Thousand Shoe Factory Bankruptcy, The New Labor Contract Law Is The Most Lethal?

The wave of corporate bankruptcies is coming from south to north. Journalists have gone to Guangdong, Henan and Shandong to investigate the secret of bankrupt enterprises. Is the new labor contract law the most deadly knife?

Among them, the "permanent labor contract" causes employers' panic and will be misinterpreted as pferring the social security responsibility of the government to the enterprise.

The owner said the cost would increase by 20%, but the labor department said it had no impact.

The deadly knife hung on the head.

"Leaving or leaving" has become the most important proposition of a large number of enterprises.

In the Pearl River Delta, this bustling and brilliant world factory seems to be unavoidable: thousands of shoe factories are bankrupt, more than 10000 Taiwanese and Hong Kong funded factories are closed, and a large number of small and medium-sized enterprises are planning to move away. At the same time, the "Domino effect" triggered by it results in the impact of 20 small factories on the cluster chain.

Sharp blade, piercing the "world factory" that highlights the industry's hollowing out.

Henan Suiping, a quiet Central Plains small town.

At the age of 43, Ni Junli was lucky to know the appearance of the knife. The other side of the blade made her lose her job.

The sudden death of the largest plastics factory in the country has made the small town in a dilemma. 7000 workers have to find jobs again.

The bankruptcy of enterprises is like a bus, not a half day, and then three cars come together.

In Qingdao, Shandong, in 2007, hundreds of Korean enterprises fled naked, leaving the debt and thousands of Chinese workers at a loss.

In the uproar of the new labor contract law that breaks down the business, the bankruptcy of enterprises is coming from south to north. Our reporters have gone to Guangdong, Henan and Shandong provinces to investigate the secret of bankrupt enterprises. Is the new labor contract law the most deadly knife?

For the industry, is it a pain in the bud or a helplessness before the recession?

Collapse or elimination?

Spring breeze blew, sweeping the Pearl River Delta, those already stormy enterprises.

According to the statistical report of Asian footwear industry association in November last year, there were five thousand or six thousand shoe factories in Guangdong, and more than 1000 large and medium-sized shoe factories had been closed. Among them, in two or three months, four hundred or five hundred small and medium-sized shoe factories closed in Huidong's more than 3000 shoe factories.

This scene does not stop in the footwear industry, but in a whole circle of labor intensive industries, such as clothing making, toy processing and electronic processing.

The media exclaimed the Pearl River Delta to launch a "Domino closed chain".

According to the report from the association, 50% of enterprises began to plan to move to the mainland.

However, the mainland is not a happy place.

Henan province Suiping County, known as "China's largest plastic bag manufacturer" Huaqiang Plastic Co., Ltd. announced the suspension of the pfer, and 20 thousand workers were separated from the factory overnight.

Coincidentally, many foreign-funded enterprises that love each other are also involved in this trend.

In January 12th, more than 30 Korean executives, who were once regarded as star enterprises by the local government, were evaporated.

Qingdao, known as the Korean enterprise paradise, has also suffered from the impact of the Korean enterprises' failure to escape.

There are no clear statistics on how many businesses are closed.

However, statistics of "bankruptcy database" by Cao Siyuan, founder of Beijing Siyuan annexation and bankruptcy consulting firm, said that as of the end of 2007, the number of bankruptcies in Chinese enterprises rose for the first time. In 2007, the number of bankrupt enterprises increased by 12% to 3207.

At the same time, the curve depicted in the bankruptcy database shows that the number of bankruptcies in China has increased since 1991 for 6 consecutive years, exceeding the total sum of the previous years, from 1997 to 1999 with three years of swing; 2001 reached 8939 of the highest historical points; then from 2002, it fell for 5 consecutive years, and 2006 dropped to 2857; and 2002 was the first year of bankruptcy cases in six years.

But the "3207" figure is not accurate in Cao Siyuan's view.

The bankruptcy rate of Chinese enterprises is only around 0.1%, far from the normal 1%.

That is to say, the number of normal bankruptcy cases of Chinese enterprises last year should be around 32000.

The last straw started from the Spring Festival so far, Zhang Xiaomei, who worked in a small shoe factory in Houjie, Dongguan, was assigned by the boss the task of standing on the dusty street, holding the "recruitment card" and waiting for the emergence of skilled workers.

Without workers, the factory undertook 80% orders.

In her boss's view, even if the wages of workers mentioned 1500 yuan, it is still difficult to recruit satisfactory workers.

