Jinjiang Leather Industry Seeks "Green Breakout"

For many leather enterprises in Jinjiang, 2007 is a "troubled time".

Export tax rebate policy adjustment, the state intensified efforts to control leather and other heavy polluting industries.

The change of external living environment makes Jinjiang's leather industry face enormous challenges.

According to the deployment of the central economic work conference held in December last year, the completion of the targets for energy conservation and emission reduction will become an important criterion for testing the effectiveness of economic development, and will also serve as a "hard bar" for assessing the ruling level of local cadres at all levels.

As a heavy polluting industry, the leather industry will undoubtedly face the first test of energy conservation and emission reduction policy.

"Under the policy environment, how to choose is crucial."

Sun Huiyue, the president of Jinjiang Xingye leather Polytron Technologies Inc (hereinafter referred to as "Xingye leather"), said.

It is gratifying that, in the face of many challenges, scientific and technological innovation and green breakthrough are becoming the common understanding of Jinjiang leather enterprises.

Environmental protection standards have to cross "kan", "energy saving and emission reduction, export tax rebate policy adjustment and bank compression credit scale, all of which have a huge impact on the leather industry."

Sun Huiyue said.

At the beginning of 2007, the implementation plan of Jinjiang's industrial pollution enterprises in coastal waters in 2007 was introduced. The 10 leather enterprises in Jinjiang city were included in the first batch of remediation areas of Jinjiang's "retreat from the second to the third", of which 1 enterprises were asked to close, and the remaining 9 enterprises had to move to the centralized control zone of Jinjiang Anton industrial park before June 30, 2007.

In August 2007, the Jinjiang TMC centralized control area became one of the key environmental protection units of the Quanzhou municipal environmental protection special action, and was required to complete the rectification before September 20th of that year.

However, most of the leather enterprises in the centralized control area are small and medium-sized enterprises. It is obviously unrealistic to take tens of millions of dollars for pollution control.

For those companies that fail to meet the environmental standards, banks' credit squeeze is even worse.

A person familiar with the leather industry in Jinjiang said that in the past, private enterprises mostly adopted the mode of holding together loans and providing mutual guarantees, but this lending mode has not worked at present.

"No one dares to provide guarantees for enterprises without emission permits, because these enterprises are likely to close down at any time."

This person said that since last year, the environmental protection department and banks jointly launched the "green credit" policy, to control illegal sewage and non-compliance enterprises, and cut off the capital chain of polluting enterprises, which made the enterprises that failed to meet the environmental protection "very hurt".

According to the Quanzhou Leather Industry Association's relevant personnel, this year, there are dozens of small leather household workshops which fail to meet the standards within and outside the centralized control area.

In July 1, 2007, the adjustment of the export tax rebate policy had a great impact on the leather industry in Jinjiang.

According to the analysis of the Secretary General of the Quanzhou Leather Industry Association, the export tax rebates for leather and leather products have been completely abolished, making the export cost of leather enterprises increased, and some small businesses have to pfer orders to powerful medium-sized and large enterprises, while the leading enterprises in leather industry are developing opportunities.

At this point, the industry has triggered a new round of shuffling.

It is worth noting that the leather enterprises in Jinjiang are mostly supporting enterprises in shoemaking and luggage enterprises, and the product exports of downstream shoemaking and luggage enterprises will soon be reflected in the leather industry once they change.

In 2006, the EU imposed a high anti-dumping duty on leather shoes exported to China, resulting in a significant reduction in the export volume of footwear products, which also greatly affected the production of leather enterprises.

The head of Jinjiang Anhai Leather Industry Association said that in 2006, the tannery output in Anhai was reduced by at least 50%.

In recent years, the international trade frictions have intensified. The developed countries including the European Union and the United States have built up technical and environmental barriers to trade. The environmental requirements for our export products are increasingly stringent. As the upstream industry of China's important export products, the leather industry will also be greatly affected.

In the industry view, the great changes in the foreign trade environment will promote the healthy development of leather industry. Leather enterprises can only win in the end by focusing on improving product quality and technology content.

"The survival pressure of leather enterprises is very great now. Enterprises can only survive if they continue to improve their technical and environmental standards."

Quanzhou Leather Industry Association's responsible person said.

Planning for upstream and downstream joint pollution control faces either pollution or collapse of the "single choice problem", Jinjiang leather industry began to exert efforts to control pollution, and strive to get over the "green" of environmental protection.

The relevant person in charge of the Quanzhou Leather Industry Association said that a similar move is to concentrate on the pollution control of leather enterprises and reduce the cost of pollution control by enterprises.

In February this year, Jinjiang's TMC control area, which has worked hard for 5 years, is expected to finally achieve its goal.

All along, the tannery enterprises in the centralized control area have their own heating, and 63 enterprises have fifty or sixty boilers, which are chaotic and have great safety risks. Most enterprises do not set up dust removal devices, causing serious pollution.

In September 2006, fifty or sixty small boilers were demolished one by one in the centralized control area, and 4 large 20 ton boilers were collected and installed with dust removal and desulphurization equipment.

At present, the commissioning work has entered the final stage, the central control area will soon be able to achieve central heating.

In addition to concentrating on pollution control, the leather industry in Jinjiang is launching a "technological fever", which will provide new impetus for the development of leather industry in Jinjiang with technological innovation.

