Footwear Cluster Effect Enables Wenzhou Private Enterprises To Live Longer

How long can Wenzhou private enterprises live?

2.9 years?

3 to 4 years?

Or shorter or longer?

A newly released "Wenzhou private enterprise life cycle study", for the first time to answer the local life expectancy: 10.99 years!

Why is this figure higher than the average life expectancy of the national private enterprises and the whole province's private enterprises?

Why can Wenzhou people occupy the leading position of national private enterprises after decades of reform and opening up?

In Wenzhou, the report is undoubtedly a strong heart.

"These 10.99 years represent the survival of Wenzhou's private enterprises in a good ecological environment."

Pan Zhongqiang, deputy director of the Policy Research Office of Wenzhou Municipal Committee, said, "these 10.99 years do not represent anything.

The path of pformation and upgrading is very long and difficult, but we must go on. "

In the past 10.99 years, the enthusiasm of the whole enterprise is still high. 30 years ago, Wenzhou's private enterprises sprang up everywhere on a barren land.

Up to now, there are more than 70 thousand private enterprises in Wenzhou. They have become a contingent of wind and rain in China's economic stage.

In 2007, Pan Zhongqiang and Secretary General of Wenzhou business association Huang Xiaozhong thought of doing an investigation on Wenzhou private enterprises.

"The general interpretation of the life cycle of an enterprise usually takes about 25 years, but it is difficult to find an area like Wenzhou where it started early and developed so far, and has formed a large area of regional private economic characteristics."

Pan Zhongqiang said.

In 2007, Wenzhou industrial and commercial bureau, Wenzhou municipal Party Committee Policy Research Office and Wenzhou University jointly formed "Wenzhou private enterprise life cycle special research group".

Huang Xiaozhong told reporters: "the sample is based on the business registration and sales information of the industrial and commercial department's" economic account "database, which includes two kinds of enterprises, namely," dead "(that is, the official suspension and sale) and the" living "(being in operation).

On the basis of this, the research group selected the more representative years to calculate and set up the mathematical model through function calculation, and finally concluded that the average life expectancy of Wenzhou private enterprises is 10.99 years.

According to figures from the Wenzhou Bureau of industry and commerce, the number of new private enterprises has increased to 10011 last year, an increase of 6.72 over the same period. The total registered capital of more than 100 million enterprises in the city has 469 enterprises, an increase of 44.8% over the same period. In the complex and changeable 2008, despite the difficulties of many enterprises, the overall enthusiasm of Wenzhou private enterprises is still high.

Research shows that enterprises with less than 500 thousand yuan of registered capital have the lowest anti risk ability and the highest death rate.

However, the registered capital of enterprises with a scale of more than 5 million yuan has the lowest mortality rate, only 1.24%.

Different industries have different lifespan.

Research shows that the valve and the civil appliance industry survive longer, and only calculate the average age of the enterprises that have been injected (hanging) for more than 10 years.

And hardware, pen making two industries, the survival period of enterprises in 5 years or so.

The research group also divided the life cycle of Wenzhou private enterprises into five stages: initial stage, development stage, stabilization stage, recession stage and death period (or regeneration period).

99% of the existing private enterprises in Wenzhou are in the initial stage and the development stage. Only 0.8% of the private enterprises in the stable period.

The private enterprises, which enter the recession period and the regeneration period according to the normal order, belong to a small number of enterprises.

Previously, the survey results released by relevant agencies showed that the average life expectancy of the national enterprises was 2.9 years or 3.5 years, and the life span of Zhejiang's private enterprises was no more than 7 years.

Obviously, private enterprises in Wenzhou belong to the "longevity" type.

The mechanism is ineffective and extensive management: the private economy of the whole country is short of one country, and no private economy in one country has achieved such achievements as private enterprises in China within 20 years.

However, the life expectancy of Chinese private enterprises does not seem to be long.

The golden period of the real development of ordinary private enterprises is in 2-4 years. After that, they either go bankrupt or stagnate for a long time.

The survey of Huicong international information group, a special investigation firm of Chinese enterprises, shows that the average life expectancy of Chinese private enterprises is only 3 and a half years.

The report on China's private enterprise development compiled by the all China Federation of industry and Commerce in 2005 stated that the average life expectancy of Chinese private enterprises is only 2.9 years.

Some people believe that the values of private enterprises are still planned economy and small-scale peasant economy. The most lacking in the operation of enterprises is the spirit of contract and reputation.

The policy of talents is "idle", and the phenomenon of frequent brain drain does not form a corporate culture.

The strategic plan is weak, only talking about "ideas", not talking about "strategy", only considering "now" and not considering "future".

The quality of the owners of private enterprises is not high enough.

For all these reasons, China's private enterprises can not walk out of the shadow of "short life span".

In 2006, Zheng Yumin, the director of the provincial industry and Commerce Bureau, revealed that the average life span of the enterprises in the province was only 7 years.

The province has only 18 of the history of private enterprises for more than 0.355% years, with less than 20 years of history.

This data shows that in the process of pformation from "big private enterprises" to "strong province of private enterprises", the survival characteristics of Zhejiang private enterprises determine the continuity of life.

