Under The Influence Of Inflation, Dongguan Footwear Industry Is Facing A Change Of Competitiveness.

June 17th hearing cause

Michael Porter, Professor of Business School of Harvard University, founder of enterprise competitive strategy theory and ignition of global competitiveness.

In the 80s of last century, Potter served as the chairman of the Reagan Competition Committee of the Reagan government in the "Reagan era" with the emphasis on market forces. In 1990, Potter, who was only 43 years old, put forward the concept of "Diamond System".

Potter believes that the reason why a country shows great vitality is that its economy has shown great competitiveness in international competition. The essence of national competitiveness lies in the competitiveness of the industry, and the formation of the dominant industry depends on the so-called "Diamond System".

The diamond system includes 4 main elements and 2 additional elements. It is also an indicator of the industry development framework and even the competitiveness of the industry.

Among them, "production factors", "demand conditions", "related industries and supporting industries" and "enterprise strategy, structure and competitors" are its basic elements. Besides, "opportunity" and "government" are its two additional elements.

For the basic elements, Potter said, these factors may strengthen the speed that domestic enterprises create domestic competitive advantage, and may also lead to stagnation of enterprise development.

If they are connected, they will form a diamond. If the additional elements are added, it is a hexagonal diamond, and the diamond system will come from here.

According to the reporter's recent survey of Dongguan manufacturing industry, which has been the embodiment of China's international competitiveness, behind the inflation squeezing the survival space of SMEs such as shoes and clothing in Dongguan, the "Diamond System" factor that has a bearing on Dongguan's competitiveness is delicate. With the change of many competitive advantages, the Dongguan manufacturing industry, once famous for its "Dongguan miracle", may still face an uncertain future.

The lowest level of inflation

In 4 and May of 2011, Wenzhou Jiangnan leather, famous restaurant chain enterprises such as Portman and other Wenzhou enterprises broke down due to the broken capital chain.

News of the "collapse tide" of Wenzhou enterprises has spread like wildfire, but according to relevant media reports, there has been no large-scale collapse of business in Wenzhou, but the living situation is plunged into the lowest level for many years.

This judgment is similar to that of many small and medium-sized entrepreneurs in Dongguan.

"I am very puzzled that our order was not affected in 2008, but in 2011 it was the worst year."

Dongguan Shu Yi garment factory owner Shu Guozhi (a pseudonym) told reporters.

Dongguan, known as the "world factory", is the cradle for the survival of small and medium-sized enterprises.

According to the data released by Dongguan Statistical Bureau, the number of private registration households has reached 467 thousand and 700, and 99% of them are small and medium-sized enterprises.

In the rumor of "collapse tide", our reporter found that factors such as rising raw material prices, rising labor costs and other factors led to the compression of the profit margins of enterprises, coupled with the expected increase in the appreciation of the renminbi. Many enterprises either dare not receive or dare not receive them.

Guangdong Bureau of Statistics announced that the first quarter economic performance data show that Guangdong's 3.73 million industrial enterprises above Designated Size realized a profit of about 92 billion 300 million yuan, an increase of 10.4% over the same period last year, an increase of 12.5 percentage points from 1 to February, down 26.1 percentage points from the same period last year.

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According to the analysis of relevant officials of Guangdong Statistical Bureau, the reduction of the profit margin of enterprises is mainly due to the increase of raw material prices, the increase of wages of enterprise workers, the increase of bank loan interest rates, and the establishment of provident fund by some large enterprises.

Meanwhile, Dongguan, which is listed as one of the pilot cities for processing trade pformation, has made remarkable achievements in industrial pformation. However, enterprises with poor pformation are struggling under high cost environment.

"For the first two years, we have been talking about wolves, but actually wolves did not come.

The current situation is not caused by the international economic crisis. It is precisely caused by domestic inflation. "

Ding Li, a researcher at the Guangdong Academy of Social Sciences and a regional economic expert, told reporters.

The changing "Diamond System"

Combining the status quo of Dongguan's manufacturing industry with the "Diamond Theory", the Dongguan manufacturing industry observed by our reporter has changed in terms of "production factors", "demand conditions" and "related industries and supporting industries".

