International Giant Adidas Moved Out To Replace The Industrial Giant Zhejiang Was Affected

Zhou Haihua left Hangzhou last week, and her boss did not dismiss her. However, due to the lack of sufficient work tasks, her income was reduced to only one-third of that of the same period last year, and she had to find another way out - her company's sales scale was 96% smaller than that of two years ago.

As the cost advantage of labor and raw materials is no longer available, multinational companies have reduced their business in China, except for Adidas In this way, some multinational companies have also reduced their orders to the original OEM enterprises when they moved their factories outside China. As a result, these OEM enterprises, which were originally attached to large companies, face great pressure to survive. As a large province of OEM business, Zhejiang has also suffered from such an impact on a large number of enterprises.

Old employees who have no work to do are forced to resign

At more than 3:00 p.m. on Friday, it should have been the time when workers had the highest enthusiasm for production: they could go to the weekend after finishing their work. However, in a lamp export enterprise in Yuhang District, Hangzhou, the gate is closed, the huge factory is quiet, and only the office area has a few employees left behind. The person in charge of the company said that because there was not much business, the workshop did not start today.

Zhou Hai has worked for Huawei, a lamp company, for more than four years. She is mainly engaged in the assembly of energy-saving lamps. She still remembers the grand occasion at that time. At most, there were more than 3000 employees in the factory. Since last year, the number has gradually decreased. By the time she left the company, there were only more than 500 employees left. Zhou Haihua said that the company did not dismiss her, but the factory's piece rate salary was reduced without overtime work. Sometimes, because there was no order, the company simply took a break, and the income decreased from nearly 4000 yuan/month to only 1310 yuan/month. Such income makes it impossible for her to live in Hangzhou. She said that she plans to return to her hometown in Anhui for a rest period recently to check the market.

Zhejiang OEM enterprise Encountered the "weaning" of multinational companies

What embarrassed Zhou Haihua was that this lamp company, which started as a Philips OEM, was facing the biggest crisis since its establishment. According to the person in charge of the company, since 1997, they have mainly produced OEM products for Philips, with the proportion once reaching more than 95%. They mainly produce various types of energy-saving lamps and LED lamps. According to the statistics of Export Electromechanical Department of Hangzhou Inspection and Quarantine Bureau, by 2010, the company's annual sales exceeded 52.7 million dollars, ranking the third in Hangzhou in terms of the total export of energy-saving lamps and LED lamps. Because of its large export scale and excellent product quality, the company has won Philips "excellent supplier" and other awards.

The turning point occurred in 2011. Because of the soaring price of phosphor and other raw materials, Philips could not accept orders at all, and the company's business volume began to decline significantly. The annual sales volume was 17.25 million yuan, only 33% of last year. In the first half of this year, the situation further worsened. With the contraction of Philips orders, the company's export volume further declined. In the first half of this year, the export volume was only 1.17 million dollars, only 4% of the same period in 2010.

Another family in Xiaoshan was also "weaned" by international giants clothing Enterprise. Because of its excellent quality, this enterprise obtained a OEM order from a famous brand in Germany. The enterprise hardly needs to attend any trade fair. It only needs to produce meticulously according to the requirements of the partner, with annual sales of more than 20 million dollars. This year, the company received a notice from the German enterprise to cancel cooperation. For this reason, the head of the company has to frequently participate in various exhibitions at home and abroad. If new customers and orders cannot be found in a short time, the clothing enterprise is also facing the risk of production suspension.

More OEM enterprises face survival crisis

It used to be the gold lettered signboard of global well-known multinational companies, which has a halo effect on most of them. However, these well-known brands not only have strict requirements for production, but also make very little profit to suppliers.

For example, the cooperation agreement between adidas and its co processing plants stipulates that suppliers must formulate and constantly update three-year strategic plans every year, and must also ensure that their equipment and processes keep pace with adidas' needs. Another enterprise in Hangzhou mainly manufactures energy-saving lamps for Philips. In order to meet the requirements of the other party, it invested more than 30 million yuan last year to carry out equipment transformation and improve production capacity and technology content.

At the same time of demanding requirements, multinational companies' profits to suppliers appear to be quite "stingy". The lamp factory where Zhou Haihua works can earn 15 yuan for each energy-saving lamp exported before it is outsourced to Philips. After it is outsourced to Philips, it can only earn 0.2 yuan for each energy-saving lamp sold to Philips. The person in charge of the company said that the profit rate for Philips OEM now is only 2% - 3%. If the national export tax rebate policy is slightly changed, there will be basically no profit.

