Zhejiang'S Difficult Economic Turn

For decades, the private economy in Zhejiang has been stubborn.

In previous adjustments, they can always protect themselves in legal or illegal ways, and find survival paths through self-help.

But now, they appear to be in a desperate state and are crying out for help from the government.

It's good news, but it seems to be bad news more often than ever. After the hottest summer, Wenzhou's frequent power cuts in the past few years.

Before the final heat subsided, the Wenzhou merchants rarely stopped their footsteps and became slow in the night.

On the most famous poetry Island, the lights on the banks of the river are dim and charming.

Neon, the most upscale entertainment block in the newly upgraded area, is still shining and shining.

But everyone has no intention of appreciating it.

A survey conducted by the Wenzhou economic and Trade Commission in early July showed that in Wenzhou, 15521 enterprises in 31 industrial towns and development zones, 1259 of them stopped, half stopped and closed down, accounting for 8.1% white walls, empty factories, locked factory doors, raw materials scattered in the workshops, guards left behind in twos and threes, sluggish fruits and food hawkers in the industrial parks, and the real picture was revealed as soon as the day came to light. The first time in the world, the number of enterprises in Wenzhou was 100%.

"Many factories have shut down."

Zhou Dewen, President of Wenzhou SME Promotion Association, said that this summer is far ahead of the difficulties that could be imagined at the beginning of the year.

From Wenzhou along the coastline to the east or directly north, in Taizhou, in Yiwu, Ningbo in Cixi, Ninghai, Shaoxing, Shengzhou and Keqiao Textile City, depression is just like a faucet that can not be closed.

Zhejiang's industrial economy is "in a tight running state", "the enterprise weighs the weight ahead", the Zhejiang economic and Trade Commission's July industrial economic analysis report wrote in a rare tone.

The latest statistics show that in the first half of 2008, the industrial added value of Enterprises above Designated Size in Zhejiang increased by 12.2% over the same period last year, an increase of 5.5 percentage points compared with the same period last year. In the first five months, the total profit of enterprises increased by 14.1%, and the growth rate dropped by 17.8 percentage points year-on-year.

"In the second half of this year, the economic operation is still facing greater uncertainty and development trend is grim."

The report is pessimistic.

A survey conducted by the Wenzhou Municipal Economic and Trade Commission in early July showed that among the 15521 small and medium-sized enterprises in 31 industrial strong towns and development zones in Wenzhou, there were 1259 enterprises that were closed down, semi closed down and closed down, accounting for 8.1% of the total number of investigations, an increase of 2.1 percentage points over the first quarter.

Some enterprises began to migrate, preferring to stop working to build new factories in the mainland.

On the major media in Wenzhou, information about "rent seeking" for plant or production equipment has now been changed to "pfer".

"The original rental plant of 25 yuan per square meter can not be rented for 6 yuan now."

Out of the city of Wenzhou, by train, westbound, the big shoe factories on both sides of the railway can be seen everywhere. The signs of "China Shoes Capital" remind each other of the legend once created. When the shoe making industry in Wenzhou is at its best, it produces 40% of the world's shoes, 60% of which are exported abroad.

But now, in the industrial zone of the shoe industry, shoe leather and shoe factories, the shutdown has swept the whole park.

There are only a few guards in the factories, and they are gloomy and disoriented.

"I simply can't live."

Lin Jinbiao, chairman of Wenzhou shoe material association and chairman of good shoe material, said.

Because of soaring raw material prices, RMB appreciation, export tax rebate rate reduction, interest rate adjustment, labor force price rise and logistics cost increase, profit margins are being further compressed.

A $more than 10 sole has a profit of about 1 yuan in the past.

Under the impact of increased costs, it has been almost completely offset.

"Before net profit 5%, now 1% is good."

"Orders are either not, they are afraid to do."

Lin Jinbiao said that on the first floor of his factory, 5 production lines for sole production have been suspended.

As the price of iron rises, the cost of making shoes is increased from 2000 to 3000 yuan per piece. The oil price is rising, the raw material of shoe material is increased by more than 3000 yuan (the raw material of shoe material is mainly petro chemical products), and the polish oil is also expensive. Before each pair of shoes, it is 8 yuan, and now it is at least 1.5 yuan.

At the same time, wages for workers are also rising.

In the past few years, the basic salary for the odd jobs with no technical requirements was 850 yuan, and now it is 1200 yuan.

Lin Jinbiao's strategy is to reduce the number of contract workers, from more than 100 to more than 50 at the height of the contract.

"We can only recruit a small number of workers, and take fewer orders to ensure the stability of the teams we have recruited."

But even if it does not start, the basic salary of the workers is enough to crush a small business that is not prepared.

Lin Jinbiao introduced that he knew a larger shoemaking enterprise with only one worker's salary, and the monthly expenditure was about one million.

The largest shoe manufacturer in Wenzhou has about 20000 employees and pays tens of millions of dollars a month. "If you don't have a list for three months, you can't live at all."

RMB appreciation has exacerbated difficulties.

Foreign trade orders are mostly denominated in US dollars. Over the past year, the renminbi has appreciated nearly 10% against the US dollar. If it was signed a year ago, it would have no profit after it has been completed.

"Not losing money is pretty good."

Lin Jinbiao said.

Environmental protection control measures are also a factor.

Lin Jinbiao said that in the same sense, more than 100 enterprises that provided shoe upper leather for shoe enterprises were all closed because they could not bear the cost of controlling pollution.

Some enterprises began to migrate, preferring to stop working to build new factories in the mainland.

On the major media in Wenzhou, information about "rent seeking" for plant or production equipment has now been changed to "pfer".

"The original rental plant of 25 yuan per square meter can not be rented for 6 yuan now."

The large depression has exacerbated the tension of the capital chain.

"Even the foreign trade list has debts.

The Koreans owe us about one million or more than three months.

Lin Jinbiao is worrying about his about three million receivables. "Factories are always padding money, they simply can't afford it."

Most people have abandoned the main business of manufacturing.

A shoe owner made a mortgage with 60 million of his factory and housing loan, all of which went to Sichuan to invest in real estate.

Lin Jinbiao believes that this is a helplessness, "if borrowing to expand production, it is a vicious circle."