Dongguan Shoes: Hesitation At The Crossroads

The association and the manufacturer of Houpo shoe material square, Houjie Town, are surrounded by Dongguan shoe factories and related industries. Li Peng is working in this industry gathering place. His status is the Secretary General of the footwear association of Asia, and is also the editor in chief of the Asian footwear industry and the same name website.

During the interval of conversation, his phone kept ringing.

Recently, too many people are concerned about the current situation and future of Dongguan's manufacturing industry. Li Peng has just received a research team from Beijing.

He said he was currently running a family run company and interviewed the bosses of the industry face-to-face to do a questionnaire survey.

Similar to the footwear industry association, there are a large number of trade associations in Dongguan, such as the footwear association, the toy industry association, the furniture industry association, and other sub sectors. For example, Dalang's professional towns have their own wool textile industry associations.

The chairman or president of a society is often the boss of a large factory, and the real responsible person may be the vice president or the Secretary General.

The association receives a certain membership fee annually, and also relies on resources to do some training, publishing information through the magazine network and other information platforms, as well as earning some income.

The trade association has become a link between enterprises in various industries in Dongguan, and has also been given the color of collectives for the industry.

Many situations and appeals of enterprises in the industry are conveyed through the channels of the association.

For Li Peng, the important thing at the moment is to collect the situation of shoe factory's operation or profit, and to judge the situation next year. At the same time, we should also reflect the willingness of enterprises to raise the export tax rebate rate.

In the recent export tax rebate policy of the state, footwear has not been raised with textile and toy products.

Li Peng said that the association had also done some research on the implementation of the labor contract law and the exchange rate issues before, and the results were paid much attention to and received the response from the relevant departments.

Some chambers of commerce are often related to professional town governments, while others are organized by industrial enterprises.

Because of the service industry, the voice of industry associations may be different from the ideas of local governments.

Therefore, some associations with more professional towns and local government backgrounds are more likely to be less sensitive than those without government relations.

Dongguan shoe factory, especially Taiwan funded factory, has a very large scale. According to the industry, a shoemaking line needs about 400 workers. Therefore, more than 8000 people in Dongguan can be regarded as a large factory. Five thousand or six thousand people can only be counted as factories, and 4000 people are small factories.

The largest shoe factory in the world, Taiwan Baocheng group, a brand OEM for Nike and Adidas, has 70 thousand people in Yuyuan's shoe factory in Dongguan.

Li Peng has broken fingers, counting from the shortage of migrant workers to oil shortage, electricity shortage, raising the minimum wage standard, anti-dumping, rising costs, and lowering the export tax rebate rate. Until now, the shoe factory in Dongguan has gone through many shocks.

The latest impact of this wave can not be underestimated. The damage comes from the direct reduction of orders. This year, the order of footwear industry in Europe and the United States dropped by 10%, and next year the situation is even less optimistic. Only the US market forecast will reduce the demand for 150 million pairs.

Enterprises with a relatively small scale from 600 to 2000 people are the most affected. As for smaller factories and small workshops, they are not related. They just start working alone and do not rest alone.

The pressure is still objective, including the export situation of traditional industries such as textiles, clothing, footwear and so on. A industry insider predicted that after the completion of the overseas orders this Christmas, some small and medium-sized shoe factories may not start after the Spring Festival.

Finding new ways is not only the aspiration of enterprises, but also the expectation of local governments.

The closing of the shoe factory at the end of last year began to arouse concern about the prospect of Dongguan's traditional manufacturing industry. When the more than 4000 employees closed their factories, they left some machine owners running with some small factories, and even secretly moved away from the machines.

The boss did not disappear, nor did he pay wages in arrears, and he paid financial compensation in accordance with the regulations.

The reasons for the closure of enterprises are very complicated. In addition to losses and orders, some Taiwanese enterprises choose to end their businesses because of the boss's lack of successors; others feel that their business pressure is high and their profit making days are closed. The closure of the Union toy factory is not due to the order and financial crisis, but because the owners have taken the money out for stocks and investment in silver mines, resulting in a chain breaking of funds. Because of the collapse of the financial crisis, there is only one enterprise. The company, which was originally a fairly good business, unfortunately sent a large sum of money to Lehman brothers to invest last year.

In fact, people in the industry have a saying that those who choose to close are usually those that have just opened for several years, because they haven't had time to make money. Those factories that are open for a long time and are large in scale, even if the economy is not good at present, will not make money for the time being, and they will stick to it.

In the most concentrated town of Humen, there were rumors that hundreds of upstream and downstream Taiwanese enterprises were leaving together, but official figures showed that there were more than 1200 clothing enterprises in Humen and 350 thousand employees.

Around the kilometer of the fashion city in the Yellow River, Humen, the wholesale market for clothing is still crowded.

