How To Make Chinese Manufacturing In The Face Of International Market?

China's export manufacturing industry, which relies mainly on the international market, now faces two major difficulties: slow external demand and low domestic cost advantages.

The slowdown in external demand is mainly due to the risk of recession in the main economies of Europe and the United States caused by the subprime mortgage crisis. The gradual increase of production costs in China is complicated and not short-term. The Chinese export enterprises with no pricing power have yet to make preparations for pformation, and the situation is not good.

In the first quarter of 2008, exports began to decelerate significantly. Although there was a slowdown in external demand, the increase in China's manufacturing prices was also the main reason.

At present, domestic and foreign trade enterprises are facing three evasive difficulties: China has begun to correct distorted factor prices, improve environmental protection and labor welfare costs and gradually raise the RMB exchange rate. These measures are not temporary policy measures or market fluctuations, but the beginning of China's economic pformation.

This also means that the manufacturing costs of Chinese enterprises will continue to rise for a long time, and export enterprises relying on cheap advantage will be more and more difficult to survive.

Obviously, if we continue to survive or expand production, there is another way for foreign trade enterprises to expand their domestic sales.

Because in a period of rising inflation and production costs, a large number of disadvantaged enterprises are facing closure, and competitive enterprises can fully integrate the industry through mergers and acquisitions, thereby enhancing the industry concentration and bargaining power.

However, China's foreign trade enterprises still lack the capital and integration capability of mergers and acquisitions.

Most of the resource-based enterprises in China are monopolized by state enterprise groups, with a high degree of concentration and strong M & a capability (currently a large number of overseas mergers and acquisitions). The manufacturing industry is mainly dominated by non-state-owned enterprises. Large scale export enterprises are small in scale and low in technology. Once a number of enterprises fail due to the decline in exports, it is a good time for enterprises to acquire competitiveness.

Mergers and acquisitions need to be built on a strong capital platform. Most of China's private manufacturing enterprises have not been listed. On the one hand, these enterprises themselves have better profitability and will not be willing to go public. On the other hand, financing in China's capital market is not easy.

If the opportunities for large-scale mergers and acquisitions are coming, they are generally at the stage of liquidity tightening. Bank loans are more difficult, and the Chinese corporate bond market is still not a real market, and the scale is relatively small.

Therefore, even if there are opportunities for mergers and acquisitions, it is difficult to achieve.

A successful example of pformation is BELLE group, which was once an export small shoe factory. After listing on the Hongkong stock exchange in May last year, it has acquired many shoe brands at home and abroad and become a shoe giant.

Therefore, China's export enterprises should consider avoiding the risk of macro tightening by means of capital acquisition.