Export Stranded Orders Outflow, Policies To Support Export Enterprises

Ground triangle

Province is China's foreign trade town.

According to the latest general list of import and Export Customs issued by the General Administration of customs, the customs and Excise Department in charge of customs operations in Jiangsu, which is responsible for cargo supervision in the whole territory of Nanjing, ranked third in total import and export value in 1~9 months in 2012, after Shanghai customs and Shenzhen customs.

Unlike Shanghai, Jiangsu has more manufacturing enterprises and is more vulnerable to the adverse effects of external economic environment such as the European debt crisis.

With the gradual increase of labor prices in China, a large number of international orders have been pferred to Vietnam, Kampuchea and other countries. What are the impacts of export oriented enterprises located in Jiangsu? What are the ways in which manufacturers and foreign trade enterprises are struggling to survive under the impact of various unfavorable factors, and are hard to pform in the low tide?

In fact, many enterprises have begun the exploration of the road of pformation after the global financial crisis in 2008, such as the development of new products and the introduction of new technologies.

However, the real problem is that under the environment of worsening export, these enterprises are facing the pressure of survival first, and the capital and talent reserve needed for pformation are far from enough. This also makes it difficult for them to find the best balance in the short term between survival and innovation.

On the other hand, although the national and local governments have introduced policies to stabilize and promote the development of foreign trade enterprises, the landing of all policies will take time. Many export-oriented enterprises need more substantive help and support from all walks of life.

Recently, I went to Jiangsu and took Suzhou as a sample to make in-depth interviews with local foreign trade enterprises and manufacturing enterprises. I hope to present the true situation of these enterprises to readers through the following reports.

"14%...

It is negative growth. "

Xu Zhao leaned forward and emphasized each word.

Xu Zhao's Suzhou Hengfeng import and Export Co., Ltd. (hereinafter referred to as Suzhou Hengfeng) operates various kinds of light industrial products.

The import and export business of electromechanical products, bicycles and spare parts has exceeded US $200 million annually.

But this year 1~8 month, the export volume of this enterprise has a two digit negative growth.

The situation is not optimistic.

"The bad foreign trade situation will probably continue for 2~3 years."

Xu Zhao told reporters that at this stage, it is the most important thing to maintain cash flow to ensure that customers and orders are in hand.

However, this is not what we want to do.

Orders are running away.

The fingers are too wide and the orders are too thin.

Now, as chairman of Suzhou Hengfeng, Xu Zhao's responsibility is to do everything possible to retain orders.

This contrasts sharply with the era of brilliant development of the local import and export industry.

Sitting in his office and turning up the thick business card book on the table, Xu Zhao sometimes recalls the good times he had had.

When he left school, he was a Ph.D., and was in the middle of Pingjiang District, Suzhou.

After the work experience of a government agency, Xu Zhao, 25, was sent to a producer of a tourist hat to become a factory director.

The state-owned enterprises at that time were depressed.

The tour cap factory, which has only 170 people, has a per capita loss of up to ten thousand yuan.

Xu Zhao, a recruits in the foreign trade industry, showed his ability to take orders at this time, and the enterprises soon turned around.

In 1993, Xu Zhao completed the trade volume of 700 thousand dollars at the Suzhou Minmetals Import and export company, and became the salesperson who completed the most business volume at that time.

In 1994, this figure doubled 10 to $7 million.

A few years later, Xu Zhao came to Suzhou Hengfeng's predecessor, Suzhou light industrial products import and Export Corporation.

At that time, the company had been losing money for 4 consecutive years, accounting for only 42 thousand yuan in cash.

Xu Zhao recruited his own army and borrowed working capital.

In 2001, the company achieved an export volume of US $25 million.

In 2003, Xu Zhao became the Suzhou light industrial products import and export company after reform, that is, the chairman of Suzhou Hengfeng later.

From 1995 to 2005, that is the golden time of foreign trade.

The company's exports doubled every year to achieve an increase of 100%.

Xu Zhao said that at that time, Suzhou Hengfeng exported garments to swim across the sea and were sent to various large supermarkets in the United States.

