Capital Chain Stuck In Chengdu Shoe Industry Life And Death Point

In March 2008, a piece of news shocked nearly 200 thousand practitioners of the footwear industry in Chengdu. The owner of the BELLE shoe factory, which had been in Chengdu for more than 20 years, ran away, leaving tens of millions of debts and a factory with an area of more than 40 mu. In the past 3 months or so, in Chengdu shoe industry circles, such stories are being staged everywhere, and there has been news of the disappearance of a certain shoe factory owner. In addition to market factors such as rising raw materials and blocked exports, 12-15%, such as tightening monetary policy, energy saving and emission reduction, and the introduction of the new labor contract law, are further pushing the long-term footwear industry in Chengdu to the brink of danger. According to Chen Zugang, a professional manager who has long studied the footwear industry, the total cost of enterprises will increase by about 12% to 15% this year. First of all, raw materials, such as sole, leather, glue and so on, are raw materials of chemical industry, so the price rises sharply with the price of oil. In this way, to maintain the same scale of production, the capital needed will inevitably increase; and the appreciation of the renminbi and the subprime mortgage crisis will further exacerbate the business capital chain. "Early signed orders, to be sure to lose, do not lose customers", under difficult decisions, some enterprises choose to continue to export, profit margins continue to be thin. The disadvantages are far more than that. Under the new labor contract law and the policies of energy conservation and emission reduction, the profit margins of enterprises are also narrowing step by step. "Our original net profit is about 8%, probably only 3-4% now." Wang Tao, general manager of Chengdu Linlong shoes industry, said. Ma Yuntao, Executive Deputy Secretary General of the Sichuan footwear industry association, believes that Chengdu footwear industry has been engaged in the "recruitment war" due to the shortage of skilled workers in the past. With the implementation of the new labor contract law this year, the average annual labor cost per employee increased from 3000 yuan to 5000 yuan, and the highest growth enterprise reached nearly 7000 yuan. "More than 30% of enterprises in Chengdu are in stoppage or semi shutdown." Ma Yuntao revealed. Although the above data are not recognized by the government and industry authorities, it is an indisputable fact that the situation is serious. After visiting and investigating the industry, hundreds of shoe factories are currently in a state of shutdown or semi shutdown. Only more than 230 factories in Wuhou District, Chengdu, including cluster Bridge Township, Jinhua Town, and Shuangliu Jiujiang Town, have been shut down and half stopped factories, and the range has also spread to some shoe enterprises in Chongzhou. In fact, the symptom of survival crisis of Chengdu footwear industry has already appeared in early 2007. In the first half of 2007, more than 20% of shoe enterprises in Chengdu had no orders and fell into a halt. Xu Bo, a Chengdu footwear expert and professor of leather Department at Sichuan University, proposed that Chengdu footwear industry is a typical regional "bulk economy" in Sichuan. In a certain area, relatively concentrated production of similar products or products, but due to weak industry self-discipline, market competition means more emphasis on price competition; many small and medium-sized shoe companies compete by imitating others' products; a large number of small businesses are developed from family workshops, and family management is the main responsibility of enterprises. Due to the natural defects of large and medium sized enterprises, relatively unregulated, it is very difficult for them to obtain loans from banks. Once the external environment changes, the crisis of survival will be patronized instantly. "We have opened factories for more than 10 years, and have never used bank loans, but now we want to use them, but we find they can not be used." Wang Tao, general manager of Chengdu Linlong shoes, has a hint of helplessness in his words. On the bank side, because of the credit crunch and the financial management of enterprises are not standardized, there is hardly any possibility of obtaining loans. "An annual output value has reached 50 million yuan, and 100% of the goods exported enterprises have not used one bank loan." This is the true portrayal of most shoe companies in Chengdu. "At the lowest time, our private lending rate is only 0.5%, which is cheaper than bank loans." When Wang Tao needs money, he is usually very anxious, so he basically interacts or uses private funds through his friends and family. Through its own capital flow, suppliers generally allow credit, receipt of orders, production and delivery in about one or two months after the resumption of payment, for a long time, a large number of shoe business is through this mode, live their "moistening" days. But the credit crunch suddenly began to blow, and they suddenly discovered that it was not "spiritual". There are many reasons for failure. Xu Bo attributed it to six factors: macro control, tightening of money, price rise of raw materials, appreciation of RMB, rising labor costs and extensive management of enterprises. The effect of monetary tightening is emerging. Even if many companies want to borrow from banks, the banks' lending possibilities for most of the Chengdu footwear enterprises are almost zero, and the pockets of shoe companies that have never been good at dealing with finance suddenly feel tight. The interest rate of private lending before the shoe industry in Chengdu has gradually increased. "As far as I know, some interest rates have exceeded 1 Gross (10% per month)." Ma Yuntao said. There is a "leverage effect" between bank loans and private interest rates. Banks are reluctant to lend, and private interest rates naturally rise. "But now it is not a problem of high interest rates, it is simply impossible for enterprises to use them." Wang Tao said the original story, "before borrowing is mainly the order, to borrow money to buy raw materials, should be anxious, probably half a month to return the money." Now the enterprises are facing the overall price rise of raw materials. The loan is to maintain normal production, not emergency, "so high interest rates, and the profits of enterprises are getting lower and lower. Who can afford it?" Where is the way out for the shoe industry in Chengdu? Industry experts pointed out that the current situation of Chengdu footwear industry is the total outbreak of malignant factors accumulated over the years. "Macroeconomic regulation is only a problem that is hidden, not a cause." "Or wait for silence in silence, or break a path by themselves." Wang Zhongyuan, general manager of Chengdu Dan Lu shoes industry Co., Ltd., when he said this, revealed a "self rescue" heroism in the tone. "Now is a difficult time, but it is also a good opportunity for growth and development. Only bigger and stronger can we not be afraid of risks." While Wang Zhongyuan said this, the company has adjusted its sales strategy to high-end products, and has made efforts to build its own brand into the high-end shopping malls in Chengdu, thus opening its own brand. Xu Bo believes that the most important thing for Chengdu shoe factories to survive is to strengthen innovation and strive to increase the added value of products. "Even if many enterprises are doing OEM, the quality of products can still add more value to enterprises." Xu Bo gave advice to some bosses who only care about the short-term interests and lack product quality and extensive management.