Facing The Five Squeeze Shuffle Wave Swept Dongguan Shoe Enterprises

Dongguan shoe enterprises are facing five heavy extrusion, and the profit margins of enterprises are getting smaller and smaller.

Footwear industry: the new wave of reshuffle has quietly hit the market. "As the boss of shoe factories, the pressure is increasing."

General manager of Dongguan Songjiang shoe material factory Bai Jun Jun is very helpless: "from last year to now, raw materials rise, RMB appreciation......"

The common constraints of various factors make shoe factories face tremendous pressure. "

In Dongguan, bosun is facing the same predicament as shoe makers.

Wang Wei, chairman of Dongguan zhangmutu shoe industry, which has more than 600 employees, told reporters that many small and medium-sized shoe enterprises in Dongguan are facing severe tests. Some weaker shoe enterprises have quietly closed down.

At present, Dongguan is vigorously promoting the pformation and upgrading of labor-intensive industries. Where should the shoe industry go? In Dongguan, known as the "world shoe capital", the shoemaking industry boss is facing a new round of choice, and the new wave of shuffling has come quietly.

The industry's current situation of canceling two hundred or three hundred shoe factories every year is very normal. Rumors about a large number of shoe enterprises in Dongguan went bankrupt last October.

It is reported that since last October, a large number of traditional enterprises such as shoemaking, furniture and so on have been evacuated in Dongguan.

More importantly, in the first three quarters of 2007, hundreds of shoe factories in Dongguan collapsed.

Is this really the case? Huang Chunming, Secretary General of Dongguan Leather Footwear Association, told reporters that in order to get more accurate information, he went to Dongguan industrial and commercial bureau to understand the situation.

According to the data provided by the Dongguan Bureau of industry and commerce, in 2006, the number of shoe factories opened and cancelled in Dongguan was 883 and 346, respectively, and the number of shoe factories opened and cancelled in 2007 was 501 and 289 respectively.

By 2007, there were 4404 shoe factories in Dongguan.

Huang Chunming believes that, compared to the total volume of more than 4000 shoe factories, it is very normal to cancel two hundred or three hundred stores every year.

According to the survey conducted by the Dongguan Municipal Foreign Trade and Economic Cooperation Bureau and other relevant departments, more than 200 enterprises in Dongguan last year terminated the contract, most of which were labor-intensive enterprises, concentrated in shoemaking, hardware, textiles, furniture and other industries.

The reasons for the termination of the contract include the normal expiration of the contract, the "three to one subsidy", the pfer of "three capital" enterprises, and no operation.

Li Peng, Secretary General of the Asian Footwear Association, said there was no need to make a fuss about such a result, which was just the result of shuffling inside the industry.

From 2002 to 2008, China's shoe factories surged from more than 20 thousand to more than 30 thousand, but the consumption group did not expand correspondingly, resulting in overcapacity.

Shoe enterprises can get room for survival by means of price reduction and so on, and the price of shoes can not be raised.

If a pair of shoes is sold for 100 yuan after export, the profit is only 5 - 8 yuan.

Dongguan, which is known as the "world shoe capital", can not avoid such competition. Some weak shoe factories are bound to fail.

According to the press survey, the landmark event that made Dongguan shoe enterprises in the vortex of collapse is the closure of the shoe factory.

In December 20th last year, Tai Tong Village, a nearly 4000 employee in Tai Tang tou village, Dongcheng main mountain management area, stopped operating and paid about 40000000 yuan of economic compensation for employees, causing a great stir inside and outside the industry.

Reporters visited the Houjie town gathered by shoe companies for a few days, trying to find the clues of the collapse of shoe companies, but only a little.

In three Tun Village, a shoe company employee said that a shoe factory nearby was closed.

The reporter found the deserted factory under his guidance.

But it is said that the shoe factory has not gone bankrupt, but moved to Chi Ling village.

Only in the village of Chi Ling, the reporter found a shoe factory, Delhi shoe factory, which had already been closed down under the introduction of the insider.

