Is Dongguan Facing A New Wave Of Factory Closures?

machining

Let Dongguan have the title of "world factory".

But over the past year, "flameout", "decline" and "crisis" have become the labels of the outside world added to Dongguan.

At present, many factories and factories in Dongguan, Shenzhen and other places in Guangdong have lost orders, so they have to shut down or pfer their production lines to Southeast Asia and Africa.

The media calls Dongguan a new "factory".

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But not all of Dongguan's atmosphere is pessimistic.

Yuan Baocheng, mayor of Dongguan, said that the collapse of some enterprises belongs to the survival of the fittest in the market economy, and does not mean that the manufacturing industry is facing a crisis as a whole.

Some experts believe that some factories in Dongguan are bankrupt while processing and manufacturing.

Companies are also rising.

On the one hand, the tide of closure is on the other hand.

This is a process that China's industrial upgrading must go through.

More than a year after the closure of the factory in Dongguan, the 37 year old Ren Yuan soon closed the factory in Shenzhen.

In the past few months, Ren Yuan has sold and sold his own house and car.

But he found that selling more houses and cars could not solve the problem.

Finally, Ren Yuan chose to bid farewell to the mobile phone manufacturing industry.

"My experience is the same as that of Gao Min."

Ren Yuan said that in January of this year, Gao Min, chairman of the "Chao Xin communications", left suicide by suicide.

Several suppliers of Gao Min owed millions of dollars and became his last straw.

10 years ago, Dongguan could build factories with several mold machines.

At that time, Ren Yuan, who was a part-time worker, seized the opportunity and opened the first mobile phone screen assembly plant in Dongguan.

After several years of development, the annual output value of Ren Yuan's factory is more than 200 million yuan.

In 2009, he opened another same factory in Shenzhen, mainly producing cell phone screen and screen light source.

The two factories achieved financial freedom for him.

But since 2012, the mobile phone manufacturing industry has begun to decline.

In addition to the elimination of mobile phone brands in the world, the competition of mobile phone accessories manufacturing industry is becoming more and more intense.

Similar cases with Ren Yuan have been staged for nearly one or two years.

Dongguan's local argument is that in the past year, at least 4000 enterprises have been closed.

The manufacturing industry enterprises headed by the electronics industry collapsed in batches. The media called it the second round of "closure tide" in Dongguan.

Screen factory profits reduced by 9 in three years.

Ren Yuan is a Henan native. He worked in Dongguan in 2003 and entered a mobile phone screen processing plant.

After being familiar with the business process, Ren Yuan set up his own screen factory in 2005.

At that time, it was the climax of the development of touch screen mobile phones. All kinds of mobile phones were replacing the mobile phone screens, and many smart phone brands were also emerging.

Ren Yuan began to provide mobile phone screens for Samsung, NOKIA, KYOCERA and other mobile phones, and the scale of production is bigger and bigger.

In 2009, Ren Yuan opened another mobile phone screen factory in Shenzhen.

Ren Yuan said that his factory had no core technology, but just assembled the glass that was cut out of the factory into a mobile phone screen.

10 years of development made Ren become a successful friend in his mind, but he did not expect the cold winter of business to come.

"In fact, it was no longer interesting, and the factory profit decreased by 9 in three years.

3 years ago, we could make 1 million pieces of goods and make 2 million. Now we make 10 million pieces to make 2 million. "

Ren Yuan said that since 2012, the profits of mobile phone screens have been getting lower and lower, and manufacturers have been selling their prices down, which has become a vicious circle.

One day last year, he received a telephone call from another LCD company who had worked for more than 10 years. The other said he could not live, and the 1 million 650 thousand yuan owed to him could only be paid later.

"I've been doing business with him for so many years, what can I do?" said Ren Yuan. They are all triangular debt relations, and his clients owe him money, and he also owes money to suppliers.

If his factory is going to continue, he will have to pay the debt himself.

Later, there were more and more customers who went bankrupt, and Ren Yuan could only sell their cars to keep their factories running.

Ren Yuan said that many factories are now struggling to support and do very hard work, but they must continue to do so, otherwise they can only declare bankruptcy, which means they admit defeat.

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"Sometimes I think of tears."

Ren Yuan said that although he made some money in the ten years of entrepreneurship, the factory went bankrupt. I really don't know how to tell people.

In October 8th, a company similar to Ren Yuan, Shenzhen Fu Chang Technology Co., announced that it had decided to stop production and give up its operation because of its chain breaking.