But when the good times passed quickly, Xu Zhao found that it was difficult for the company to receive orders from supermarkets in the United States. In the past, the intermediaries who visited the city in a row seemed to turn to Vietnam, Kampuchea and Sri Lanka overnight.

Some intermediaries no longer appear, they only stay in Xu Zhao's business card book.

On the cards of different sizes and delicacy, Xu Zhao noted down the goods, prices and styles that customers needed, including their looks, hobbies and tastes of food.

But even with such sincerity, it is hard to restore the hearts of customers.

Xu Zhao's European inspection found that more and more commodity labels had changed from "MadeInChina" to "MadeInVietnam (Vietnam) /Cambodia (Kampuchea)".

The overall trend of industrial chain pfer seems to be irreversible.

Xu Zhaolve once rejoiced that Suzhou Hengfeng finally won orders for export fabrics to Kampuchea, which were pported to an American supermarket after processing locally.

But by 2012, Suzhou Hengfeng had completely lost the order, while other orders had to be reduced and reduced.

The reason is that the factories invested by domestic enterprises to invest in Vietnam and Kampuchea have taken root, and the local enterprises driven by them have also relied on cheap labor to let intermediaries see the image of "cheap and good quality" in Chinese factories.

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From 6 containers to 2 containers

Europe and the United States were originally the key export markets of Hengfeng, Suzhou.

The purchases in these two areas account for 60% of the volume of the company's exports.

However, the recent trip to Europe, which impressed Xu Zhao deeply, is that the consumption concept of local people is changing rapidly, and the purchasing power is dropping more and more obvious. For example, in the European supermarket, "12 pieces of rags sold in the first place have been sold separately."

Along with the European debt crisis, a series of "complications" are attacking Suzhou Hengfeng's traditional business.

Suzhou Hengfeng originally had a factory price of 150 US dollars, using high-end configuration of bicycles, is now asked by buyers to reduce standards, pricing also reduced to 80~90 U.S. dollars.

"If the clomi is plated before the pmission system is now required to use plastic, this will result in a very low profit margin."

Xu Zhao told reporters that even so, in order to keep orders and ensure normal production of workers, Suzhou Hengfeng can only exert its efforts to lower costs.

In the production of rag products, the factory found that cutting the standard size cloth with existing machines would lead to redundancy of one side and serious waste. The factory developed and improved the machine for this purpose.

Suzhou Hengfeng originally maintained the export volume of 6 containers per month, but now, under the pressure of economy, the "more frugal" Europeans have slowed down the rate of upgrading of household products, which directly led to the reduction of the volume of rag exports to 2 containers.

Negotiations have also become a very difficult task.

In the past, refreshing trade enterprises, businesses and auto repair factories began to implement the policy of selling products, and turned to short lists and small bills.

"Originally, it would take 20000 cartons, and now only 5000."

Xu Zhao said, "the advantage is that these customers will not care too much about the price."

The "long list" customers will repeatedly compete in the price of orders.

"At least one cent, at least one hour."

Xu Zhao said.

The price has been talked about, but the unknown factors are everywhere.

"Because of the long order time, the rising cost of domestic factories and the fluctuation of exchange rate may be a disadvantage for us."

Xu Zhao told reporters.

Labor cost pressure increases

"Compared with the financial crisis, there are still orders this year, but the prospects are not clear enough to see clearly."

Xu Zhao said.

Xu Zhao attributed the loss of orders to a sharp rise in human costs. "Five or six years ago, the wages of workers (monthly) increased by 800 yuan to 1000 yuan or 1200 yuan after that, but the rate of increase was slow and matched with the overall price rise."

With the rapid rise of labor prices, the cost of Hengfeng in Suzhou has also increased significantly.

The 3000 yuan salary of garment suppliers has long been unable to attract workers.

Xu Zhao has experienced workers' dissatisfaction with wages.

About a year ago, in the bicycle factory of Hengfeng, Suzhou, there were lacquer workers demanding to raise wages to 5000 yuan.

Workers and Xu Zhao knew that pipeline failure would cause losses to the business.

