Shoe Enterprises: Small Businesses Can Also Resist Risks.

In the late winter of 2008, the southern Pearl River Delta region is facing a cold test in response to the most severe ice and snow weather in the northern part of the century.

Data from government statistics departments and private research institutions all point to the same fact: thousands of shoe factories in the PRD are closed down, and more than 10000 Hong Kong funded enterprises are facing closure. A large number of small and medium-sized enterprises plan to move out or remain unsustainable after the Spring Festival.

At the just concluded two sessions of the Guangdong people's Political Consultative Conference, some delegates thought that the withdrawal of some enterprises in the Pearl River Delta region is the necessity of Guangdong's industrial upgrading.

Opponents put forward to see how many years the industrial upgrading road has taken place in Hongkong, and how to upgrade Guangdong's tens of millions of migrant workers.

Under such a big background, we chose a representative foundry enterprise to listen to the boss's heart.

The "representativeness" includes three aspects: first, it is a pure foundry enterprise, and the time of engaging in the foundry is not less than 3 years; secondly, the scale is in the upper class of the shoemaking enterprises in Guangdong; thirdly, the owners of the enterprises are also operators.

Dongguan Zhongcheng Shoes Co., Ltd. has entered our vision.

Li Jianxin, the 42 year old chairman, began to run shoe factories in Houjie in Dongguan in 2003 and accepted traders to supply women's shoes under the unidirectional American market.

When the shoe factories close to Dajie, all walks of life are small and steady, and now it has become a medium-sized factory with a scale of 600 people.

Dongguan Houjie Xintang village, lined with factories on both sides of the road, is the most concentrated Dongguan shoe manufacturer in the world. More than 80% of the shoes are produced here.

Reporters walked into Zhongcheng company, the factory building was being shipped out, and the shoes box was filled with the yard in front of the office building. There was intense conversation from time to time in the closed door of the general manager's office.

At the end of the conversation, Li Jianxin, who came out of the room, told the reporter, "we must push the exporter to increase the price."

Is the closure of low-end enterprises conducive to industrial pformation and upgrading?

The answer is yes.

However, reporters from the dialogue with Lee boss realized that the reality does not allow us to do this romantic thinking.

Reporter: let's first talk about the growth of the company from 2003 to now.

Li Jianxin: in July of 2003, he entered the Xintang village of Dongguan to set up Zhongcheng shoes industry Co., Ltd. at that time there was only one production line, and the whole factory had about 200 employees. After one year, another production line was added, with more than 300 employees. In December 2006, a product line was added, and the staff reached more than 500.

But the profit is very poor. Although sales have increased, the output in the past has increased by 20% per year. In fact, profits are decreasing.

Our factory mainly produces low and medium class shoes. In Xintang, there are many factories that produce this type of products. Many factories that fail are mainly middle and low grade products, and the main raw material is PU leather.

From 2003 to now, some factories have been relocated in one or two years or even gone bankrupt.

Generally speaking, our order is relatively stable, with a large scale, and the profit is declining while the output is bigger. Now the output of shoes is close to 5000 pairs per day.

Reporter: in addition to the foreign trade company's order, do you consider yourself placing orders?

Li Jianxin: foreign trade company buys the most fashionable brand new shoes from foreign department stores, let's copy them.

We find the nearest material to replace the original shoes. The most commonly used type of leather is PU, which reduces the cost.

From our proofing, that is, development, and then through foreign trade companies to get the foreign market to buyers to see, after the guests look at the order, we immediately followed the preparation of production, shipment.

Orders will also encounter other enterprises to compete. The mainstream of competition is not just price. Some factories have low unit prices, but they may not be able to make shoes.

Our customers always value the overall quality. We have been taking orders from the US market. We have been working with fixed foreign trade companies for 4 years now.

100% of our women's shoes are exported to the United States, and they haven't made European orders. Because the European orders are fragmentary, they can't afford the output. The production depends on the output. The population in European countries is not too large. Different countries also need different packaging, packing and shipping are rather troublesome.