Yang Tian, a former employee of Fu Chang, believes that the failure of Fu Chang has its own reasons. Fu Chang mainly produces mobile phone plastic shell for Samsung, HUAWEI, ZTE and other mobile phone companies, which belongs to a low-end industry.

Once a manufacturer is able to compete with lower prices, Fu Chang will not be able to receive orders.

No order, but also to pay wages to employees, is bound to drag down businesses.

Not long ago, Dongguan Jing Chi Alwayseal Technology Ltd also declared bankruptcy.

Founded in 2013, Jing Chi company is also a manufacturer of mobile phone shell.

In November 1st, only one old man was in the gate of Jing Chi factory.

He said that before the closure of Jing Chi, there were many suppliers to collect debts. The production quality of the factory could not keep up this year. The rate of defective products exceeded 20%, and a large number of products were returned. The owners could not pay the money, and naturally they could not pay the suppliers, which eventually led to the closure of the enterprises.

"Where else can Dongguan attract me?"

In addition to bankruptcy, some enterprises have chosen to move out.

After the long vacation in October, Dongguan Jinbao electronics factory shut down a factory line in 4 factories.

According to media reports, Jinbao company will pfer the production line to Thailand.

Dongguan Jinbao electronics factory is located in Changan town of Dongguan. It belongs to Taiwan funded enterprises. It is mainly a world-famous electronic piano, computer and printer.

Jinbao company employee Liu Qiang (a pseudonym) said that before the Mid Autumn Festival this year, when they finished the last batch of orders, the company announced the Mid Autumn Festival and the National Day holiday.

But when they came to work in October 8th, they found that the production line of the factory was demolished, and they heard that the production line was pferred to Thailand.

The entire Phoenix factory area where they live can be diverted to other factories or to be sent home.

Liu Qiang, who has worked in Jinbao factory for 8 years, has become the supervisor in the production line.

When he had orders, he worked 12 hours a day and worked 26 days a month for more than 6000 yuan. But after the production line was dismantled, the factory asked him to work as a general worker in other factories.

Liu Qiang can hardly accept this.

By the beginning of November, 100 people in the Phoenix factory were still sticking to the company.

They say they sit in the office every day to play cell phones and sleep and pay wages 2000 yuan a month.

"In fact, we are forced to leave the factory voluntarily."

Liu Qiang said.

But Jinbao electronics factory does not approve of the pfer of production lines.

"It's just a production line adjustment."

Liu Yuhong, executive director of Jinbao electronics factory, said that the order of the original product line was reduced, and they would replace the production line of the new product and remove the original workbench.

Although the Dongguan Jinbao electronics factory denied pferring the production line to Thailand, Dongguan's factory moved to mainland China, Vietnam, India and Africa everywhere.

Zeng Liang (a pseudonym), the head of a shoe factory in Dongguan, said he had visited Africa, Gabon and other places. Now many parts of Africa are very similar to Dongguan more than 30 years ago. The low labor cost and low policy threshold are very suitable for barbaric growth. He has plans to find second Dongguan in the new African continent.

Ren Yuan's fellow townsman, Shen Feng, a 28 year old Zhoukou native in Henan, plans to pfer his LED lamp factory to the mainland.

Shen Feng's experience is similar to that of Ren Yuan. He is now struggling to support his factory.

In 2008, Shen Feng came to work in Dongguan.

A business minded man later set up a LED factory to make lanterns.

The core technology of the lamp is mainly the luminescent chip.

This chip technology is still being mastered by Japanese and Chinese Taiwan manufacturers.

Shen Feng purchased chips and plastic packaging from outside, hired people to weld and assemble them, and processed LED lights that were used for neon lights and family ceiling decoration.

Because there is not much technical content, like Shen Feng's LED lamp manufacturers, there are many homes in Shenzhen and Dongguan.

Shen Feng said, at the beginning, a meter LED lamp belt can earn 20 yuan. Today, the one meter lamp belt also makes a few cents.

Recently, Shen Feng is negotiating preferential policies with his old town government.

Shen Feng said that now there are policies in Shenzhen and Dongguan, and there are even more in the mainland.

"Where else can Dongguan attract me? Even if I stay, where do I go to recruit workers?" Shen Feng said, "a worker in Dongguan and Shenzhen can earn a minimum wage of less than 3000 yuan, otherwise a small worker can not be recruited, but in the mainland, more than 1000 yuan will be able to recruit a worker.

"Migrant workers are like currencies that can not be circulated".

In the eyes of Ren Yuan, today's Dongguan has changed radically.