The original factory building of Deli shoe factory has become a production base for an electronic factory opposite.

Industry analysis of the five factors, squeezing shoe enterprises survival space in the reporter's investigation, many industry insiders believe that the shoe enterprise's life is really bad.

They believe that at least five factors are squeezing the survival space of shoe companies.

The impact of high oil prices on raw materials and footwear companies is the first to bear the brunt of the rising cost of production, resulting in smaller profit margins. High oil prices have led to soaring prices of raw and auxiliary materials in the footwear industry.

Last year, up to now, the price of chemical products needed for shoemaking has increased by nearly 20%, and the profits of shoes are becoming less and less.

Some new materials, such as TPU, rise by 2000 to 5000 yuan per ton. These materials have been accepted by consumers. Substitutes are not only related to the performance, quality and grade of products, but also directly affect the consumer market. Enterprises are afraid to use substitutes easily.

Dongguan's shoe industry has always been processing foreign brands, and it has become the main business mode of many shoe enterprises. This mode has been challenged by export tax rebates and processing trade adjustment since last year.

After last July, the reduction of export tax rebate rate of professional footwear foreign trade companies with low profits accelerated their demise.

In addition, since August 1, 2007, the state has expanded the catalogue of processing trade restricted commodities, and the processing trade enterprises in the eastern coastal areas must give the deposit to the bank management. The cost of processing many shoe enterprises in Dongguan has increased by about 10%.

Low price competition products are easy to be anti dumping. There are many small shoe enterprises in Dongguan. The family workshop mode of production makes footwear products not ideal in terms of wear resistance, folding resistance, comfort and other indicators. This low-end product has become increasingly unpopular with consumers and can only be seized by price war.

China's export footwear enterprises are developing rapidly, and occupy a large part of the market in the United States, the European Union and Russia, making the western traditional footwear enterprises feel a strong competitive pressure.

For example, in the shoe making power Italy, the cost of producing a pair of leather shoes is more than 7 times the cost of shoe making in Dongguan.

This product of low price competition can easily become the object of anti-dumping and safeguard measures.

In October 2006, the European Union announced a 16.5% anti-dumping duty on Chinese leather shoes enterprises for a period of two years.

In June 2007, Taiwan also imposed a 43.5% anti-dumping duty on 6 types of footwear products in the mainland.

The EU and Taiwan are listed in the key export areas of Dongguan, and the severity of the attack can be imagined.

Some people in the industry pointed out that, from this year's shortage of labor and EU anti-dumping cases, there are many drawbacks in the management mode that relies on cheap labor to gain price advantage.

In recent years, the exchange rate of RMB against the US dollar has been rising. At present, the exchange rate has risen to the level of 6.9:1, making shoes enterprises a headache.

Because foreign businessmen usually place their order in US dollars, Dongguan shoe enterprises pay in Renminbi for both payment of workers' wages and material purchase.

As a result, the decline of the US dollar against the RMB exchange rate directly reduces the profit of footwear products.

A shoe factory owner in Houjie said that at present, the exchange rate between Hong Kong dollar and Taiwan dollar has been steadily decreasing.

Some foreign merchants have offered quotations in Hong Kong dollars or Taiwan dollars, hoping to gain profits in a disguised form through some financial means.

For example, at the beginning of the month, a pair of leather shoes 100 yuan (RMB nearly 90 yuan) to the factory order, if the Hong Kong dollar devaluation, two months later, when receiving goods, 100 Yuan Hong Kong dollar may only cost 80 yuan, virtually, the factory produced a pair of shoes less than a few dollars of profits.

Labour costs have increased. Insiders say that labor costs have risen steadily in recent years and become "the last straw to crush the camels".

A lot of shoe business owner frankly says, in the many challenges that shoemaking industry faces, new labor contract law is hit hard.

The new labor contract law has increased the cost of employing employees by more than 8%. Some enterprises feel that their business prospects are bleak, so they simply turn off their jobs.

