Wenzhou Shoe Enterprises Wait For Better Turn To Save Themselves

Wenzhou's 6 000 enterprises are in a state of work stoppage, which is one of the most conspicuous incidents in the past half month except for the floods in Southern Yangtze River and the aftermath of the earthquake.

In June 19th, Xinhua published an article entitled "Wenzhou mode of life and death: 6 enterprises hanging by a thread".

Is this just a sudden incident?

How about the impact?

Or is it a link that must be experienced in economic development?

Is it the irreversible industrial upgrading?

In the past year, "thousands of shoe enterprises in the Pearl River Delta have gone bankrupt or moved out" suddenly and again. Now many people's minds do not want to carry out too many associations. But these two things always seem to collide inadvertently, giving people some hints.

Some may say that many factors, such as rising raw materials, blocking exports, tightening the money supply, saving energy and reducing emissions, are the main reasons for the closure of 6 000 enterprises in Wenzhou.

It can be seen that the profits of these enterprises in Wenzhou are also bearing the squeeze from the two fronts of the upper and lower reaches: the upstream is the soaring of raw materials and labor costs, and the downstream is the rapid increase of exchange rate and the shrinking of foreign orders under the subprime crisis.

It is also said that most of the 6 enterprises in Wenzhou are small and medium-sized enterprises. The inherent "life cycle" of SMEs is precisely the fate of Wenzhou enterprises falling down this year.

In short, many people believe that the death and robbery of 6 000 enterprises in Wenzhou is more often the result of the "bad elements" superposition.

This is not the same as the incident that led to the collapse or relocation of thousands of shoe enterprises in the Pearl River Delta last year.

Since the reform and opening up, the Pearl River Delta has seized two opportunities in the three wave of global industrial pfer: the light industry represented by clothing, shoemaking and toys before the mid 90s of the last century, and the IT industry represented by electronic information in the middle of 90s.

Last year, a large number of shoe factories that had been closed down began to rise in bulk before the mid 90s of last century with the comparative advantages such as location, land and labor force. After that, shoe manufacturers in the Pearl River Delta moved forward vigorously.

Observers pointed out that the decisive reason for the rise of the shoe manufacturers in the Pearl River Delta region is the relative abundance of local resource elements, which has given the enterprises suitable soil for growth.

However, the third wave of global industrial pfer - the pfer of heavy chemical industry after 2000 is coming. The Pearl River Delta has failed to seize this opportunity. One of the reasons is that the PRD has not yet had enough resources to undertake the industrial pfer. After several years of neglect, the collapse of the Pearl River Delta's shoe making enterprises has affected the local light industry's atrophy.

The emergence of the "Wenzhou mode" originated from the mid 80s of last century. Wenzhou was identified as one of the 14 coastal open cities. The business culture and flexible way of thinking rooted in the blood of Wenzhou just met the market economy which was gradually opening up at that time. Soon it was found that the "Wenzhou mode" emerged and showed strong vitality in a number of emerging economic models, such as South of Jiangsu mode and Yiwu mode.

In fact, Wenzhou, which is regarded as a "wild" economic form like wildfire, has created a large number of Wenzhou enterprises flourishing. In addition to closely related to the natural endowments of Wenzhou people and Wenzhou, more importantly, the external market factors are playing a role. It is a long period of civil power that has been showing signs of "spring full of people" in the years of the market.

Therefore, it is not difficult to imagine that when the direction of the market is changing or suddenly changing, Wenzhou enterprises will become inevitable if they do not brew the ability to adapt to the new wind direction.

In this way, both of them seem to be in a chain of "going all the way" in fact, facing the same problem -- the painful pformation of industrial pfer and upgrading.

In the face of this reality, the so-called "life cycle" and other factors of small and medium-sized enterprises naturally withdraw to a secondary position.

Although the 6 SMEs in Wenzhou are fighting for the crisis with temporary stoppage, they are trying to stick to the situation. But in the face of the grim situation, what is ahead of them?

Recently, a lot of "bad news" came like a piece of paper. Not only Wenzhou enterprises, Taizhou leaps, Hangzhou Nan Wang Group, Jiaxing Xu Lai, local leading enterprises have successively pmitted the news of capital chain breaking.

Where is the way out?

Building factories elsewhere and pferring to new areas is obviously the direction of some enterprises.

From the manufacturing perspective, the relative advantages of land and labor costs in Hangzhou, Wenzhou and other places have been lost, but these areas have always been flexible in the market mechanism and efficient in enterprise operation, and even the best entrepreneur human capital can be duplicated and played a role in other regions.

Taking root in the locality, finding new comparative advantages, improving service and brand marketing are another upgrading direction.

For enterprises with R & D strength, product innovation and new market with high added value should be an inevitable choice.

Because the era that can survive only by low labor cost, low technology level, protective policy and extensive and unorganized management is going to be over. Under the new market trend, the enterprises that survive can also take the road of "management innovation and technological innovation" meticulous development, which is the consensus of industry experts.

Enterprises also need to change their concepts, from simple price competition to value competition, and gradually pform from simply providing low price products to helping the customers to solve the core values of concern. By enhancing the status of enterprises in the value chain, they can enhance their profitability.