Ten years ago, when he arrived in Dongguan, he was surrounded by factories and walking on the streets of Dongguan, just like the temple fairs of his old home.

Today, Dongguan is extremely cold.

The street beside the factory is cold and clear, and people are getting less and less.

There is a star rated hotel in the NOKIA factory area on the south side of Dongguan.

The hotel attendant said that most of the people who came to talk about business in NOKIA chose to stay here before, when the room rate was more than 400 yuan a night, and it was always full.

After the closure of NOKIA's factory in Dongguan in April this year, the business of this hotel began to slump. Now the suite with living room is only 200 yuan a night.

Some industrial parks used to be the "economic income" that towns and villages depend on. Now, the advertisements of "factory rent" in these industrial parks can be seen everywhere.

From the outside of some factories, the facilities inside are obsolete.

Liu Qiang, 28 years old, came to work in Dongguan 10 years ago after graduating from the technical school. He started working in a household electrical appliance container factory in the first three years. Later, he was introduced to Jinbao electronics factory in 2007 and was married and had children here.

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Liu Qiang's hometown in Ningxiang, Hunan, most of his young people are working in the field.

But the Dongguan Jinbao electronics factory closes the Phoenix factory area, making him suddenly unable to defend the land to face the choice. Is he going back to his hometown or continuing to work in Dongguan?

Liu Qiang said that he can only make printers now, but now most of the similar factories are saturated, and factories like Jinbao electronics factory have removed the production line, and other small factories will not have vacancy posts.

He can only lower his salary and find a new job.

Liu Qiang felt that people, like money, suddenly failed to circulate, and the work was not guaranteed, making him very confused.

There are many electronics factories in Wanrong Industrial Zone, Liaobu Town, Dongguan.

In November 3rd, more than 100 young people from Liangshan, Sichuan were returning home from the factory.

November 20th is the new year of the Yi people. They return home at this time of the year and return to work in Dongguan after the new year.

The factory where they work is also a factory that makes mobile phone shells. The monthly wage is 3000 yuan.

After the 1990s, the Yi people, Boli, said he could save twenty thousand or thirty thousand yuan a year, which is much stronger than in his old Liangshan.

"Just came out of the mountain to work. For the first year, I wanted to go back. For second years, I didn't want to go back. I didn't know what I could do back there."

Boli was also confused about the collapse of the surrounding electronics factories. He did not know how long his factory could last, nor did he know if he had any work to return to Dongguan after returning home.

Boli said he did not want to think about that much now. He plans to save enough money and go back to his hometown to develop aquaculture. What he lacks most is capital.

"Machine replacement" and "cage changing birds"

Dongguan's cold and cheerless changes that Ren Yuan feels are not appearing this year.

Since 2009, migrant workers in Dongguan, Changan, Humen and Houjie, which are full of migrant workers, have begun to suffer from "labor shortage".

In some private occasions, officials in Dongguan believe that with the increase of labor costs and the rising price of raw materials and land, Dongguan, the world factory, is losing its advantages compared with other regions.

Yuan Baocheng, mayor of Dongguan, in this year's government work report also suggested that the other cities were several times the advantage of Dongguan's land resources. The "magnetic attraction effect" of the north central Guangzhou and other central cities and the free trade area, and the "de Sinicization" trend of manufacturing orders will be Dongguan's "growing annoyance".

Yuan Baocheng admitted that with the gradual diminish of the demographic dividend, the labor depressions in the early days of "Peacock Flying Southeast" in Dongguan had been completely dissipated. "Difficulty in finding jobs" has evolved into "recruitment difficulties", and compared with the surrounding central cities, the cost advantage of not only the talent has been introduced, but on the contrary, it will increase the cost due to imperfect urban facilities and unsatisfactory human environment.

According to Nanfang Daily, faced with the dilemma of reality, Dongguan authorities began to vigorously promote the "machine substitutions" campaign.

According to relevant reports, the municipal government set up a special fund for machine replacement in Dongguan. From 2014, it invested 200 million yuan a year for a total of 600 million yuan for 3 consecutive years, supporting the implementation of "machine substitution", and the highest subsidy rate could reach 15% of the total equipment.

According to the relevant person in charge of the Dongguan Municipal Bureau of information, the promotion of "machine substitution" in Dongguan can not only alleviate the situation of insufficient employment and rising labor costs of manufacturing enterprises in Dongguan, but also enhance the competitiveness of enterprises, accelerate the pformation of labor-intensive enterprises to technology intensive enterprises, and promote the quality of employment personnel, and promote the upgrading of Dongguan's entire city.

