Dongguan Faces A New Round Of Business Closures

It is located on the East Bank of the Pearl River Estuary. It is known as the "world factory" at the beginning of the "Four Tigers of Guangdong".

The city, known for its manufacturing industry and its per capita GDP reaching the level of moderately developed countries, has recently received more comments on "flameout", "decline" and "crisis".

There are 17 A shares in Dongguan.

The company covers machinery, metal, rubber and plastic manufacturing.

Clothing, etc., in the first half of this year, the performance of local 1/3 listed companies decreased year by year.

But this is only a small epitome of Dongguan enterprises.

Most of the local small processing enterprises are mainly made of electronic equipment, toys, leather goods and clothing, and the listed companies are not the majority.

More small and medium-sized enterprises are scattered in the 28 townships of Dongguan in the form of industrial zones.

The five star hotels in Changping, Liaobu, Houjie, Changan, Humen, Shijie and Dalang have become "China's famous town of electronic information industry", "Chinese women's clothing city" and "Zhujiang Delta industrial key satellite town".

Hotels, restaurants, supermarkets and stations can be seen everywhere in large industrial areas.

According to Jiang Lin, Professor of Zhongshan University and special researcher of Dongguan, from the 1997 Asian financial crisis to the global financial crisis in 1997, Dongguan's electronics manufacturing industry has come to a golden age. Many enterprises have made money, and so has become the processing and manufacturing base of the global IT industry.

But the prosperous industrial towns in the past are now in a dilapidated sight.

Whether it is the Mulun Industrial Zone in Changping Town, the well head industrial area in Dalang town or the Wanrong industrial area in Liaobu Town, there is an advertisement for "factory rent" everywhere. The yard of a vacant factory building is filled with tables, chairs and stools. When the phone is called, the director of the village committee, Tam director, listens to the buyer, and says that the price is good.

Occasionally there are handwritten posters in the factory that can be distinguished, and a few eyes are seen before the poster. The security guards at the door will kindly remind them that it is a message a year ago.

He said, "now the factory is not recruiting. Although it is still working and the business is much worse, the factories in this year are almost the same."

As the "mobile phone OEM" shrine, Dongguan has focused on 5 listed companies producing electronic devices, namely, 300460.SZ, 300410.SZ, 600183.SH, 002638.SZ and 300083.SZ.

These 5 companies all over the electronics manufacturing industry upstream and downstream, producing crystal originals, PCB printed circuit boards, CCL, LED and precision structural parts, for a variety of electronic devices and digital products including smart phones. The main customers are Samsung, OPPO, Meizu, ZTE and so on. Sales of the top five customers of Jinsheng precision company account for 62.92% of its revenue last year.

Similar to the actual situation in the industrial area, the above 5 companies, without exception, showed a decline in performance in the first half of 2015, with a sharp victory or even a net loss of 169 million yuan, which was 814.71% lower than the same period last year.

The company's 2015 semi annual report shows that the revenue of plastic precision structural components has been slowed down by the global smart phone market, and the business revenue of Samsung's plastic precision structural parts of major customers has declined significantly, resulting in a decline in the company's operating income.

Another chairman of the LED industry alliance of Guangdong Province, which provides the display for the Tiananmen square and the National Grand Theater, has a 70.27% decline in net profit in the first half of the year. The net profit margin from 1 to September is expected to increase to 75.90%.

The market and environment are the common reasons for the 5 companies to mention the decline in performance.

In its report, Sheng Yi technology, an old listed company in Dongguan, said that in 2015, both the macroeconomic situation and the financial and monetary situation, both in the direction of commodities and in the future of the electronic market, have seen complicated changes.

Various favorable and unfavorable factors interpenetrate and interlace, thus making the market in 2015 appear changeable and unstable.

"Electronics manufacturing is worse this year than it was in 2008.

In 2008, the main factor is international factors. This year is a combination of international factors and domestic factors. In contrast, domestic factors are even more influential.

According to the long-term observation of Yuan Mingren, a consultant of Dongguan Association of Taiwanese businessmen, the more stringent production and environmental regulations in the country have increased the cost of enterprises, so it is difficult to resist the difficulties and challenges brought by the weak economic situation.

Gong Jiayong, deputy director of the Research Center for strategic emerging industries in Guangdong (Dongguan), China's Development Institute of electronics and information industry, also said that when Dongguan was manufacturing to upgrade the industry, it is now entering the cycle of decline to breed a new industrial mode, which is similar to the historical development process of other countries and regions.

At the beginning of this year, China lowered its economic growth forecast to 7% in 2015. In the early October, the world bank's forecast of China's economic growth was 6.9%, the first time it fell below 7%, while the 7.4% growth rate in 2014 was the lowest level in nearly 25 years.

According to statistics, China's official manufacturing PMI fell to 49.7 in August, the first time it has fallen below the ups and downs line in the past six months, the lowest level since August 2012, while PMI in September was 49.8, a slight rise of 0.1 from the previous month.

Gong Jiayong pointed out that the economic situation has exposed the hidden problems of enterprises in the course of the rapid development in the past. The listed companies are generally the leading ones in the industry, but SMEs still have an impact on the industrial chain matching their businesses.

