The Manufacturing Industry In The Pearl River Delta Faces The Crisis Of "Made In China"

At 2:30 p.m. on January 4th, a crowd of people swept out of the crowd and entered a small conference room.

There are many trophies and plaque on the table in the conference room. "The first member of the Longgang District of Shenzhen, Gao Changchang," "Shenzhen customs trust export enterprises", "Shenzhen Longgang tax pacesetter" words can be seen.

Soon, the voice of the chairs and tables was quiet and the atmosphere was frozen.

All the people cast their eyes on the director Zhang in the middle of the conference table.

Director Zhang had been silent for a long time and had just opened his mouth.

No one paid attention to each other, but they all expressed themselves desperately.

The atmosphere of Christmas has not dissipated beyond this conference room.

At present, the world's largest Christmas tree producer Shenzhen Baoji handicraft factory is on the verge of death.

After the new year's holiday, Baoji didn't start work as scheduled.

In January 3rd, nearly 1000 employees of Baoji began to protest outside the factory for the wages owed by the factory, and nearly 100 suppliers of raw materials had already heard about it in an attempt to ask for debt by way of dismantling factory equipment.

"Employees and suppliers are not in a hurry. The assets of Baotu (Baoji's parent company) are now hosted in six banks in Hongkong, and six of them need time to coordinate how to compensate them."

Director Zhang was hoarse, and it was hard to hold everyone's voice down. "Baoji's water and electricity charges are also in arrears. Customs is also its creditor. Let's not rush."

Perhaps more people are waiting for "anxiety" to come, including the purchasers of Christmas trees in 2008.

It is not without clue that the "king of Christmas" will throw away the "King Christmas".

"(2007) November 20th, the management of the company announced to everyone the news of the reorganization of the treasure road company."

The director of Mu Ji, the Baoji handicraft factory, told reporters that "the staff are in a state of panic and have been somewhat unable to control".

"However, the Chinese management has no news about how to restructure and reorganize the process."

Mr. Mu said that by the end of November, Baoji's management had been informed by the staff of Baotu Hongkong that they had been striving for a double pay at the end of the year.

"We estimate that there must be something wrong with the operation of the company."

Mr. Chen, a plastic pellet supplier from Dongguan, told reporters: "we have supplied Baoji with 4 years, but in a few years, Lai Baoji rarely owed money.

We did not arrive in December when the payments due in October were delayed.

Mr. Chen learned from his friends in Hongkong securities market that there might be a problem in the financial management of "Bao road". "This company has no hope. If you do not make any trouble, you will get nothing at last."

However, Chen did not catch up with the first batch of debt collectors.

The first batch of Baoji's creditors began to ask for debts.

Bao Ji, engineer of Ye Ye, told reporters that "in order to repay debts, the factory used raw materials to compensate."

Because there is no cash in the factory account.

In December, the situation became more serious.

Some "unidentified, Western clothes and leather shoes" people began to enter the workshop at the same time of their production, valuing the production machines and assembly lines, and the lending bank of Hongkong Baotu company also came to the Baoji handicraft factory to check accounts.

"Restructuring should be a failure. At this time, closing is inevitable."

Mu director recalled.

However, there is still a lack of catalyst for the outbreak of the incident.

Baoji began arrears of overtime pay in March 2007, and then went to the factory in July, when the staff came up with the factory.

But until now, this commitment has not yet been fulfilled.

Under the pressure of employees, in December 26th, two people from Hongkong claimed to be agents of Baotu. They announced that Baotu company had terminated the labor contract with all employees of Baoji handicraft factory.

Employees began to stop work and tried to talk to Baoji management, which had long been out of sight, and more and more suppliers who were in arrears of money received news that they would gather in the small snow elephant village to collect debts or at least "move something to pay their debts".

In the afternoon of January 4th, Zhang, director of the labor bureau, who came to the factory to coordinate disputes, appease everyone's feelings. "We will give you a statement. Baoji has not yet gone bankrupt," he said.

The Christmas tree, "scurvy" of the king of Christmas, is disguised as so beautiful.

But the Christmas king still fell.

The Christmas tree produced by Baoji is very popular in the international market. The order of Christmas tree is scrambled early every year.

The period from November 2006 to March 2007 is the period of Christmas tree Christmas in 2007.

The purchase time of raw materials began in June of 2006 and lasted until the end of 2006.

In Baoji's previous years, this time period was very good.

But in 2007, there seemed to be a turning point.

On the face of it, in 2007, October, when the order invitation was sent from Baoji's old customers, Baoji had no more orders.

This makes it impossible for workers to understand.

But the symptoms of bad blood can be seen more clearly in the procurement of raw materials.

"Every year in June, raw materials, steel and plastic, we mainly buy futures, and take the spot by the end of the year."

Ye engineer told reporters, "but in June of this year, there was no purchase of futures."

In June, Baoji gave up the identity of "King Christmas"?

The staff in charge of marketing business in the factory wrote accounts to this newspaper. In 2000, "our volume is not big now, but the profit space is high."