Our province is dominated by traditional manufacturing and labor-intensive industries. The proportion of private enterprises in manufacturing industry in Zhejiang is close to 70%, which is more than 20 percentage points higher than the national average level, and accounts for more than 6 of enterprises engaged in labor-intensive industries.

Such enterprises have low technology content and relatively low profit margins.

Although owners want to improve their competitiveness through upgrading equipment technology, subject to subjective and objective conditions are often difficult to achieve, coupled with extensive management, private enterprise life expectancy can not be long.

Many share-holding private enterprises are actually family businesses. Such a shareholding structure not only affects the enthusiasm of workers, but also aggravates the contradiction between labor and capital. What's more, behind the "company system", a closed group of rights is formed, and the entry of foreign talent is bound to affect the growth and development of enterprises.

The industrial cluster effect: let Wenzhou private enterprises live longer to see Wenzhou, from the soles of Yueqing, to the shoes of Ouhai, to the shoes of Pingyang heads, to the shoes of Yongjia, to the shoe machines of Ruian, and even to the Huafeng Group, which is the main raw material of shoes, and even to the market of all kinds of raw skins, thus forming a complete industrial chain. "Lippi"

Today, Wenzhou has become the largest leather shoes manufacturing base in the country.

"And the toughness of the industrial chain with high density and reasonable division of labor is also very strong. Even if some individual enterprises fail to operate well, more enterprises will emerge and occupy the blank.

This is also the ecological foundation for supporting the footwear industry in Wenzhou. "

Pan Zhongqiang said, "many private small and medium-sized enterprises in Wenzhou have remained unchanged for more than 10 years and 20 years, that is, the continuous development of industrial clusters has provided the ecological environment for them. This is also the main reason why Wenzhou is still dominated by small and medium-sized enterprises."

In fact, the development of private enterprises in Wenzhou started with marketing as the guide.

"The first batch of entrepreneurs in Wenzhou was the origin of the sales people."

Marketing has realized the pition from production to consumption. It is the multi-level marketing network that supports the development of small and medium-sized enterprises.

"This is also an important feature of the Wenzhou model."

Pan Zhongqiang said.

Under the current economic situation, private enterprises in Wenzhou will never be unaffected.

But in fact, last year, the research group learned from the visit that by the end of last year, private enterprises in Wenzhou had not closed much.

Pan Zhongqiang said, "this is related to the relatively stable and relatively conservative financial concept of private entrepreneurs in Wenzhou.

To a large extent, whether we can get through the crisis depends on whether the financial policy of the enterprise is steady or risky.

"In the past, we always believed that the development of private enterprises seemed to be difficult to find rules," he said to reporters. "This report shows us that there are stages in the development of enterprises and that growth is not equal to development".

This report will also provide a reference for government decision making in the course of the development from traditional extensive operation to intensive and optimized operation mode.

Market pformation and upgrading: to help Wenzhou private enterprises extend their lives, the report shows that land resources, staff quality and technological innovation are three major problems that affect the development of Wenzhou's private enterprises. With the extension of the life cycle of enterprises, the external unfavorable environment and internal obstacles are gradually increasing.

In the study, Wenzhou private enterprises should adopt different strategies in different life cycle. The initial stage should take innovation strategy as the core and the development stage should take the strategy of cooperation and competition as the core. The stable period should take the expansion strategy as the core, while the recession period will take the pformation strategy as the core.

From 6 years ago, Paris opened the first Chinese shoe store named Kangnai, and Kangnai has opened more than 200 overseas stores in more than 10 countries, including the United States, Italy, Greece and France.

"Private enterprises in Wenzhou are trying to establish an international distribution network, such as access to chain supermarkets and shopping centers. This is not a traditional business format, but a modern business format."

Pan Zhongqiang said, "the pformation of the market is a fundamental step, and the Wenzhou people today will be the Chinese people's tomorrow."

"Of course, Wenzhou is more small and medium enterprises that survive in the ecological environment of industrial clusters, and upgrading to a large extent is the upgrading of cluster level."

Pan Zhongqiang said, "the conkey Industrial Park in Russia has gathered many shoe factories in Wenzhou, while the Longjiang Industrial Park in Vietnam has many Wenzhou tanning enterprises."

This shows that the organizational orientation and structural orientation of the industry are equally important. In the ecological environment of cluster, we must not only attach importance to the brand building of enterprises, but also attach importance to the brand of clusters.

The key to upgrading the cluster level lies in how to promote the development of the traditional regional block economy to the modern industrial cluster, so as to optimize the utilization of resources. This is the problem of the policy orientation of the industrial organization.

Pan Zhongqiang said.

In this environment, large enterprises do not simply expand their scale, but focus on industry leading. Through the strengthening of management level and enterprise culture, the core competitiveness of core competitiveness is strengthened by integrating the core resources of technology R & D, marketing channels, brand status, information network, and talent capital.

"In fact, in such a modern industrial cluster, the life cycle of an enterprise can be extended indefinitely."

Wang Xiaonan