European countries have strict requirements for environmental protection, and many raw materials need to be tested. This is very costly, and the US limit is much lower than that of Europe.

Some factories make their own orders, engage in production and trade, but do not succeed.

Not only is energy scattered, but also funds are scattered. Like a large factory of 5000 to tens of thousands of employees, our middle scale production can not invest too much in all kinds of channels.

The size of the shoe factory is related to the size of the order. For example, the order is a large brand, and the volume of the shoe factory is large, so that the scale of the enterprise can be enlarged.

If the brand is only two or three lines, its order is not big enough, and the bigger the factory is, the harder it will be to operate.

Reporter: the cost of shoe factories is made up of raw materials, wages, rent, utilities, taxes and so on. In the past few years, from the perspective of sincerity, which part of the cost has increased the fastest?

Footwear industry in addition to the attention of the industry chain matching, what factors are you concerned about?

Li Jianxin: the fastest is wage growth. When we opened the factory in 2003, the highest wage was more than 900 yuan, the lowest was more than 500 yuan. Our minimum wage now is around 1200 yuan, which has doubled, and the workers in the production line can get 1800 yuan.

Whether they are counted by piecework or technicians, their wages are about 1800 yuan.

Besides, it is difficult to recruit workers, workers are very mobile, factories are closing down a lot, but they do not know where the workers have gone.

On the whole, the trend of labour has been decreasing.

And the growth of raw material procurement is not too big. Besides, the biggest factor that affects us is the exchange rate difference.

4 years ago, the yuan remained at around 8.26, and now it is 7.20.

But now the US shoe market has not gone up in price. American importers and the US market are pressing China's shoe export prices.

The past 5 dollars can be exchanged for more than 40 yuan, and now 5 US dollars can only be exchanged for more than 30 yuan.

In the past, the gross interest rate of the shoes was 15-16 yuan, and it was now reduced to about 10 yuan, and it was on the edge of the loss.

There are many factors that affect enterprises in 2008. One is that the fluctuation of exchange rate is bigger. Two, after the implementation of the new labor law, the wages of workers will increase by 20%-30% on the existing basis. Three is the national inflation. After the oil price rises, many raw materials are also rising in price. The main raw material of PU is petroleum products, which are closely linked.

Despite the rising raw materials, there is a competition between manufacturers of raw materials. The rise of raw materials is also the result of competition in the industry.

Reporter: have you considered moving the factory to develop a new environment?

The price of shoes has not risen, and the profit of shoe factories is thin. What is your way of survival?

Li Jianxin: the main industry of Houjie is the shoe making industry. The size of the shoe factories is different. From more than 100 people to thousands or even tens of thousands of people, there are many Taiwan funded shoe factories in Xintang village. Most of the shoe manufacturers in the middle scale are bought by the mainlanders.

What we do is fashion women's shoes. They are all processed and exported, which is equal to the foundry. This is precisely the most profitable part.

Export orders are purchased through trading companies, and the materials for making shoes are purchased by us. Therefore, we can not deviate from the industrial chain. The materials needed for fashion women's shoes are constantly changing with the seasons. Thick streets can be regarded as the purchasing centers of raw materials, and all kinds of fabrics, inner materials, silk buttons and hardware are all available, close to fashion and foreland, and have mature and mature industrial chains.

At present, it will not consider moving the factory to the mainland, because the cost is high, for example, it is far away from the port and the cost of logistics and pportation is increasing. If the factory is moved to Hunan and Jiangxi area, raw material procurement will become a problem, and raw materials are not complete and complete, which will naturally affect production.

If we only make men's shoes and sell them domestically, factories can move to the mainland.

Whether to export or not, it involves the problem of export. The mainland is far away from the port, and sometimes it can not be shipped out of the whole cabinet, so it needs other factories and cabinets.

The foreign trade company entrusted by us has four or five supporting factories. If any factory does not have enough containers, it will be pieced together from other factories.

Too many factories will inevitably lead to vicious competition, and the elimination of a batch is also the trend of the times.

