PRD Footwear Enterprises Are Facing Difficulties In Export And Difficult To Manage.

Focusing on Guangdong's industrial upgrading report seven, in August 21st, BOC Hongkong released a report: "in the first half of this year, the export situation of the Pearl River Delta was going downhill.

The operation of some enterprises is difficult to sustain.

The difficulties faced by export processing enterprises include: the continuous and rapid rise of labor costs and the adjustment of national processing trade policies, as well as the shortage of land resources, the appreciation of the renminbi and the surging of crude oil and commodity prices.

To this end, the Pearl River Delta enterprises on the one hand strengthen product development and brand development, on the other hand are ready to move to lower cost areas, the latter is more feasible for a large number of small and medium-sized enterprises, "the new round of industrial pfer will not pose a threat to Hongkong's International financial center."

Shenzhen's export growth dropped by 20%: export data said no export report: at present, Guangdong's export processing enterprises face sharp changes in internal and external environment and adjustment of state policies, resulting in a sharp increase in operating costs.

These enterprises are considering various countermeasures, including upgrading technology, creating brands, recombining and merging, moving factories or even stopping businesses.

This change will not only have a profound impact on the economic development of the Pearl River Delta region, but also bring about a new integration of the two modes of economic cooperation between Guangdong and Hong Kong.

In the first half of this year, the total export volume of Guangdong increased by 12.9%, an increase of 13.5 percentage points year-on-year, far behind the 21.9% growth rate of the whole country.

Guangdong's total exports accounted for 30.3% of the total 28%. in the first half of this year from 31.8% in 2006 and 30.3% in 2007. In 2006, the total export volume of the Pearl River Delta accounted for more than 95.6% of the province's total, accounting for 29.8% of the whole country.

In the first half of this year, export growth in Guangzhou, Shenzhen, Dongguan and Foshan fell by 8.1, 21.6, 2.4 and 20.1 percentage points respectively.

In June, exports of Shenzhen and Foshan decreased by 2.6% and 3.6% respectively, which is rare in recent years.

In the first half of this year, Shenzhen's export growth ranks behind the mainland's coastal export base, while the growth rate reached 31.3%. last year. On the other hand, the export growth of export processing enterprises' main products declined significantly. Clothing exports decreased year by year, while 31.3%. plastic products shrank. The export growth of 4.5%. toys, lamps and bags and bags increased by 25.4, 14.2 and 12.6 percentage points respectively.

From the perspective of enterprise type, the export volume of foreign-funded enterprises increased by 15% in the first half of last year, while the growth rate reached 24.4%. 60% in the same period last year. The pessimistic expectation is that 60% of the enterprises in the Pearl River Delta participated in the first two months of this year, and 1855 fewer than the same period last year.

But these data do not fully reflect the problem.

According to the Statistics Bureau of Dongguan, if the newly opened enterprises were added, the total number of shoe factories in the last year and last year increased by 537 and 212 in the net shoe factories in the city, and 4404 of them were still steady.

There are also some special factors that lead to a broader phenomenon of enterprise obsolete. For example, the government has stepped up environmental enforcement and increased safety standards in Europe and America, resulting in the closure or closure of many ceramic and toy enterprises.

"On the whole, the Pearl River Delta has not appeared on a large scale of industrial failures".

The report cites a survey by the Chinese manufacturers' Association of Hongkong: 83.4% of the respondents said the overall production cost increased by more than 10% in the past two years.

The proportion of pessimistic or even pessimistic businesses in the Pearl River Delta business in the next two years will be close to 60%. The proportion of the total business in the industry is expected to be 2/3.

Under this pessimism, 8.4% of the enterprises will consider closing the factory, and 11.7% of the enterprises consider turning to other businesses, both of which amount to 20%.

Therefore, the "Manufacturers Association" estimates that if the existing business environment can not be improved, the number of businesses in the Pearl River Delta business in the future will be over 1.

60% enterprises have never developed: why worry?

The report cited the "manufacturers' Association" survey that 52% of enterprises are ready to upgrade equipment and technology, and another 44.1% will develop high value-added products, and 25.7% want to create their own brands.

However, pformation requires resources such as capital, technology and talent, which is what the PRD enterprises lack.

The Hongkong Federation of industry "Pearl River Delta manufacturing - Hongkong industry challenges and opportunities" Research Report shows that the PRD enterprises are mainly OEM (OEM), accounting for 82.1%., while ODM (original design) and OBM (original brand) account for 25% and 12.8% respectively (Note: some overlap), indicating that the PRD is dominated by low technology industries.

Moreover, 65% of enterprises said they had never engaged in any research and development activities.

The technological development and market diversification of the Pearl River Delta enterprises is inferior to that of the Yangtze River Delta, which leads to the difficulty of operation in the face of rising labor costs and export processing policies.