Xu Zhao finally satisfied the demands of the workers.

As a business owner, Xu Zhao thought he could not control workers' behavior.

However, in Kampuchea and other places, the labor price is obviously low, and due to the lack of labor laws and other laws and regulations, workers can make up for lack of efficiency through overtime work for a long time.

As a Ph.D. in Soochow University, Xu Zhao's discourse always reveals dialectical thinking.

"Young workers are reluctant to work hard and hard work, followed by domestic policy guidance, such as the increase in insurance that workers need to pay for workers, and the enhancement of workers' awareness of rights protection."

But he also knows that in the fierce battle for orders, any slight adverse factors will eventually be magnified indefinitely.

The export is stranded and the outward looking enterprises are looking forward to the policy landing.

"During the financial crisis of 2008, the foreign trade industry was a" bloody storm ".

Now, it is "staggering."

Xu Zhao, chairman of Suzhou Hengfeng import and Export Co., Ltd. (hereinafter referred to as Suzhou Hengfeng), said, "the most influential ones are light industrial products, especially consumer goods."

In view of the poor export situation, the Jiangsu provincial government has issued a new round of supporting policies to stabilize foreign trade growth. But for foreign trade enterprises in Jiangsu, they are most concerned about whether all policies can be landed.

Export enterprises struggle to survive

Every August and September, it is the peak of Christmas orders in Europe. It is also the most busy time for Suzhou Chun Ju electrical appliances Co., Ltd. (hereinafter referred to as Chun Ju appliances). But this year, the order is only 80% of the past, which has brought us a lot of pressure.

Company office director Li Bin said.

Chun Ju Electric is a company specializing in the production of vacuum cleaners, steam cleaners, air purifiers and vacuum cleaners for 550 people.

Public reports show that in 2010, the company achieved a total annual output of 3 million vacuum cleaners, with sales of nearly 730 million yuan.

"More than 90% of our company is exported, and exports are mainly for Europe."

Li Bin introduced.

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Suzhou has a relatively complete industrial matching system. Nearly 60% of domestic vacuum cleaners come from Suzhou enterprises, and products are also exported to foreign countries. "Therefore, whenever the global economy fluctuates, our orders will be affected accordingly."

An industry insider of Suzhou vacuum cleaner told reporters.

Li Bin told reporters that orders for spring chrysanthemum appliances increased by 10% in the first half of this year. "In the overall environment of foreign trade and import and export, it is not easy for us to have such figures."

Despite the further expansion of the European debt crisis, the company's orders fell sharply in the second half of this year, but Li Bin told reporters that the company did not generate layoffs.

"Although orders fell by 20%, normal production per day is guaranteed.

Compared with before, the overtime of the employees is cancelled, and the overtime pay is reduced, but overall there is no big effect.

The company also has some funds to subsidize employees, so wages have not changed much, nor have employees resigned.

We must ensure that the wages of employees can not drain employees, although the export is not very good, but with the development of new markets, we believe that it will soon be bright. "

The reporter saw in a workshop of Chun Ju electrical appliances that the machine kept on raging, and the entire workshop accommodated more than 100 employees. The workers seemed to be busy. Each production line had a clear division of labor and a well organized workflow.

"This workshop has more than 160 employees, producing more than 4000 units a day, all of these products have been ordered, and there is no backlog in the company."

Li Bin told reporters.

On the production line, a staff member who did not want to be named told reporters: "the products produced by the company are actually less than in previous years, but they can also ensure that we have 8 hours of work every day.

We have less overtime and less pay, but on the whole, we can accept it and not leave the company. "

However, for foreign trade enterprises, besides operating pressure, there are still too many unforeseen risks that will come at any time.

Trade barriers from the United States let Suzhou Hengfeng drag.

The product is holding back.

The anti-dumping case initiated by the United States to Suzhou Hengfeng chose to pay $100 thousand to sue or abandon the market.

"The vast majority of foreign trade enterprises in China export the size of slippers only 1 million ~200 million.

For example, the total export volume of our company is US $about 2000000 a year, and gross profit is US $100 thousand.

