Shoe Industry In Guangdong Suffers From Shuffling, Thousands Of Shoe Factories Fail

"Labor shortage", "electricity shortage" and "oil shortage", plus anti-dumping, appreciation of the renminbi, rising labor costs, rising raw material prices, and the adjustment of national policies on export rebates and processing trade, under the impetus of various factors, the shoe industry in Guangdong is undergoing pformation and upgrading, and many shoe enterprises have been eliminated.

Information from the Asian Footwear Association shows that in the first three quarters of this year, there were about 1000 shoe factories and supporting enterprises in Guangdong, which were closed down by various factors or voluntarily closed down, or were sealed up by courts or moved elsewhere.

Li Peng, secretary-general of the footwear association of Asia, said that this data was obtained by the association through several field surveys in Guangdong.

200~300 of the more than 1000 shoemaking enterprises in Dongguan were closed down.

Li Peng pointed out that the competition pressure faced by Guangdong shoe enterprises is at least 10 times that of the 90s of last century.

The closure is mainly small and medium enterprises. In the last two or three months, four hundred or five hundred small and medium-sized factories in Guangdong have been closed.

A large proportion of these enterprises rely on speculation, low price competition or poorly managed enterprises.

The shortage of labor, the sharp rise in production costs, and the improvement of operational thresholds in the country have greatly affected such enterprises.

In addition, the new labor contract law, which is about to be implemented in January 1st next year, will also have an impact on these irregularities.

Li Peng also mentioned that some large scale enterprises are pferring part of their production lines to Vietnam or the mainland with relatively low cost.

According to the association's understanding, nearly 50% of Taiwan's shoe manufacturers in Dongguan Houjie have added new production lines to Vietnam.

"These situations in Guangdong shoe industry may not be a bad thing. After a fittest adjustment, they will be more conducive to the healthy development of the industry and provide a better competitive environment for enterprises with high added value."

Li Peng said.

Wei Yafei, director of shoe making office of China Leather Association, said that official statistics were not available at present, but the failure of some shoe enterprises in Guangdong is objective. China's footwear industry is entering the throes of pformation and upgrading.

However, compared with Jiangsu and Zhejiang, Fujian, which is the same shoe-making base, in the face of the same external environment such as RMB appreciation, raw material price increase and macro regulation, Guangdong has been the most affected. Guangdong shoe enterprises should reflect on this point, mainly relying on the mode of processing trade, neither taking the "two legged" walking at home and abroad, but also absent from their own brands.

Shoe manufacturers in Wenzhou and other places do better in these respects than Guangdong. While expanding domestic sales channels, they are also developing their own international marketing network, so they are more competitive than Guangdong shoe companies.

Guangdong shoe enterprises are mainly concentrated in Huizhou, Dongguan, Guangzhou, Heshan and Zhongshan cities, a total of five thousand or six thousand, more than 80% of the enterprises are processing trade.

Wu Zhenchang, chairman of the Guangzhou Panyu Chuangxin shoes industry Co., Ltd., which specializes in the production of shoes for Nike and other big brands, said that nearly twenty thousand employees of the company, and the wages for retaining workers increased year by year. Now they are basically over 1000 yuan, plus the continued appreciation of the RMB this year, as well as the intensive macroeconomic regulation and control policies of the state. The cost pressure of enterprises has increased significantly, and the comprehensive cost has increased by more than 10%.

However, Nike and other brand customers are willing to share some of their rising costs.

Zheng Xiaobo, director of marketing department of Guangdong Yisheng shoe industry Co., Ltd., one of the top ten women of leather shoes in Dongguan, said that the company is now digesting the cost pressure through various measures, and has already been developing the domestic market. Now the domestic market sales account for 20% of the total sales, and to a certain extent, the pressure of RMB appreciation has been reduced.

In addition, the company is trying to build up its brand value and boost its market.