Bai said, "according to the regulations, at least 2000 yuan per month should be paid to each ordinary worker.

There is no way to go through the pformation or collapse, and the enterprises that make low-end products will not be able to get past. I estimate that many shoe factories in Houjie can not adapt.

According to the introduction, the remuneration of all kinds of industries in Dongguan has been raised to varying degrees in this year, and the wage of the footwear industry is generally raised by about 15%.

A shoe factory owner said that from April this year, the minimum wage would be raised to 770 yuan. The general wage of general practitioners could be 1000 yuan to 1200 yuan, and technicians could get more than 1500 yuan.

Embarrassment is that shoe companies are also suffering from lack of work while increasing labor costs.

At present, chemical industry, food industry, construction industry and other industries have a strong demand for labor, resulting in increased mobility of the footwear workers, plus the long working hours of some footwear manufacturers, and the loss of skilled workers.

Reporters at the three street in Houjie, Chi Ling and other places to visit, saw a lot of shoe companies have posted recruitment notices, lack of work severity can be seen.

In order to attract workers, raise the standard of food and extend the rest time, many shoe enterprises still have difficulty in easing up the shortage of workers.

When did the footwear industry create Dongguan famous brand? Dongguan's footwear industry has attracted worldwide attention, but the lack of its own well-known brands is becoming the crux of the development of the footwear industry.

The most important thing in the competitiveness of shoemaking industry is its own technology and brand.

If we do not increase brand building efforts, Dongguan's future will inevitably be replaced in the world footwear industry chain.

Dongguan as a manufacturing and manufacturing industry, shoes, textiles and toys account for a large proportion, but Dongguan's shoemaking enterprises are mainly based on the "three to one supplement" processing trade, and the local government's tax revenue from shoemaking is not high.

Dongguan's shoe industry is mainly OEM, and the processing fee is very low. From the whole industry chain of shoes, there are not many profits left in Dongguan.

Take Nike shoes as an example, its brand profit is estimated to account for 30%, and then the global agents will probably take up 20% to 30% profits, and the market sales will take 20% to 30%. In fact, Nike shoes will not exceed 10% for the Dongguan foundry enterprises.

Therefore, although many Nike shoes are produced in Dongguan, R & D and sales have little to do with Dongguan.

Such an industrial chain is broken.

At present, Dongguan is vigorously promoting industrial restructuring and upgrading, promoting technological innovation of enterprises, and industrial development is replacing innovation and ingenuity with imitation and extensive.

Therefore, the shoe making industry is urgent from "made in Dongguan" to "created in Dongguan".

Of course, the promotion and creation of brands need close linkage between the government, science and technology departments, research institutes and shoemaking enterprises, and push forward from the aspects of technology input, tax incentives, financial support, introduction, digestion and absorption, re innovation, talent team building, technological innovation base and platform construction.

In the course of branding, we should first play the leading role of the large backbone enterprises in the industry. We should set up a general meeting of independent innovation and famous brand forum to sum up the advanced experience of creating famous brands for large backbone enterprises. Secondly, the relevant government departments and industry associations will cooperate to promote the brand building and improvement of the main shoe producing areas. The third is to maintain technological innovation, because technological innovation is an important means of breaking out the footwear industry in Dongguan.

Private enterprises can set up research institutions for shoemaking, with the help of relevant departments' technical strength, do some low-end brands behind some big brands, and gradually march toward first-class brands.

Under the new situation, Dongguan shoe enterprises should continue to move towards the top of the value chain according to their own actual conditions, instead of staying at the bottom of the value chain for a long time, and only take a small amount of processing fees.

In fact, with the advanced technology level and perfect industrial matching foundation of Dongguan footwear industry, as long as we keep up with technological innovation, marketing methods and catching up trend, we will keep up with domestic and foreign brands. So Dongguan footwear will have strong competitiveness in the whole country and even in the world.