Even so, as China's labor force and raw material With the increase of costs, international brands are becoming more and more "empathetic", shifting production capacity to regions such as Southeast Asia and Africa where costs are lower. In addition to Adidas announcing to close its domestic factories and transfer its production capacity to Myanmar and other places, Vanke also announced to move its production capacity to Bangladesh, where the labor cost is about 30% cheaper than that of China, and Philips also transferred a large number of orders to Southeast Asia.

Zhang Handong, director of Zhejiang International Economic and Trade Research Center, believes that Zhejiang's manufacturing industry is developed and there are a large number of OEM enterprises for international brands. With the relocation of the production capacity of these multinational companies, more OEM enterprises will face survival crisis in the next few years.

OEM enterprises also go out to integrate global resources

"In the past, Zhejiang used to rely on cheap labor, raw materials and land to process for large foreign companies in order to participate in international production. Now, when this advantage is no longer available, it should also consider transformation and upgrading, actively go out, use global resources, and take the path of high added value such as design and brand," said Guo Guangchang, president of Fosun Group.

In fact, some manufacturing industries in Zhejiang are already trying. The head of a textile enterprise in Keqiao, Shaoxing County, said that this year they are going to set up factories in Ethiopia, which is rich in wind, water, minerals and other resources. It is also one of the world's important cotton planting bases, which is more suitable for textile enterprises to invest in building factories. More importantly, the labor cost there is low, and the minimum wage is less than 10 yuan/day. According to this wage standard, the current wage of workers is 300 to 400 yuan/month, which means that if welfare benefits are added, one worker can be hired in Shaoxing, and seven or eight people can be hired in Ethiopia. The person in charge of Xiaoshan is also considering moving the factory to Vietnam, hoping to continue to cooperate with international brands.

"In the long run, enterprise transformation and upgrading is essential," said Zhu Weiguo, chairman of Hangzhou Feihua Lighting Appliance Co., Ltd. This year, Feihua Lighting hired R&D engineers from Philips at a high salary to reduce the manufacturing cost of energy-saving lamps, improve lighting efficiency and reduce energy consumption, so as to further expand the domestic and foreign markets.

Related news:

Adidas migration shock wave:

Six foundries will be weaned

At present, if new customers and large orders cannot be found in the short term, the OEM factory with 100% of its production capacity attached to Adidas will face the risk of closing down.

Adidas, regarded by many garment manufacturers as the parents of food and clothing, is gradually influencing the bottom of its global integration strategy.

At present, four foundries, including Shanghai Donglong Down Products Co., Ltd., have received the notice that Adidas will terminate the contract in October this year, and two others will stop in March next year.

It is worth mentioning that Donglong has cooperated with Adidas for more than ten years, and about 70% of its factory capacity in Tongling, Anhui Province, serves Adidas. "The situation of two of the six companies is very bad, because they are 100% dependent on Adidas, and they basically have no contact with other customers. If they can't find new orders in the short term, they will have to close the factory." The person in charge of Donglong said.

In response, Adidas China said: "Since we are optimizing the global procurement structure, a total of ten supplier partners have received legal notice about our termination of contracts."

In fact, a few years ago, Adidas began to reduce the orders of Chinese manufacturers.

Hengyang Rongyang Shoes is a subsidiary of Rongcheng Group, and Adidas accounts for about 90% of the OEM brands. Since last year, the orders from Adidas have also decreased significantly. Relevant people said that in 2010, when things were good, 250000~300000 pairs of Adidas shoes could be processed a month, while from August to October last year, only 150000~200000 pairs were processed each month.

The main reason for Adidas to transfer production capacity is the emphasis on labor costs. For example, the number of workers in Donglong Tongling Factory is 1600~1700, and the per capita wage is 2000 yuan/month, while the number of workers in Shanghai Factory is more, and the per capita wage is 2700~3000 yuan/month. The minimum monthly salary of Adidas factory workers in Cambodia was disclosed to be about $130, which is less than 900 yuan. The cost gap is clearly visible.

Shanghai Sanfeida Garments Co., Ltd. (hereinafter referred to as "Sanfeida"), whose orders of Adidas account for about 30% of the total production capacity, is also one of the "suspended orders". Lily, the person in charge, told reporters, "Adidas will definitely gradually move production overseas. Because China's labor costs are increasing year by year." She said that Adidas orders about 500000 to 600000 pieces in the company every year, Workers' wages have now risen to about 3000 yuan.