In the past, the small factory type "Dongguan made" factory was developed by relying on cheap labor, policy dividends and loose environmental protection requirements. Now the economic environment has changed and there has been a "collapse tide" phenomenon.

In October 2008, after the collapse of Hejun toy factory, the largest toy factory in Dongguan, which had developed for 13 years, the aftermath of the economic crisis spread for several years.

Research data show that by 2011, more than 3500 toy factories in Dongguan had closed about 1800, with only a few hundred left.

At that time, a large number of enterprises, represented by toy factories and relying on foreign trade orders, formed the first wave of "closure tide" in Dongguan.

2015 in the first half of the year, Taiwanese enterprises, Wan Shida, Liansheng closed the Dongguan plant, NOKIA Dongguan factory shut down, Samsung's foundry million people factory, Dongguan Puguang stop production, Dongguan Sheng Xin Food Co., Ltd. chairman lost contact, Dongguan Meier Plastic Co., Ltd. boss on foot.

In July 2015, a court seal and a civil ruling were issued on the door of Dongguan Su Yi Toys Co., which confirmed the news of the Korean executives running away.

After 7 years, another large toy enterprise has been closed.

Or in January 2015, the main telecommunications company in Dongguan, Southeast Asia's mobile phone brand, was blocked by a supplier because of its closure. The chairman of the company killed himself and left a letter: "all resources have been used, but we still can't run a good factory."

Employees said that factories had been badly underutilized since November 2014.

This makes the outside world start to pay attention to the global financial crisis in 2008, and whether Dongguan has seen a new round of "closures".

How long will this test last? The business manager of a stuffed toy company founded in 2003 admits that the toy business is not as good as it used to be, and the closure of small factories is a common occurrence. Their company mainly serves several large customers in Japan and Hongkong. These customers usually get official authorization from brands such as Disney, and factories are produced on the basis of prototype production. The low-end manufacturers that make Shanzhai toys have almost been eliminated in Dongguan.

Gong Jiayong analysis said: "the collapse of this round is more of an industrial factor, that is, the industrial foundation of traditional foundry factories no longer exists.

Those who have not improved their own operation level, and have no brand and technology subcontracting enterprises are withdrawing. Their era is over.

In 2014, more than 4000 enterprises in Dongguan were closed, and this figure was not officially recognized.

But according to Yuan Baocheng, mayor of Dongguan, Dongguan closed down 428 enterprises last year, and there may be some businesses failing to register after business failures.

Yuan Baocheng said that the economic situation in Dongguan in 2015 was indeed grim, especially the pressure faced by SMEs. Dongguan will continue to face the problem of enterprise failure.

However, the government will pay close attention to the phenomenon of business failure and introduce some policies to support it.

The economic environment and the overall recession of the manufacturing industry exposed the past problems of the "world factory".

Gong Jiayong believes that Dongguan is an export-oriented economy. Most European and American countries have not yet come out of the crisis. They have made foreign trade channels and export tax rebate -1.html "> export tax rebate subsidies. Now the profits from domestic sales have been reduced. It is very difficult to open up the market without channels. Dongguan manufacturing earthquake will probably continue for many years. Without the labor cost advantage, the elimination of low-end industries is the general trend.

Yuan Mingren stressed: "not only in Dongguan, but also in the whole country.

In Ningbo, Changzhou, Wuxi, Kunshan, Suzhou, Wuxi and Tianjin, factories in these areas for export and domestic demand generally declined by 40% or more.

Chen Zhilong, chief research fellow of the China Regional Research Center of Nanjing University of Finances and Economics, has also written that the crisis and challenges faced by "made in China" are lingering as the demographic dividend and the total cost of factors rise.

If mishandled, the hollowing crisis that Chinese manufacturing industry may face is not alarmist.

However, thanks to the advantages of available capital, local listed companies seem to have more choices to overcome their difficulties.

The net profit growth of 300242.SZ in the first half of was over 600% due to the acquisition of a mobile Internet integrated marketing company, Jin Yuan interactive.

South of the Five Ridges gardens (002717.SZ), 300143.SZ, 300221.SZ and 002503.SZ have also improved their operations through acquisitions, restructuring, launching new projects and upgrading the Internet.

At the beginning of the year, the Dongguan municipal government put forward the strategy of upgrading Dongguan's manufacturing 2025 in the next 10 years. It said that Dongguan will implement the six major projects of intelligent manufacturing, service manufacturing, innovative manufacturing, high quality manufacturing, cluster manufacturing and green manufacturing, and realize the pformation from manufacturing to strong manufacturing industry by 2025.

However, even now, there are several people in a large factory sitting around a table sewing cloth bags, and the production scenes of Cantonese old songs are still there.

Policy oriented spread and the role of SMEs seem to go through a long process. Most of the people in it are still confined to immediate interests and have no awakening.

Plush toy factory manager said: "the economic environment is on the one hand, the boss is a stable source of tourists."

In 2015, it is considered to be a relatively difficult year for China's economic operation. As a manufacturing sample, Dongguan is facing more and more difficulties.

"Made in Dongguan" survived the financial crisis in 2008, can we pass the economic sluggish 2015 again?