount of $56 million, and like Wang Hexia, "boss", in Wenzhou Yongqiang area there are more than 100.

A local official in Wenzhou told reporters that there were two kinds of entrepreneurs on foot. Some like Hu Fulin, blind expansion led to the fragmentation of the enterprise capital chain and in trouble.

There is another kind of usury, like Wang Hexia.

"Some enterprises in Wenzhou have suffered setbacks, but we can not say that the entire Wenzhou economy has collapsed."

An official of the Wenzhou Economic Development Zone told reporters that only two or three business owners in the development area were running away, not "the worst hit areas".

"All companies must be tested, and those backward companies will be eliminated, of course, but other companies will rise."

He also said, for example, "people's bearings, Zheng Kang and other companies focus on the main industry, and constantly upgrade their industries, and develop rapidly."

Huang Jiancong, chairman of Zheng Kang industry, said in an interview with reporters that the main business of "stainless steel belt, stainless steel pipe and fittings" was only 7 million yuan when it was founded in 1999, and its assets have reached 200 million.

"In 2004, the company began to focus on industrial upgrading, and only to pform products with prospects and technological content, will they be competitive in the future".

"10 years ago, we used 1 tons of steel to produce steel bands, making 4000 yuan, and now we can only earn 400 yuan.

If we do not develop and produce products with technological content, the company will not be able to operate any longer. "

Huang Jiancong said, before, friends have repeatedly pulled him into the real estate, guarantee and other industries, but he thought "to do business or to focus".

However, Huang Jiancong unexpectedly talked about it. Since 2006, he has been concerned about the new energy LED industry.

"After a long inspection, I find that the market prospect of LED is very good.

If the project is approved, we plan to invest 300 million to that area. "

Huang Jiancong said that in order to share risks, he will introduce partners, his shareholding ratio is 40% to 50%, the investment amount is about 150 million.

And insufficient funds, he said he would borrow money from the bank.

"I will not be the next Hu Fulin."

When the reporter mentions "diversified risks", Huang Jiancong confidently said that only the enterprises that had been dumped did not lose the industry.

And just two days ago, Mao Guojun, chairman of the Shenzhen LED company, who was the main product of the company, fled the family and triggered a heated debate about whether the LED collapse will happen.