The "shortage of migrant workers" encountered by shoe factories was written by Li Peng, the director of the Asian footwear industry association, in a report submitted to the State Council policy research center.

He listed more than a dozen factors in heavy or light areas: the appreciation of the renminbi, the rise in the price of raw materials, the rise in labor costs, the shortage of migrant workers, and the shortage of electricity, etc., squeezing the profit space of the enterprise.

At the policy level, export rebates, processing trade and environmental monitoring are also constantly being adjusted, including export enterprises, including shoemaking enterprises.

The words of Liang Jiayao, a shoe factory owner in Dongguan, may explain the predicament of the enterprise: "the appreciation of RMB continues to rise, the price of raw materials rises, the cost of wages rises, recruitment is difficult, export trade is suppressed, and policies are frequently adjusted.

At the just concluded national two sessions, Zhang Yin's muzzle, dubbed the "five Gunners" by the media, refers directly to the new labor contract law.

"This situation has led to a decline in domestic employment rate, especially for people with low cultural level and low technology content."

She proposed to cancel the term "indefinite contract".

In her view, "signing an indefinite contract" is a historical retrogression.

Cao Siyuan, founder of Beijing Siyuan annexation and bankruptcy consulting firm, believes that after the introduction of the new labor contract law, there are many rebounding phenomena.

In particular, the "permanent labor contract" causes the employer's panic, which will be misinterpreted as pferring the social security responsibility of the government to the enterprise. No enterprise has such great ability.

The new labor contract law has increased the cost to enterprises. There are different claims: the labor and Social Security Department of Guangdong province believes that the law-abiding enterprises have no influence at all, and the cost increased by 2% of the total cost of enterprises.

According to Liu Kun, head of Nanhai Golden Shoe industry, the new labor contract law and the combination of two taxes have increased the cost to enterprises by more than 20%.

"Two taxes in one" has also been criticized by many business owners.

Some commentators believe that the reason why Korean companies are fleeing is that foreign-funded enterprises no longer have the advantage of blood superiority, but compete equally with Chinese enterprises, making some foreign enterprises with less competitive competitiveness irresponsible and collectively fleeing.

In addition to policy factors, the industry itself has also made it possible for enterprises to doomed their fate from that day.

At present, more than 70% of the PRD industry still relies on the "low cost, low profit" processing trade mode, which always lives at the bottom of the price chain, with a profit of only 5%-10%.

Such labor-intensive manufacturing enterprises do not have the core competitiveness. Once the low cost comparative advantage is lost, they will directly face the choice of life and death.

The natural elimination of labour intensive enterprises?

There is a saying in the foreign trade circles that if the profit of the whole industrial chain is 100%, then the processing trade will only get 10% of China's profits, while the earlier stage R & D and later channels can take 90% of the profits.

In 2005, former commerce secretary Bo Xilai made an account of EU officials: China exports 800 million shirts to exchange for an Airbus plane.

What is revealed is the helplessness of China's manufacturing industry in terms of low cost, low profit, lack of independent brand and technological content.

The current policy trend seems to speed up the natural obsolete or accelerated industrial upgrading of these low cost and low income labor intensive enterprises.

The special investigation conducted by the foreign trade department of the Ministry of Commerce shows that the collapse of business in Guangdong has not hurt the overall situation.

The industries currently involved are mainly labor-intensive industries such as shoemaking, textile and clothing, toys and furniture, while the export machinery and IT categories are not affected.

Most of the Korean enterprises run away from the industry, and most of them belong to extensive enterprises with high resources and high pollution.

Guangdong's processing trade exports account for about 4 of the total export volume of the country, and the contribution of processing trade to nearly 70% of last year's export volume of more than US $300 billion.

But Huang Huahua, governor of Guangdong Province, said during the two sessions that many industries in Guangdong were at the low end of the international industrial chain, and the ability of independent innovation is not strong enough. The government hopes to extend the pricey Delta's extremely limited and expensive land to more high-tech enterprises.

However, industrial upgrading is a spontaneous market process. Behind the promotion of policy adjustment, there is a shadow of government regulation.

Cao Siyuan believes that industrial upgrading is a slow gradual process, and it will not be too concentrated. The current phenomenon is precisely contrary to economic laws.

Way out or predicament?

Businesses are watching and the government is watching.

In February, the Chosun Ilbo quoted Zhu Jianguo, an economic commentator, for commenting on the collapse of the PRD business. "In 1958, during the great leap forward movement, there was a death.

When an enterprise dies, hundreds or thousands of employees will lose their jobs.

The situation is more serious than imagined. "