The so-called "production factor" refers to human resources, natural resources, knowledge resources, etc. the "demand conditions" correspond to the domestic market demand, which is also related to the saturation of the market.

Dongguan Humen town is known for its clothing manufacturing industry. Shu Guozhi's factory has gathered thousands of small and medium-sized garment factories in the area of the BOM market, mostly OEM processing plants, with relatively low technical content.

"From April 23rd to now, the workers in our factory are almost half work and half fun, and 60% of them are happy to work.

There are many small factories, only 20% to 30% of them are at work.

Shu Guozhi reluctantly told our reporter.

His factory opened in 2004 and commissioned four overseas clothing brands in hundreds of square meters of factories, from Malaysia, Philippines, Singapore and Taiwan, China.

Although it is a foundry, Shu Guozhi thinks his factory belongs to a garment factory with a certain technical content. It can be completed from design drawings, purchase of raw materials, trademarks, tag, buttons and printing. As for export, the quality of products must meet international environmental standards.

It is such a garment factory that has a certain ability to resist risks. It also finds it difficult to continue after 2008.

"In 2006 and 2007, orders were the best, with a total of 12 million units, up to fifty thousand or sixty thousand now."

The double-sided attack of raw materials, rising labor costs and reduced orders has made the small garment factories feel the pressure.

Shu Guozhi made an account of our reporter. As the main raw material, the cotton cloth has risen from 35 yuan per kilogram to 59 yuan, but the unit price of the customer is not willing to raise the order. "The ex factory price is 25 yuan, now we increase 5 yuan, the customer is not willing to buy."

"The whole market is so competitive.

Unless it is a well-known brand, prices can still be sold.

Customers will worry about sales if the price of medium products increases.

Therefore, the price of orders will not generally increase.

Dongguan Humen clothing and apparel industry association secretary general Wang Minjian explained.

There is also manpower cost.

Since March 1, 2011, the minimum wage in Dongguan has risen to 1100 yuan, and Shu Guozhi's monthly wage expenditure is more than 50 thousand, which is 20% higher than the original one.

"Now, it's hard for us to find a worker in such a small factory, and we will definitely keep it up."

He must not "treat" workers in order to retain people.

Faced with all sorts of helplessness, Shu Guozhi sighed, "I think it's easy to open a factory, to keep a factory hard, to ride on horseback or not to run." {page_break}

Since the first half of this year, Shu Guozhi's friends have repeatedly heard the news of bankruptcy.

In the face of inflation, the biggest hit is industries such as clothing, shoes and toys, which are labor-intensive, low threshold and low risk tolerance.

Mr. Fang, the general manager of Houjie shoes and footwear materials Association, also said that he would often hear their worries while chatting with some members. This year, the situation is better than that in 2008, but worse than in 2010.

Considerations on the pformation of "enterprise strategy and structure"

Over the past three years, Dongguan has been undergoing pformation and upgrading. This is also a manifestation of the "enterprise strategy, structure and competitors" in the "Diamond Theory".

Since 2008, there are nearly two thousand "three to one" enterprises that are not qualified as legal persons in Dongguan, which have been pferred to legal person enterprises, accounting for 30% of the total number of enterprises. The 300 strong enterprises have basically realized the operation mode of "design + production", and more than 70% of the processing trade enterprises in the city have carried on deep processing and carry over business; 988 processing trade enterprises have their own brands, and the total domestic sales has increased 34.4%.

"Dongguan is becoming more and more suitable for the production of medium and high grade products, and the enterprises that produce medium and low grade products are likely to go bankrupt."

Liao Yongjie, manager of Dongguan port Jie Industrial Co., Ltd. told our reporter.

His company produces safety shoes (known as "labor shoes") in Dongguan's Houjie Village Industrial Zone, and Houjie is a gathering place for shoes and shoe materials industry.

Liao Yongjie said that they originally planned to set up a shoe-making production line in Dongguan, but because "the market situation is getting worse and the labor cost has increased by 30%", they only have to pfer the production line to the mainland cities, and the Dongguan company is only responsible for receiving orders, designing and printing.

