Why Are Chinese Foundry Companies Entangled?

Here world Clothing and shoes The Xiaobian of the network introduces the rising cost of manufacturing in China: the war and the retreat of the foundry enterprises.

Mitutoyo shoe industry is a Taiwanese invested Nike OEM company, which has invested in the mainland for more than 20 years. Due to the increase of labor costs and the adjustment of tax policies, the capacity of the company has shifted over the past ten years in the eastern coastal area and has gradually been tilted towards Southeast Asian countries. Taking into account the market layout, industry maturity, corporate image and other factors, Mitutoyo shoe industry is afraid to completely leave the mainland China, but stick to it, the heart is also full of tangled.

　 strategic shift

Ping, the assistant director of Mitutoyo Footwear Co., Ltd., told reporters that the company invested in mainland China in 1988 and has always focused on manufacturing, mainly for Nike OEM.

"At present, the biggest problem facing enterprises is the high cost of labor, labor costs began to grow in 2002, to a large adjustment in 2009, from then on the annual rate of increase of about 12%." Lou Ping said.

Labor stress has become the biggest constraint on the development of Mitutoyo footwear industry. Even if wages rise, they will be dissatisfied and unable to keep workers. In the past, new workers were recruited and trained for one or two months. At present, the turnover rate of new workers reaches 60% within half a year, and less than 30% can be retained for more than a year.

Along with the rising cost of labor in the eastern coastal areas, the company's capacity is gradually shifting along the coast. From Kunshan to Fuzhou and then to Putian, Mitutoyo shoe industry has built three factories in China.

Lou Ping said, because the Yangtze River Delta's salary is too high, now Kunshan factory only make a high value-added air cushion parts, basically rely on mechanical automation, artificial dependence on small. The scale of the Fuzhou plant has been shrinking for the past two years. Only the Putian plant is developing well, and the 13 thousand workforce is relatively stable, too, because the cost of labor there has not yet risen.

Affected by labor and raw material costs, the new investment of Mitutoyo footwear industry began to tilt towards Vietnam and other Southeast Asian countries in 2000. In recent years, the expansion rate in mainland China has not been as fast as that in Vietnam, and the profit of enterprises is not as good as that of Vietnam.

　 Stick to the price

Building Ping believes that processing manufacturing industry In the future, mainland China will no longer be the focus of foreign investment, but the existing manufacturing industry can not completely withdraw from the mainland market, including buyers like Nike, and will guarantee a certain amount of Chinese orders every year. This is related to the global layout of foreign businessmen. They need to ensure a certain amount of orders in China for the sake of risk diversification. Compared with areas such as Vietnam and Thailand, China's political situation is stable, its investment environment is mature, and its efficiency and integrity are better. These factors are very convincing for international purchasers.

More importantly, China, as one of the most important economies in the world, will have a great negative impact on its own business and even damage its commercial reputation if it completely withdraws. "Imagine that if a big brand is completely withdrawn from China, the outside world will surely guess what the problem is." Lou Ping said.

In addition, although labor costs are rising, there are other advantages on the mainland, such as the integrity of the industrial chain, the quality and proficiency of the workforce, and the opportunities for the development of related industries. Some Taiwanese businessmen have diversified operations in the mainland. Besides the shoemaking industry, they are also involved in other industries. It is impossible to shift the focus of the whole industry to Southeast Asia.

Take Mitutoyo shoe industry as an example, at present, it still insists on the stock scale in China, and its capacity basically remains stable. But "sticking to" also makes the enterprise pay a price. Lou Ping told reporters that in recent years, the profitability of the company has hardly increased and the profit margins can only be maintained at a relatively low level.

Lou Ping stressed that we must guard against the "hollowing out" of the manufacturing industry. The mainland has not yet developed to the extent that there is no need for second production. Without the manufacturing industry as the foundation of the real economy, the service industry has lost its support. Although the contradiction between labor and employment is prominent, there are still hundreds of millions of migrant workers in the central and western regions need to solve their jobs. The manufacturing industry is still the largest outlet for providing jobs.

Building Ping believes that the industry itself does not have high and low points, and traditional industries can also have high-tech, high-end equipment and scientific management means. "For processing trade and traditional manufacturing industry, the focus of the government's work should be to accelerate the transformation and upgrading of industries, and to supervise enterprises' legal compliance and fulfill their social responsibilities".

　 Looking forward to fairness

"We have entered the mainland for more than 20 years and have become an integral part of China's economy. There is no difference between domestic and foreign capital." Lou Ping suggested that we should take an objective view of the characteristics of the mainland's economic development, face up to the necessity of the existence of the foundry enterprises, and give the enterprises the fair treatment they should have.

　 First, it is necessary to improve and improve the key systems such as social security as soon as possible, so as to alleviate the pressure of labor cost.

Lou Ping said that the social security paid by enterprises to migrant workers now accounts for 40% of the cost of labor, but this part of the social security and welfare migrant workers are not fully enjoyed. She suggested that the social insurance provided by local enterprises to employees can be linked to the new rural cooperative medical insurance and new agricultural insurance accounts in their hometown as soon as possible. On this basis, the proportion of enterprises' payment should be reduced appropriately, which will lighten the burden of enterprises and let every cost fall into the employee's social security account.

　　 Two, on the industrial policy, we should treat foreign and domestic enterprises equally and do not discriminate.

"Compared with preferential policies, we are more concerned about the stability of policies." Lou Ping believes that the overall investment environment and hardware facilities of the mainland are very good. The soft environment includes government efficiency, civil servants' quality and executive power, but the macro environment is not conducive to the development of the foundry enterprises, which has the objective factors of economic development, as well as the subjective causes of local governments. "In recent years, it is obvious that local governments are more willing to support local enterprises and develop local brands."

　　 Three, it is to formulate professional planning for the gradient transfer of processing trade enterprises, so as to reserve time and space for enterprises to move and transfer.

Lou Ping told us that a competitor once moved the factory to a central province to take orders at a lower price. Unexpectedly, the minimum wage standard was raised in second years, and the cost of labor increased, and the transportation cost and workers' unskilled factors in the mainland, and the operation immediately failed. Every worker has to pay a year's wages, and the company has not earned one hundred million of the money.

Lou Ping said that no matter the East, the West or the west, they are all new and high. technology The high-end service industry is in hot pursuit. Some areas are actually divorced from the local industrial base and labor quality. It is hoped that the government will fully understand the necessity of manufacturing enterprises at the present stage and take the lead in formulating a professional industrial transfer plan, while supporting the transformation and upgrading of enterprises, and at the same time, guiding the direction of enterprise gradient transfer.