Once a person respondent alone, it is likely to lose both the market and the cost of litigation.

So, in the end, we can only choose to give up.

Xu Zhao said.

Slippers are not the main items of Hengfeng in Suzhou, but a factory that supplies them has been closed, and more than 200 workers have lost their jobs.

"We account for 60% of the purchase of this factory."

Xu Zhao told reporters.

"In the face of international trade friction, we lack effective support from professional teams and policies."

Xu Zhao believes that "this should be led by relevant government departments and industry associations to organize collective complaints, and provide technical support from professional teams so as to lighten the burden and risk of enterprises. But in fact, it is difficult for us to effectively support this."

Support policies to solve problems

Things seem to be turning around.

An analysis of the import and export situation of Suzhou in the first half of the year, published on the website of the Jiangsu provincial development and Reform Commission, introduced that the Suzhou municipal Party committee and the municipal government have held several symposiums on key areas and key enterprises of foreign trade, and issued a series of supporting policies for stabilizing the growth of foreign trade, such as a series of policies and measures on promoting the pformation and development of business, and the support and reward policies for enterprises were fulfilled in advance until half year.

But what foreign trade enterprises are concerned about is whether the policies can come down when the economic situation is delicate.

"The tax department recently issued a new regulation to start collecting taxes on commission.

In this way, many intermediaries are unwilling to cooperate with us and turn to Vietnam, Kampuchea and other regions.

Xu Zhao said.

"Another new rule is for export processing rebates.

Before, the receipts of fabric factories and processing factories can go to the Inland Revenue Department for tax rebate, but now only the clothing factories can unify the invoice, which means we have to pay more than one local tax, "Xu Zhao said." it is estimated to account for 1% of total sales.

"This is what happened recently."

He was exhausted. "Now I spend a lot of time on communication with government departments."

Hu Yuexiao, a securities analyst in Shanghai, referred to the "export tax rebate" policy in his research report. "Since the beginning of the year, the central fiscal revenue and expenditure has been maintaining a slowdown in revenue and expenditure growth.

There has been little room for further easing of fiscal revenue and expenditure at the central and local levels at two levels.

On the one hand, the sharp decrease in tax revenue brought about by the economic downturn and the decrease of local land leasing income; on the other hand, the expenditure is hard to cut down, so it is not difficult to understand why tax cuts will be so difficult.

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"We hope to introduce policies that do not need to occupy corporate cash flow."

A director of the electronic enterprise department, a listed company in Taiwan, told reporters, "in addition, we hope to reduce the logistics cost - these little expenses will cause the business cost of enterprises to be reduced."

At the 2012 Forum on logistics and supply chain management held recently, Wang Huimin, deputy director of the national development and Reform Commission's Economic Operation Bureau, also said that after deducting the industrial structure factors, the reasonable level of China's logistics cost rate should be around 13%, which means that the current social and economic operation of China has undertaken an excess logistics cost of about GDP5 percentage points.

"For example, customs, we hope that the inspection rate can be reduced.

The situation is often encountered, due to waiting for inspection and affect the shipment time. "

Xu Zhao pointed out.

The good news is that in July this year, the general office of the Jiangsu Provincial People's government issued the "opinions on strengthening and improving port management to promote stable growth of foreign trade". It has proposed that efforts should be made to improve the efficiency of foreign trade cargo clearance and minimize the cost of foreign trade goods in pit.

At the same time, the government at the port's location takes the lead in concentrating on all fees charged for inspection and supervision of foreign trade goods, and cancels all kinds of illegal, irregular and unreasonable charges.

Besides, we should actively explore the guarantee method that does not need to occupy enterprise funds for the clearance business that needs to provide security.

Difficulties in Transformation: finding balance in survival and innovation

The poor foreign trade situation has profoundly affected the operation of related enterprises.

Against this background, enterprises begin to seek the way of pformation.

They need to maintain a balance between order maintenance, survival and development, pformation and upgrading, and product competitiveness.

Connect small single extension market

"We are actively developing small and medium-sized customers, even if only 1 containers order."

Suzhou Hengfeng chairman Xu Zhao said.