Many shoe factories say they want to leave Dongguan, but in fact, as long as they are still making shoes, they can not really leave Dongguan.

After 20 years of development, Dongguan has become the largest shoe production base in the world, and 10 pairs of shoes in the world are produced here.

At present, the annual output is about 1 billion 600 million pairs. At its height, there are 1800 shoe factories, more than 2000 shoe materials, leather and shoe machine supporting enterprises, more than 3000 supporting businesses, 650 traders and shoe development centers, 5 material markets, and over 1 million employees.

Not only has a huge production volume, but also has formed a complete industrial chain, from the industry information, product design, raw and auxiliary materials procurement, machinery and equipment, personnel training, production and processing, to display, sales, logistics and pportation of the entire supporting system.

Li Peng once went to India, Indonesia and other places with the shoe factory owners. The final result is that most people still believe that the overall environment of Dongguan can not be replaced.

The Guangdong provincial government began to use policy to guide some traditional labor intensive enterprises in the Pearl River Delta to pfer to the mountainous areas of northern Guangdong and the East and West wings. A lot of 21 industrial pfer parks have been set up by the central cities of Pearl River Delta and the local governments. There are 9 Industrial parks in Dongguan.

But in general, there are not many enterprises that really relocate.

Li Peng said, as far as he knows, Dongguan has not yet seen the "run away" situation of many enterprises in the shoe industry chain.

Even if factories are set up in the inland provinces or in India and Indonesia, they will not shut down the factories in Dongguan, but will only produce some simple, low-grade, and no time to deliver products in overseas or mainland factories, but the high-end, high technology and rush hour will still be placed in Dongguan.

Before and after the Canton Fair, all the towns in Dongguan organized trade exhibitions, such as footwear, wool textiles, hardware, clothing, etc., to attract customers from home and abroad to look for orders. At the same time, they also held some industry forums to gather business people, government departments and trade associations to discuss the direction of development. How to deal with the impact of the financial crisis has also become a hot topic.

For the traditional processing industry in Dongguan, from the simple order production to the upstream and downstream, it extends more competitive industrial functions such as brand, design, trend release, display, sales, logistics, and industrial incubation. It has become a common understanding from the middle section of the "smile curve" with the lowest added value to the higher end of the added value. It has become a common understanding that the world shoe industry (Asia) headquarters base project and Humen garment production and research Incubation Park project are all aiming at the direction of the industrial upgrading service integrated platform.

3 months ago, Premier Wen Jiabao's visit to China made Zhang Huarong, chairman and chief executive of Huajian group, a celebrity.

In front of Premier Wen, he talked about his six words, "development, pformation and upgrading", which is the direction that the local government in Dongguan is pushing for the development of traditional manufacturing industry.

Zhang Huarong, a veteran soldier, went to Dongguan to start her business in 1996. In the past 12 years, he has set up the country's largest export manufacturer for middle and high grade women's shoes.

In the R & D center on the four floor of Huajian's office, Moro, a female shoe designer from Italy, has just returned from a vacation. She sits in front of a pile of shoes and shoes, and her Spanish colleague goes to the fashion show in Milan, Italy to find out the latest market trend.

Next to the 6 foreign designers' offices, it is called "100 yards" by Huajian. The technical personnel of Huajian plan to collect 100 thousand consumer's foot data and reformulate a set of 100 yards of standard size, so as to make the human body more practical.

Here, technicians demonstrate that 3D images and data can be formed through foot scanning, which can be used to customize fit shoes for consumers.

"Custom price is four times that of ordinary products, but there are many ways to customize abroad, and it is also necessary to promote in China."

The staff said.

In the face of economic recession and declining industry orders, Zhang Huarong is willing to talk about management and efficiency, and the future of traditional manufacturing.

In Zhang Huarong's view, the current industry downturn has highlighted the importance of internal management.

When the environment is good, the well managed factories and the bad factories can make money, but when the environment is not good, only large enterprises with superior scale, good reputation, stable and reliable technology, and good internal management can survive.

The future may be faced with a process of "shuffling": "if the market demand is to buy 5 pairs of shoes and the economy is not good enough to buy only 3 pairs, then we will strive to do well in the 3 pairs."

The production price of Bobbi dolls in Dongguan, Guangdong is $1. Finally, the retail price of WAL-MART in the United States is 9.9 dollars, and the American made nearly 9 dollars through manufacturing links.

The conclusion is that China's primary manufacturing industry has no future.

For this rather popular argument, Zhang Huarong disagrees: "in fact, our profit margin in the enterprise is higher than our sales customers in the United States. Who says the traditional industry has no future?"

Zhang Huarong said, manufacturing industry needs perseverance. Before the capital market and real estate opportunities, many funds were attracted to it. For Huajian such enterprises, "only how to create shoes is very professional, for those hot things do not understand, the only choice is to continue to follow our profession."