China's Sports Shoes Enterprises Surpass Meager Profits And Survive

In fact, it is precisely because the domestic enterprises make international manufacturing enterprises, including Nike, that they can only earn meager profits, so that enterprises do not have enough profit space to digest the cost pressure of any wage increase. On the contrary, to maintain survival, the foundry enterprises must lower labor remuneration and sacrifice the rights and interests of laborers.

There is another price. environmental costs 。 In the foundry trade, there exists a virtual transfer of pollutants. The virtual form of pollutants comes from the waste water, waste gas and solid waste generated and produced in the process of foundry products, that is, industrial wastes. The importing countries of these pollutants have been transferred to the exporting countries of manufactured goods, which has become a hidden cost behind China's OEM trade.

Some scholars have pointed out that the OEM trade prosperity and GDP prosperity brought by laborers' low wages and environmental costs are not real national wealth and economic prosperity, but a "impoverished growth", and this "sweatshop" model is not sustainable.

　　 Vietnam? It is only the foundry base of Nike shoes, and Chinese enterprises have gone to the stage of independent brand.

Although Vietnam has become the largest production base of Nike shoes, it has nothing to do with "Vietnam made" itself.

According to media reports, Nike's global sports shoe contract factory has more than 100 factories, including Baocheng, Fengtai, Qing Lu, Guang Rong and other Taiwanese businessmen. Korean businessmen have T2, SANYO and so on. These factories are scattered in China, Vietnam, Indonesia and other places in Asia. Since 2005, Fengtai group, which controls Nike 5.5%, has transferred many Chinese orders to Vietnam. At the same time, it has expanded the production line of 4 processing plants in Vietnam and invested about ten million US dollars to build a new factory in Vietnam.

In 2005, Nike's world's largest OEM plant Baocheng group's capacity in Vietnam is also rapidly improving. In the following years, Feng Tai and Baocheng increased investment in Vietnam. It can be seen that the so-called Nike shoes made in Vietnam are just Nike's OEM enterprises that transfer their capacity to Vietnam, which costs less. It is not necessarily related to the upgrading of Vietnam's own manufacturing capability.

Chinese enterprises have gone from imitation to local brands, and the gap with international brands such as Nike is narrowing.

However, China is different. In the process of learning Nike and other international brands, China's local manufacturing enterprises have gone beyond the stage of foundry and imitation, and are moving towards the stage of creating brands. In the 90s of last century, most Chinese sporting goods manufacturers were only an important foundry partner in Nike's "light assets operation" mode. In Jinjiang, Fujian, there were nearly 3000 footwear production enterprises, employing over 300 thousand employees and producing 650 million pairs of shoes annually.

But now, from Jinjiang. Anta PEAK, 361 degree, Xi De long, del Hui, Jordan, Jin lake and other brands rely on the imitation of Nike and rapidly develop into an important competitor in China's local sporting goods market. For example, PEAK, once Nike's "Dove" based on OEM, has become the leader of the domestic basketball brand.

In 2009, the ranking of China's regional sports brand sales showed that Nike still ranked first, but Chinese local brand Lining surpassed Adidas in the second place (in 2009, Lining ranked sixth in the world sports brand sales ranking). Similarly, the local brand Anta (ranked eighth in the world) also ranked the fourth place after becoming Adidas.

Conclusion: it is very normal for Nike shoes to shift part of its foundry business to Vietnam, and its impact on domestic employment is also limited. In the field of sports shoes, Chinese enterprises have gone beyond the subprime stage of small profit subsistence, and have successfully moved to the stage of independent brands. From this perspective, Vietnam's replacement of China as the largest foundry base for Nike shoes is not good news, but it is also not bad news.