Apart from open source, the company is still trying to cut corners.

For example, he fought the idea of container.

In this container weighing 25 tons and 30 cubic meters, how to solve the problem of "exporting some iron fittings is very heavy, but it will leave a lot of space."

Xu Zhao tends to try various optimization combinations to achieve a win-win result with his customers.

"Like a supermarket, he may not need a container of biscuits, but he will need cookies, drinks, chips and so on."

The more radical solution is to extend the chain of enterprises.

"Upstream will build factories and downstream customers directly."

Xu Zhao expounded his own thinking.

Suzhou Hengfeng plans to open new factories in China to control costs and ensure quality.

Prior to that, Suzhou Hengfeng invested 36 million yuan to set up its own car company.

And the performance of bicycle and spare parts export business from 1 to August has made the company taste the sweetness.

On the client side, Xu Zhao hopes that products will be more directly exposed to terminal customers and reduce the cost of traders and intermediate links.

"We recently opened a branch in Budapest, Hungary, facing the Eastern European market. We also hope to set up a branch in Dresden, Germany, to enter the Western European market."

Xu Zhao told reporters that before that, the company's products entered the Western European region through intermediaries.

Suzhou spring chrysanthemum appliances also hope to open more new markets.

"The decline in orders has given great pressure to the marketing team. In order to reverse this situation, the company has actively opened up markets in North America and Central Asia, which have not been entered before.

This time, we have been working with Electrolux in the North American market, and now we have signed the order, which will account for 30% of our next year's output and a major growth point for our company's performance. "

Li Bin, director of the office of spring chrysanthemum apparatus, said.

An industry insider of the Suzhou vacuum cleaner industry said that for Suzhou local vacuum cleaners, not only the orders of Chun Ju electric appliances had been greatly declined, but also other enterprises were also in decline.

"In the past, the export direction was directed at the European market, and when the European debt crisis intensified, the order fell, these companies opened up markets in North America and other places is an inevitable choice."

Li Bin thinks.

Difficult choices of pformation and upgrading

In the first half of the year, the analysis of foreign trade import and export situation in Suzhou said that Suzhou will take the form of exhibition fee subsidy and export exhibition support to encourage enterprises to take part in various import and export trade fairs and exhibitions at home and abroad.

But developing new markets is not easy for businesses.

"One of the difficulties lies in the difficulty of innovation," Xu Zhao said. Suzhou Hengfeng tried to push the market once again through the purchase of foreign products. However, it once suffered setbacks in the strict intellectual property protection system. "When you have developed all the products and tried to market, it is very painful to find that others' products are still patented on a certain structure."

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"Germany has introduced bicycle parts 5 piece, and applied for a patent.

But after investigating the market, we found that with the widespread use of new cars such as mountain bikes, the original products could no longer meet the demand.

So we launched 9 sets of products, adding functions such as mountain bike maintenance, and successfully circumvent the protection of the intellectual property system.

Xu Zhao said.

Xu Zhao believes that, for most enterprises, the pformation and upgrading of the time is not yet, "the prerequisite for the pformation and upgrading is that the enterprise must have the strength and accumulation in order to have financial strength to develop and upgrade products."

However, the current policy is encouraging the upgrading of the innovation, concentrating on encouraging the successor, and the stage of encouragement is very few. Once the midway is setback, it is not rewarded at all.

Especially for enterprises lacking strength and being in the stage of survival and development, they are less able to invest in R & D.

Suzhou Hengfeng hopes to make some products that will lead the market and innovate around the needs of customers.

The company's research and development staff found that the camphor balls sold in the market were placed on the market.

Inside, foreign customers reflect too much smell.

So now they have developed camphor paper, which can be placed under the wardrobe and replaced every two months. "Now there are orders for 5 containers per month."

Xu Zhao said.

A head of the electronic business department listed in Taiwan believes that "the key to R & D upgrading is also to keep pace with the market, especially when the enterprises are unable to dominate the terminal products."

The company set up R & D department in Taiwan. "For example, if Apple wants to push iPadmini, we will keep up with it quickly and produce smaller and smaller basic electronic components."