Jinjiang Shoe Clothing Crisis: A More Serious "Labor Pains" Than In 2008

In early October, Jinjiang could feel the slight heat at the end of summer. "This crisis is more serious than 2008, and it will be harder next year. Maybe the 2016 Olympic Games will bring some changes." Facing Jinjiang Shoes and clothing The general situation of enterprises, Chen Cheng, a person in charge of a small and medium-sized enterprise (a pseudonym), talks to reporters in the south of a teahouse. This is doomed to be a year of calmness.

fast Fashion brand Hope Les, Singapore listed company alligator and this year only listed in Hongkong. Noble And so on broke out the boss lost contact, arrears of wages or even the collapse of the wind, causing a great stir in Jinjiang. In September, there was no end to the hustle and bustle of the shoe company.

Over the past 20 years, Jinjiang has achieved the fame of "China's textile industry base" and "jacket city" by virtue of "O E M - turning to domestic sales, endorsing spokesmen, smashing advertising, building brands, expanding stores and listing". However, in this round of industry depth adjustment, the "Scar" which was covered by the rapid development in the past has been enlarged, and Jinjiang is clearly on the crossroads of transformation.

Cash flow at the knife edge

After the boss lost contact with him, he seemed to be in a storm. Although there was still no pay, the chief financial officer and Secretary Ouyang Hao Ran chose to resign. In September 16th, cable International's official website claimed that CEO Wu Qingyong was "lost" and the company's cash was transferred, leaving the company with only 6 digits of cash. In September 18th, cable international official website again announced the announcement that the board of supervisors decided to remove Wu Qingyong from the company. The statement also said the bankruptcy procedure was imminent. Although cable again announced in September 22nd that Wu Qingyong had contacted the company, he said that Wu would return the funds to the company, but the announcement had changed the title of Wu Qingyong to the former CEO.

The outbreak of many storms has clouded the top of shoes and clothing enterprises in Jinjiang. One of the main manifestations is that suppliers are less trusting of manufacturers. Pressing accounts is a way to maintain cash flow in shoes and clothing enterprises. In the past, the reimbursement cycle of Jinjiang foundries ranged from 30 days to 120 days, even for a year. But nowadays, bad environment requires cash transactions. The person in charge of an enterprise with tens of millions of sales told the Nandu reporters that now the OEM enterprises dare not allow brands to press too much accounts, and cash transactions are the best. Last year, the peak of accounts receivable was 9 million yuan, and this year the plan will be controlled within 3 million yuan.

Suppliers demand cash transactions, which is still in the depth of the industry adjustment period of shoes and clothing enterprises, the pressure of capital chain will undoubtedly increase sharply.

For Jinjiang enterprises, the main means of financing are banks, private lending and listing financing. At present, these three ways are not only heavy resistance but also reefs. Most of the enterprises on the road are broken up due to the insolvency of their debts.

Bank lending is undoubtedly the lowest cost way, but according to the local banking industry, most banks today maintain the balance of loans at most and do not add new loans to the footwear industry. At this time, the relationship between enterprises and banks has become very subtle. A local person who did not want to be named told Nandu reporters that there were 22 production lines and more than 1000 workers in a local shoemaking factory, but there was a 10 million loan in the bank which was unable to repay due to maturity. The company tells the bank to renew the loan, otherwise it can only declare bankruptcy. The Jinjiang government can only ask the bank to lower the loan to the enterprise.

Enterprises with a certain scale can still strive for bank loans, while more small and micro enterprises can only turn to private lending. This is the most popular way of financing in the locality. But local people told reporters in Nandu that interest rates rose with the banks' shrinking loans. The annual interest rate was as high as 30%, and the annualized interest rate below March was sometimes more than 50%. At present, the risk of this kind of financing can be imagined when the shoe and clothing industry is in the doldrums and the profits are shrinking.

　　 Aura of Jinjiang model

Although the shoe and clothing enterprises in Jinjiang have encountered a crisis of capital chain which is unexpected, but in the 20 years before 2011, Jinjiang has created a myth of Chinese footwear industry. "China's textile industry base" and "jacket city" are at the top of Jinjiang. In the heyday of the 2011, a group of data from the Jinjiang economic and Trade Commission's official website showed its brilliance: the annual output of footwear sports tourism shoes accounted for 40% of the country's total and 20% of the world's output, and 60 billion of the industry's output value.

"From the beginning of O E M, to the domestic market, making the brand, and by signing the endorser and advertising the brand, these initiatives promoted the upgrading of the footwear industry chain at that time, and let the industry chain shift from the foundry to the brand management." The key Road Sports Consulting Co., Ltd., C E O Zhang Qing, commented on the Jinjiang model's contribution to the development of China's footwear industry.

In fact, the brand awareness of Jinjiang shoes and clothing enterprises is really ahead. "More than ten years ago, he saw that he was making a billboard of" eight points profit "in Quanzhou bridge. So early there was brand awareness. It was really not easy. Shu Wen, a senior sporting goods brand executive in Jinjiang, is so lamented.

CCTV sports channel has been dubbed "Jinjiang channel" because of XTEP brand and other Jinjiang brand advertising. By 2003, five brands of shoes and clothing in Jinjiang, which had been advertised in the central government, had more than 40 brands.

The licensing movement of shoes and clothing enterprises in Jinjiang is just speeding up the process of urbanization and increasing demand for leisure products. "At that time, many enterprises did not have their own R & D teams at all, and some even took the products of others directly to tear them off and sold them." Zhang Qing recalls. In such a good day, Jinjiang shoes and clothing enterprises can produce what they can sell.