We negotiated with American customers to raise the issue of shoe price increase. In fact, many American Importers set up a price for each other, and the processing factories also set prices together, resulting in neither side making money.

In the process of competition, some American importers have gone bankrupt, and some shoe factories have been closed down, and some factories and traders have been eliminated. The supply of the market has decreased, and the price has risen. It can only be regulated through the market, and the market economy is determined by the relationship between supply and demand.

The way out for shoe factories is that American importers must raise their prices. They should gradually increase their prices.

For example, the unit price of our shoes is 10 yuan, we expect 5 yuan per pair, so the unit price will rise by 50%, which will make up for the cost increase.

The US dollar price reduction and exchange rate difference have put us under double pressure.

Reporter: now the most prominent problem is the implementation of the new labor law. How does Houjie carry out this law propaganda for enterprises?

What's your opinion?

Li Jianxin: in January 1, 2008, the new labor contract law was formally implemented. The new law increased the cost of manufacturing in the PRD.

According to the new law, because of the increase in the expenses of employees' dismissal, insurance, welfare and other fields, it is estimated that the labor cost of labor will increase by 30% and the labor cost will increase by 20%-30%.

In the future, we do not have a thorough understanding of the overtime pay calculation method.

A while ago, the Houjie town government convened many enterprises, held a preaching Seminar on the implementation of the new labor legislation in the exhibition center, and made ideological mobilization for enterprises.

Reporter: many businesses have gone bankrupt, and you have always been a small way, and the scale is gradually expanding. Why can you stick to it?

Have you encountered any risks?

Li Jianxin: to be an enterprise, we should work hard, bear hardships and bear hardships, and work diligently and professionalism.

As a partner, one of the major shareholders is to get up at 7 every morning and 8 at work time. I will arrive at the company 20 minutes ahead of time, check the attendance and breakfast of the employees, work at 12 noon, work at 1:45 in the afternoon, get off work at 6, take 45 minutes in the middle, rest at 6:45, leave the office at 11 o'clock in the evening.

The shoe factory of foundry is very risky.

On the one hand, customers and orders are at risk. If there are no good customers, they will not be able to get good orders. If there is no good order, there will be no good profit, so there is no way to survive.

On the second hand, the quality of products must be guaranteed, and they will not be compensated if they go abroad.

If the quality is not guaranteed and the shoes are out of question abroad, the US importers will take pictures of you, declare that your products are broken, degumming, and removing the bottom, then they will be "yellow" and do not have to pay back the money.

Some factories are expanding blindly and the capital chain is broken.

At present, China's exports to the United States have no restrictions on shoes, and there is no shoe making industry in the United States, which is different from textiles.

Every shoe factory is likely to face similar claims. We have also encountered trade disputes and lost about 300000.

This year, a shoe factory was claimed 2 million and fell down in situ.

The profit of making shoes is low, and the ability to resist risks is poor. When encountering a catastrophe, the capital chain disconnect is enough to kill.

From the industrial chain, apart from traders, shoe factories, and many shoe factories, many shoe materials factories have been closed down this year, including making leather materials, making bottoms and packing.

Our shoe factory corresponds to 60 raw material suppliers. According to the production volume, if we can't finish it, we need to find a professional OEM. The cost of buying materials is about 1 million per month.

The shoe industry is full of complexity, and it must fully support itself. The local government has not given any help, no funds and no loans.

Reporter: what are your thoughts on the future of this industry?

Li Jianxin: what I feel about this industry is: abandoning pity, chewing tasteless, and earning little.

The improvement of the whole industry still needs a big environment. If we want to close down a batch of small factories which are not well managed, we can survive a batch of competitive enterprises that can be more competitive.

In the past, some small factories had no orders, killing the unit price, and having no reasonable price, resulting in the disorder of the whole industry. Therefore, it is necessary to eliminate non-standard enterprises.

Reporter: Guangdong is now talking about industrial upgrading and industrial pfer. Did you see the guidance issued recently?

Li Jianxin: I didn't see that.

Guangdong does need industrial upgrading, but