In 2007, during the first auction of the leather and shoemaking industry held by the Jinjiang shoe fair, Jinjiang leather enterprises showed great enthusiasm for new technologies. The 5 scientific and technological achievements of the public auction were successfully concluded, with a total turnover of over one million yuan.

Fujian Jinjiang Fu Tai leather company has photographed the technology of comprehensive utilization of leather waste for 210 thousand yuan.

Chen Jinzhan, deputy general manager of the company, said that the company produces more than 200 tons of leather waste every year. It used to incinerate directly to incinerators, which not only costs a lot of processing costs, but also causes huge waste of resources.

With the technology of comprehensive utilization of leather waste, it can increase profits by at least one million yuan per year.

Not only do we buy new technologies, some enterprises are also actively developing their own products.

As a leading leather enterprise, Xingye leather has set up a research institute in 2002. The annual cost of scientific research has reached about 20000000 yuan. At present, it has 7 national patents.

In the face of pollution control efforts in the leather industry, Sun Huiyue believes that the leather industry should effectively control pollution. In addition to improving its own production technology, it is necessary to intensify efforts at the source and post product evaluation audit, which requires cooperation with upstream suppliers and downstream distributors of leather products to jointly control pollution in the entire industrial chain.

It has been reported that Xingye leather has already joined the upstream and downstream enterprises to explore how the leather industry can achieve "green, environmental protection, synergy and win win". Its proposal for leather enterprises and finished footwear enterprises to participate in the development of environmentally-friendly leather chemical raw materials has been endorsed by many enterprises.

Cai Jianshe, vice chairman of Xingye leather, said that the environmental protection of leather enterprises should start from the source, namely, the purchase of dyestuff and dye, and realize from "terminal governance" to "technological governance".

"If we wait for the pollution to be treated again, we will not only spend a lot of management fees, but the effect of governance will not be obvious."

Cai Jianshe said that in the past two years, the leather industry in Jinjiang is facing an increasingly severe development situation. The only way to change the status quo is to produce green products with high added value and jointly manage pollution on the upstream and downstream.

Financial and tax policies help industry insiders say that the adoption of new environmentally-friendly materials can significantly reduce the pollution caused by leather industry. However, under the pressure of cost, many small and medium-sized leather enterprises are unable to use them.

Sun Huiyue gave the reporter an account. The average gross profit margin of the leather industry is 12% to 13%. Once the new environment-friendly agent is adopted, the cost of the enterprise will increase by 4% to 5%, and the gross profit margin will be reduced by 2% to 3%. This makes it difficult for many small and medium-sized leather enterprises to bear it, and the downstream shoe enterprises and luggage enterprises are also very difficult to accept the price increase of raw materials.

In Sun Huiyue's view, only the realization of large-scale procurement, the additional cost brought by the use of new environmental protection materials can be digested by downstream enterprises, which requires the cooperation of enterprises in the whole leather industry chain to jointly digest the cost.

Reporters learned that a "waste liquid recycling" environmental technology is hindered by the high cost of research and development, upstream chemical companies worry that after the launch of the market, only large leather enterprises are interested rather than involved.

To this end, Xingye leather joint upstream and downstream enterprises to participate in the research and development of materials, the whole industry chain research and development, together with the cost of R & D, in order to reduce the price of environment-friendly materials, so that more leather enterprises to use.

However, at present, there are not many leather enterprises with this consciousness.

Experts say that this kind of action that benefits the whole leather industry chain is far from enough by the efforts of several enterprises. It urgently needs the guidance and support of policies.

"In the market economy, enterprises that aim at maximizing profits are generally unwilling to increase investment in energy saving and emission reduction. This requires the government to set up a public technology center to solve the technical problems of pollution control in the leather industry, and then apply it to the whole industry."

What makes Jinjiang leather enterprises happy is that the new fiscal and taxation policies related to energy conservation and emission reduction bring benefits to the leather industry.

Earlier, the finance minister Xie Xuren said that in 2008, it will further improve the fiscal and taxation policies to encourage energy conservation and emission reduction, implement regular tax relief or credit income tax policies for eligible energy saving and environmental protection projects and special equipment investment, provide tax deduction for value-added tax for investment in energy saving and emission reduction equipment, improve preferential policies for taxes and fees on comprehensive utilization of waste materials and resources, and improve fiscal and taxation policies supporting the development of new and renewable energy sources.

At the same time, governments at all levels will also increase financial input in energy conservation and emission reduction and play a leading role in energy conservation and emission reduction.

The new enterprise income tax law, which was formally implemented in January 1st this year, stipulates the pre tax deduction for enterprise research and development expenses and the preferential tax rate applicable to 15% of high and new technology enterprises. It also gives the leather enterprises in Jinjiang full confidence.

The industry believes that the development of environmental technology needs a lot of manpower, material and financial resources. With the support of the state's fiscal and taxation policies, Jinjiang leather enterprises, which have invested less in innovation, especially in environmental technology innovation, are expected to increase investment in environmental technology innovation.

Sun Huiyue believes that under the guidance of national industrial policies and fiscal and taxation policies, Jinjiang leather enterprises can achieve green breakout.

China Leather Industry Association's experts also believe that the leather industry will soon usher in the "golden season". Under the guidance of the favorable fiscal and taxation policies for energy conservation and emission reduction, the leather industry can grasp the golden quarter as soon as possible.