As of 2003, Baoji had a profit of between 40 thousand and 60 thousand yuan per container. However, "because of the fierce competition in the international market, the price war has been too fierce, the profit space has been repeatedly compressed, and some part of it must be used to pay for the new product quality and safety inspection."

By 2006, the profit of each cabinet was "20 thousand yuan at most."

This reporter also found through investigation that Baoji is hiding behind the famous the Carlyle Group.

In 2002, Carlyle invested $136 million to acquire Baoji's parent company, Hongkong Baotu International - 75% of the shares.

This is Yang Xiangdong, managing director of Carlyle investment group.

Since then, Yang Xiangdong also led carlyle's acquisition of Xugong machinery.

Yang Xiangdong once defined the fund's characteristics: "the investment company will be dominated by manufacturing, the company has a strong management team, and sales and ranking are at the cutting edge of the industry, with a higher profit margin."

5 years ago, the treasure Road International obviously conformed to this standard.

As the world's largest manufacturer of artificial Christmas trees, Po sold more than $1 billion at that time.

According to the current situation of Bao Dao's current trustee, a person from Fu Li Cheng, there are more than 9000 containers exported every year during the peak period of operation.

But in 2007, the Christmas tree container of Po Road exports had shrunk to "5500".

According to a person familiar with Fu Li Cheng, the dilemma of Bao road is due to the deterioration of the whole industrial environment.

"The price of raw materials has gone up, the wage level of the PRD has increased, the RMB has continued to appreciate, and the competition among peers has become increasingly fierce."

This is the deep reason for the collapse of King Christmas.

The reason why "king of China" is going to fall out of "made in China" is also a common killer of many low tech manufacturing enterprises in the Pearl River Delta region.

This once again rings the alarm bell for the Pearl River Delta, a labor-intensive industrial intensive area.

Today, the Pearl River Delta region has encountered difficulties not only in the Christmas tree industry, but also in other labor-intensive industries, such as shoemaking enterprises, garment making, toy processing, electronic processing and so on. Many enterprises have begun to move out and some have gone bankrupt.

The Pearl River Delta manufacturing industry, which was once brilliant, is now facing a crisis.

Obviously, in recent years, due to the soaring cost of wages, land prices, fuel and electricity, the original labour intensive industries in the Pearl River Delta have gradually lost their competitiveness.

Xu Zhuoyun, a professor at South China Normal University, cited the rise of the textile, food and beverage industry in the early 80s of the Pearl River Delta in the early 1990s, and entered the stagnation period in the early 1990s. Then, the rise of the household electrical appliance industry in the middle and late 1980s also entered a difficult adjustment period in the middle of 1990s.

In July 23, 2007, China published the new catalogue of processing trade restricted commodities.

The category of newly added commodities in restricted catalogues involves many industries such as plastic raw materials and products, textile yarns, cloth, furniture, metal roughing products and so on.

A research report issued by the Pearl River Delta Business Council, led by the government of the Hongkong Special Administrative Region, pointed out that 1500 Hong Kong enterprises were expected to stop production, and 10 thousand of those wishing to stop production or reduce production scale accounted for 21% of the Pearl River Delta port enterprises.

This shows the great damage of the new trade policy.

The status of the "world factory" in the Pearl River Delta is facing severe challenges.

The crisis in the Pearl River Delta reflects the status quo of China's manufacturing industry, that is, labor-intensive manufacturing enterprises with low cost, low profits and lack of independent brand and technological content have no core competitiveness. Once the low cost comparative advantage is lost, the crisis is not simply a production of dangerous machines, but a survival crisis.

The Christmas tree industry is still looking at it, and the news from our local sources shows that the past few years have been stagnant.

"A Christmas tree can only earn 20 Fen. Who do you think we are working for?"

In January 4th, Shi Tian, the head of the Yiwu toy company, asked the reporter anxiously.

Shi Tian revealed that the depreciation of the US dollar, the increase in trade frictions, the continuous rising of raw materials and the vicious price war, all kinds of unfavorable factors, led to the profit rate of the whole Christmas tree industry below 10%.

In a special survey of Christmas gifts in Yiwu, the industrial and commercial bureau of Yiwu found that most of the small and medium-sized manufacturers play the role of relying solely on orders to earn processing fees. Their ability to develop independently is very weak, and their profits are less and less.

Xu Kuangdi, vice chairman of the CPPCC National Committee and President of the Chinese Academy of engineering, expressed with great concern that because of the gap between the level of manufacturing industry, especially the equipment manufacturing industry and the international advanced level, China is now merely a "processing center" rather than a "manufacturing center".

To this end, Liang Yaowen, director of the Guangdong provincial foreign trade and Economic Cooperation Department, has indicated that for the many processing enterprises including the Pearl River Delta, there is only one way out for the future: technological research and development is the way out for enterprises. No technology is always controlled by others. We must take market demand as the guide, technological innovation as the driving force, speed up the strategic pformation, strive to improve the technological content and added value of products, and pform to technological advantage.