"Retreat and stay is a strategy for upgrading Dongguan's manufacturing industry. There are nearly 30 SMEs in Dongguan. It is impossible for every company to carry out machine pformation. This is unrealistic. There will be a number of enterprises withdrawing."

Some scholars have analyzed the closure of Dongguan factory.

Another big move in Dongguan is "changing the cage and changing birds" to allow enterprises to pform and upgrade.

An official in Dongguan said that since the reform and opening up, Dongguan has always dominated the foreign trade processing economy, and has laid the status of "world processing plant". However, most of these enterprises in Dongguan belong to OEM or OEM. There are not many independent brands. The high value-added and Feng Houli run are taken away by brands, and the rest is the meagre artificial profits of the acting factories.

The so-called "Teng cage for birds", that is, the existing traditional manufacturing industry from the current industrial base "pferred out", and then "advanced productivity" to pfer in order to achieve economic pformation, industrial upgrading purposes.

Zhang Jie, a boss of a glass mirror production company in Dongguan, is a successful plator.

He made plasterboard in Dongguan three years ago.

Zhang Jie said that his products are sold throughout the country.

But with the regulation of the national real estate market, his enterprises began to go downhill.

He thought of pformation.

He learned that laser lenses are currently a cold door, and few enterprises produce, but this lens is widely used.

So he introduced 6 PhDs from universities and began developing his own laser lenses.

"Now I have more profits every year than I used to make plasterboard."

Dongguan under the new normal

Recently, Dongguan's manufacturing industry has been closed down by many media, calling it the second wave of "closing down".

In 2008, affected by the international financial crisis, Dongguan's manufacturing industry, which relied heavily on foreign trade, encountered cold currents.

According to media reports, only a few hundred toys were left in Dongguan's more than 3500 toy factories, forming the first wave of "collapse" in Dongguan enterprises.

"Never label Dongguan any more."

A Dongguan official said that a year ago Dongguan was labeled as a "sex capital" label, and people in Dongguan would think of "Guan style service".

In fact, the core of Dongguan is manufacturing, while the service industry is only a product attached to manufacturing prosperity.

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The official emphasized to reporters that we should treat Dongguan's factory closures in a rational way.

He said that in recent years, the closure of Dongguan factories was different from the "closure tide" before and after 2009. The closure of these enterprises is the survival of the fittest in the market. It is also the result of Dongguan's 6 years of "cage changing for birds" and the pformation and upgrading of industries into deep water areas.

The official, who asked for anonymity, said that on the one hand there were business failures, but on the other hand, there were many new businesses in Dongguan.

Besides famous factories in Dongguan, many new high-tech companies are registered in Dongguan.

"The key depends on whether the economy of Dongguan is going backward."

The official said that in the past 6 years, 5 years in Dongguan were "single digit growth", and even 4 years had not yet completed the GDP growth target set at the beginning of the year, but the overall economy continued to grow steadily.

He said, we should see that the total annual GDP of Dongguan has exceeded 500 billion yuan, and it will increase two digit as before. "This is unrealistic."

In October 28th this year, Dongguan mayor Yuan Baocheng met with 23 media at home and abroad.

Yuan Baocheng said that in 2015, 243 enterprises in Dongguan closed down and moved out, involving a contract amount of US $330 million, and 698 new foreign-funded projects in Dongguan, involving 3 billion 850 million US dollars in contractual foreign capital utilization, an increase of 17.7% over the same period last year.

This data shows that Dongguan's foreign-funded enterprises have gone bankrupt and migrated, but new foreign-funded enterprises and projects are also increasing. Dongguan's economic development is in a steady growth.

Prior to that, Yuan Baocheng also said publicly that most of the recent outsiders concerned about the bankrupt enterprises were smart phones or their manufacturers of mobile phone components. This is the survival of the fittest in the market economy, and does not mean that the manufacturing industry is facing a crisis as a whole.

For the growth of Dongguan's economy, Yuan Baocheng has been identified as "the new normal of Dongguan's economy".

Yuan Baocheng said that Dongguan is gradually switching from high speed growth to a new medium and high speed gear with more quality, efficiency and stamina. "This process overlapped with the international financial crisis impact, pformation and upgrading, and labor pains."

The rapid growth of traditional extensive mode has been unable to continue, and efficient, low-cost, sustainable growth at medium speed has become a new stage and new goal of the city's economic development.