Dongguan Shoe Enterprises Frequently Write Off Credit Risk Warning Bell

At present, Dongguan is vigorously promoting the pformation and upgrading of labor-intensive industries.

In 2006, Dongguan cancelled 346 shoe enterprises and canceled 289 in 2007.

The footwear industry in Dongguan, which has attracted worldwide attention, is constrained by multiple factors due to its lack of proprietary technology and well-known brands. It faces a shuffle in the industry, and some weaker enterprises have quietly closed down.

UnionPay letter analysis: first, the development status of the footwear industry in Dongguan, "the global footwear industry to see China, the Chinese footwear industry to see Guangdong" has always been a famous saying that the footwear industry has spread.

Located in the Pearl River Delta geographic center, Dongguan, after nearly 20 years of rapid development, with the influx of high-end talents from all over the world, the continuous improvement of the industrial chain, and the world's top equipment support services, it has become the world's shoe capital attracting worldwide attention.

Dongguan has the largest production shoe manufacturer in the world, the world's most famous casual footwear manufacturer and the largest female shoe manufacturer in China.

In addition, Dongguan has also brought together dozens of global shoe makers.

At present, there are more than 1500 shoe making enterprises in Dongguan, about 2000 shoe and shoe matching enterprises, 3500 shoe related products, leather, hardware, chemical and other related supporting businesses, 2 million employees, and over 1 billion 500 million pairs of shoes each year. It has become one of the important distributing centers for footwear products, shoes, shoes and other related products in the whole country, and has formed a complete supply chain of industry information, market trade, and specialized market for raw material production equipment.

By the end of 2007, Dongguan shoe enterprises had reached 4404.

But at the same time, a large number of enterprises are also constrained by multiple factors, facing a shuffle in the industry, and some weaker enterprises have quietly closed down.

Two, the footwear industry in Dongguan is restricted by multiple factors. While the footwear industry in Dongguan is developing rapidly, shoe companies are also being squeezed by multiple factors to survive, thus making a large number of enterprises facing the risk of elimination.

1, the impact of high oil prices on raw materials and footwear companies is the first to bear the brunt of rising production costs, resulting in smaller profit margins and higher oil prices, resulting in soaring prices of raw and auxiliary materials in shoemaking industry.

From last year to now, the price of chemical products needed for shoemaking has increased by nearly 20%, and the profits of shoes have been continuously squeezed.

Some new materials, such as TPU, have risen by 2000-5000 yuan per ton. These materials have been accepted by consumers. Substitutes are not only related to the product's performance, quality and grade, but also directly affect the consumer market, thus making enterprises dare not use substitutes easily.

2, the reduction of export tax rebates and the challenge of processing trade adjustment. The footwear industry in Dongguan has always been mainly engaged in processing foreign brands, and it has become the main business mode of many shoe enterprises. This mode has been challenged by the export tax rebate and the adjustment of processing trade since last year.

After July 2007, the export tax rebate rate of the 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%.

3, 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 kind of low-end products 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.

Therefore, the products 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.

Both the EU and Taiwan are among the key export areas in Dongguan, and the impact is very serious.

4, the appreciation of the renminbi has made shoe companies afraid to take orders. 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 RMB in both the payment of workers' wages and the purchase of materials.

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

5, labor costs have increased, and labor costs have been rising in recent years.

In the many challenges faced by the footwear industry, the new labor contract law is not a big blow.

The new labor contract law has increased the cost of employing employees by more than 8%, and some weaker shoe companies have to turn off their careers.

Three, self owned technology and famous brands will become the key to win the market competition in the footwear industry of Dongguan. The Dongguan shoe making enterprises' orders are mainly based on the "three to one supplement" processing trade mode, that is, the processing mode of incoming processing, sample processing, incoming assembly and compensation trade.

This trade mode makes Dongguan's shoemaking industry mainly make OEM (original equipment manufacture), and the processing fee is very low. From the whole industry chain of shoemaking, it can not keep much profit in Dongguan.

Take Nike shoes as an example, its brand profit accounts for 30% of the total profits. The world's various agents account for about 20%-30% of the profits and market sales account for 20%-30%, so it can be seen that the processing profit of Nike shoes to Dongguan outsourced enterprises will not exceed 10%.

Although famous brand shoes are produced in Dongguan, the brand research and development and final sales are not much related to Dongguan, which makes Dongguan's shoe industry only develop in limited space.

Therefore, Dongguan should vigorously promote industrial adjustment and upgrading, advocate technological innovation of enterprises, innovate industrial development, and elaborate instead of imitation and extensive.

The shoemaking industry should be developed from "made in Dongguan" to "created in Dongguan", gradually changing the trade mode of "three to one complement" and developing towards ODM (original design manufacture).

It is particularly important to maintain technological innovation, because technological innovation is an important means of breaking out of the footwear industry in Dongguan.

For a large number of private enterprises, with the help of relevant departments' technical strength, they should follow the brand names of some big brands, and gradually march into famous brands.

Four, credit risk indicates that Dongguan occupies a very important position in the world footwear industry.

However, the development of more than 20 years has not produced the world-famous brand and even the famous brand of Dongguan, a famous brand shoe making industry.

The footwear industry in Dongguan lacks its own technology and famous brand, but is also constrained by multiple factors, and is facing a shuffle in the industry.

The shuffling will lead to the survival of the fittest enterprises in Dongguan, and some enterprises will face greater market risks.

Among them, the low-end product family workshop production enterprise and the OEM enterprise will face the risk of being eliminated in the shuffle.

As a low-end product family workshop type production enterprise, because its low price competition is easy to become the object of anti-dumping, it will face the policy risk of exporting countries.

And taking the "three to one supplement" and OEM enterprises will be affected by multiple factors, resulting in rising costs, facing operational risks and eventually being eliminated by the market.

Under the new situation, Dongguan shoe enterprises should continue to go to the top of the value chain according to their actual conditions, and do not stay at the bottom of the value chain for a long time.

At present, the footwear industry in Dongguan already has a sound foundation for industrial matching. As long as it keeps pace with technological innovation, marketing methods and catching up with the trend, it will create its own well-known brands and world-famous brands. The footwear industry in Dongguan will have strong competitiveness both nationally and globally.