According to the Jinjiang economic and Trade Commission's announcement on the official website of the 2011 "Jinjiang industry status and planning", the textile and garment industry in Jinjiang achieved an industrial output value of over 50 billion yuan and a tax payment of 2 billion 400 million yuan. According to the statistics of Jinjiang Municipal Bureau of statistics, the output value of textile and garment industry in 2012 reached 59 billion 923 million.

　　 The rising tide of listing

Such brilliance is a hidden bomb. "The shoe and clothing industry in Jinjiang has chosen advertising and celebrity endorsement as the simplest shortcut to complete the original accumulation." Zhang Qing pointed out that too many enterprises did not follow the law of value creation at that time, and more wanted to do speculative business.

Such a speculative mentality is particularly evident in the capital market. Before 2007, there were only 5 listed companies in Jinjiang, such as Heng An, Feng Zhu, and seven wolves. However, with the listing of Anta in Hongkong in July 10, 2007, the listing of Jinjiang footwear and clothing enterprises is impossible. In 2008, the alligator fashion movement was listed in Singapore. In 2009, the famous sports brand of Jinjiang was listed in Hongkong. In the same year, China listed in Hong Kong. The listing of these big companies has changed the rules of the game of Jinjiang footwear enterprises: whether enterprises are listed or not has become the most important symbol of the success of Jinjiang entrepreneurs.

In 2011, HOSA international landing port exchange, Maxwe holdings and SOHO footwear industry were listed overseas.

"In fact, many of the listed clothing enterprises in Fujian are not lacking. Listing is not always due to capital problems, but some are the mentality of comparisons." A senior clothing industry personage Li Li (a pseudonym) so regards this wave of listing fever.

Hong Zhaoyi, deputy general manager of Qipai group, told the media: "our two companies (seven cards and strong drivers) are not listed. It is the sorrow of our Hongs family."

In fact, in July, the chairman of the board of directors who lost contact with Chairman of the board of directors failed to reach the end of this year. "It would have been all right to rush to the market and drag it down." Zhang Guanwen, Deputy Secretary General of Jiangxi chamber of Commerce in Jinjiang, said.

Blindly listing is to pay the bill. First, the financing cost of listing is very high. "Listing financing will not arrive immediately, but the cost before it is high." In order to whitewash the earnings report, enterprises need to pay taxes on the "packaging and listing", and they need to pay a commission for the packaging company. A company with tens of millions of businesses told reporters that last year, packaging companies suggested that they should be listed on the market. Insiders said that once a company listed for financing 230 million, packaging spent 140 million.

Li Li also believes that after many Jinjiang shoes and clothing enterprises have gone public, they do not have a clear plan for their business ideas, future competition and transformation strategies and market strategies.

　　 Transformation in labor pains

If it is not the development of shoes and clothing industry is blocked, if it is not the electricity supplier and the fast fashion crazily crave the shoes and clothing industry, Jinjiang shoes and clothing industry has been developing rapidly for 20 years, hidden behind the undercurrent will not suddenly erupt.

"The footwear industry in Jinjiang is perfect from raw materials to warehousing, logistics and manufacturing, and its industrial chain cluster is relatively complete, but this advantage is no longer the core competitiveness." Zhang Qing believes that now consumers are very rational, they either choose cost-effective products, or choose high value-added products, not because your brand is a celebrity endorsement will buy.

In addition, the rising cost of production has further squeezed its profit margins. For Jinjiang shoes and clothing, in the past, relying on demographic dividend to reduce costs, financing and rapid large-scale shortcuts had ceased to exist. Labor costs rise at 15% per annum, and the average price of 400-750 yuan for a pair of shoes remains unchanged for many years. The transformation is imminent.

According to the statistics of Jinjiang's Bureau of statistics analysis of Jinjiang's economic performance in the first half of the year, the survey shows that the number of orders above normal level in this quarter accounts for only 3.5% of the total, accounting for 82 .2% at normal level, and 14 .3% below normal level; from the feedback of leading enterprises, the orders of enterprises such as Anta and Li Lang have increased by about 10%, with a slight increase in 31st degree, and the seven cards and the power bars are basically flat. The enterprises such as Jordan, "noble bird", "del Hui" and so on have declined. Most of the small and medium-sized enterprises generally reflect the shortage of orders. Due to insufficient labor supply, reduced demand for products and insufficient orders, the utilization rate of main products in this quarter was only 76.6%.

"Only a few enterprises in Jinjiang's shoe and clothing enterprises can make profits, with an estimated 70% of the enterprises losing money." Zhang Guanwen believes that the main problem of the industry is overcapacity.

The inherent development mode of shoe and clothing industry has been subverted, and how should it be transformed? Khchi, general manager of the shoe making equipment Trading Co., Ltd. believes that the more we are in a low valley environment, the more we need to grit our teeth and intensify our efforts. The key is investment in Science and technology. "For example, a computer automatic rotary cutting machine needs 280 thousand, the original punching machine may only need 23 thousand, but its production capacity is 5 times that of the latter. After a year, the labor cost of 5 people is also about 250 thousand. L V has a production line of about 7 million, but it only needs 14 people. The same capacity needs 70 people in China's production line, but many enterprises dare not continue to invest at this time. He thinks that only by changing the labor intensive mode can we upgrade the shoes and garments of Jinjiang.

Shu Wen believes that the current supply chain reaction is too slow and consumer demand for the formation of contradictions. "For most of the traditional businesses, they used to rely on franchisees to do large scale shipments.