A simpler and quicker solution is relocation, the report said.

According to the "manufacturers' Association" survey, 36.3% of enterprises consider relocation of production processes, of which more than half (52.3%) will only move factories to other parts of Guangdong Province, 7.7% want to move to the Pearl River Delta Environmental Protection Industrial Park, 23.1% to the Pan Pearl River Delta region, and the other target areas include the Yangtze River Delta, Hongkong and Southeast Asia.

Another investigation by TDC revealed that about 41% of the rest of Guangdong and the Pearl River Delta Environmental Protection Industrial Park were considered, and another half were mainly considering moving to the Pan Pearl River Delta region.

According to the report on the source of the cold wave in the news, the difficulties in the survival of the export enterprises are the following two factors. First, labor costs continue to rise rapidly.

Influenced by the implementation of the strategy for the development of the western region, the rapid rise of the Yangtze River Delta, the decline in birth rate brought about by the population policy and the general improvement of the education level in the mainland, the number of migrant workers in the Pearl River Delta has been decreasing. More than 50% of the export processing enterprises in 2004 had a shortage of workers.

According to the Guangdong provincial government's estimate, in 2006, there were 2 million 500 thousand workers in the province, accounting for 1/3 of the total demand.

In 2007, the annual salary of Guangdong employees was 29 thousand yuan, an increase of 46% over 2003, with an average annual growth of 10%.. The survey shows that the average salary of migrant workers in the Pearl River Delta in 2006 is 1298 yuan, which is higher than that in the Yangtze River Delta.

According to Guangdong's "wage doubling plan", from this year, the wages of the whole province increased by 14% annually, and by 2012, the wage level will be quadrupled by 2000 (56 thousand yuan).

After the implementation of the labor contract law and the employment promotion act, the labor force's position in the labor negotiations has risen, and the wage increase has been raised. (Guangdong's labor arbitration case has increased by 25% annually), which has further pushed up wages.

According to the Hongkong TDC estimates, if labour costs account for 15% to 30% of total production costs, only wage increases and RMB appreciation will increase the total production cost by 6% to 12% two, and adjust the processing trade policy.

In recent years, the mainland's trade surplus continues to expand, and foreign exchange reserves rank among the top countries in the world. A large number of foreign exchange inflows cause serious liquidity surplus, while overseas trade frictions are increasing.

On the other hand, some low-level processing trade causes environmental pollution problems and consumes too much energy.

The mainland has adjusted the processing trade policy since 2006. With the goal of "favorable balance" and "adjusting foreign investment", we should take the control of "two high and one capital" (high pollution, high energy and resource) as the means to promote the pformation and upgrading of processing trade.

The specific measures include adjusting the export tax rebate - abolish and reduce export tax rebates and 2820 products for two consecutive years; two, expand the catalogue of prohibited categories and restrictions on processing trade.

So far, 1140 products have been banned.

The three is the "pfer" management of margin accounts.

Enterprises engaged in restricted processing trade shall pay 50% or 100% of the ledger deposit according to the import duties and VAT levied.

In the above measures, the margin account has a greater impact.

It is estimated that the cost of export processing enterprises may suddenly increase by 30%, and only the textile, clothing, shoes and hats, bags and other enterprises need to pay a deposit of 20 billion yuan.

In addition, the lack of land resources in the Pearl River Delta has restricted the expansion of export processing enterprises. Shenzhen, Dongguan and Foshan now have no land for large-scale development; the electricity price that has not been moved for two years has been thawed recently; the sewage treatment fee has increased to 300% in the past two years; the RMB appreciation has increased by 17% after the exchange rate reform, which has increased the cost of the enterprises by 3.4% to 7.7%; and the price of international crude oil and other primary products is still at a high level.

Beside the news, Hongkong headquarters has no worries. The report also said: "most enterprises do not want to go too far in the process of moving factories", mainly because of industrial matching and traffic links.

Most of the export processing enterprises take Hongkong as the regional headquarters (66%, and 13% share the regional headquarters in Hongkong and the Pearl River Delta). The Hongkong head office is responsible for sales, marketing, R & D, information management and other functions. Migration is much more difficult.

Therefore, the current popular mode is the expansion of factory relocation, that is, the separation of corporate headquarters and production capacity, and the impact on the Pearl River Delta and Hongkong economy is relatively small.

In May this year, Guangdong Province officially launched the "double pfer" strategy, and decided to use 50 billion yuan to promote the pfer of industries and labor force in the next 5 years.

According to the report, although the factory relocation is quite different from the Pearl River Delta investment made by Hong Kong businessmen in 80s, "the root has not been removed from Hongkong".

Hongkong will continue to be the headquarters and service center of the export oriented processing enterprises group, especially the function of the financial services industry and export trade will not be lost, but the scope of radiation will expand.