Liao Yongjie said that if he wants to keep profits now, he will receive an order of 30 dollars.

"But the high unit price means that the enterprise's own strength should also be improved.

Transformation and upgrading is not so easy. Design and research need more professionals and professional equipment.

Liao Yongjie said that although the government has many support policies for pformation and upgrading, many SMEs are not clear about policies, and they may not necessarily enjoy real concessions.

"The situation is much more difficult now than it was in 2008."

According to Liao Yongjie, many companies around him have adopted similar forms, placing R & D and docking machines in the PRD, and moving the production lines to the mainland.

According to the data provided by Dongguan Municipal Foreign Trade and Economic Cooperation Bureau, in 2011 1~5, 97 foreign-funded enterprises in Dongguan established R & D institutions, an increase of 32 over the same period last year.

Transformation and upgrading, to do its own brand, export to domestic sales? Shu Guozhi said, not every factory can make a brand to live, a friend's failure experience, let him do the brand is relatively conservative.

"In 2007, a friend of mine began to make his own clothing brand in Humen. He invested in designing, buying machines, and promoting, but the marketing was not good enough, the goods were sold out, they lost two or three million dollars, and the wife got divorced.

And how much and how much will he sell in such a OEM processing factory, without thinking about developing the market himself, and earning a few bucks for a garment is also steady.

But it seems hard to be "stable" now.

Shu Guozhi said he plans to walk on two legs while exporting, while registering trademarks, producing some own brands, and selling them to the wholesale market, but "can not rush too fast".

Statistics show that Dongguan also has more than 4000 labor-intensive material processing plants. This round of rising international raw material prices and increased labor costs have once again passed these tests on these enterprises, but not every factory has the capability of pformation and upgrading.

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Wang Minjian told reporters that through local investigation, the biggest impact of labor difficulties and inflation is the deterioration of dealers' environment. The enterprises do not have such a large profit margin and have a greater impact on SMEs.

For some small business failures, he said, this is a natural reshuffle market, not very good business, through the shuffle of the market, so that the entire development space to expand, so that the left enterprises have better development space.

"Transformation and upgrading is a double-edged sword. I have always believed that pformation should not be neither pleasant nor old, nor should it be too small.

Transformation should increase productivity in all aspects of society.

It is a pity that some small and medium-sized enterprises are falling down now.

The government should help. "

Ding Li said.

The "government" element, taking SME financing as an example

With the reduction of orders, the increase of raw material prices and the increase of labor wages, a series of problems point to a new problem, and how to guarantee the enterprise capital chain.

"Customers who used to pay on time always have to wait for about half a month."

The boss of a small business in Houjie, Dongguan, told our reporter.

Li Fanggui, manager of Dongguan Long Wei Industrial Co., Ltd. also had the same feeling. "When the economy was good, it used to be cash pactions. Now it is the 45 day checkout after the customer approved the invoice. It may be half a year from the next order to the settlement.

Now more and more customers are dragging money, resulting in capital turnover difficulties.

For small and medium-sized enterprises who are interested in upgrading, buying new equipment, and developing R & D teams, the shortage of funds has become a big problem.

In fact, financing difficulties have always been a key to many SMEs.

This year, the six adjustment of the deposit reserve ratio of banks has frozen trillions of bank funds, making the problem of financing harder.

According to the reporter, for some enterprises with high credit index, they used to send money to the door, but now it is difficult to lend money to them.

Moreover, it is not always convenient for small businesses to borrow from banks.

Li Fanggui said that bank loans generally require small and medium enterprises to mortgage fixed assets, but for general processing plants, it is very difficult to have fixed assets can be mortgaged, plus equipment pricing difficulties, usually the bank assessment price even 1/3 of the purchase price is less than.

Even if you can borrow money, the bank's credit line is too low and it's hard to quench the thirst.

Therefore, to solve the problem of financing difficulties, small and medium-sized enterprises are all the way to go.

As a Wenzhou person, Li Fanggui generally chose to borrow from Wenzhou, or to "charge" each other with relatives and friends.

However, the business environment is getting worse, which makes the lenders cautious, for fear that the money will evaporate.

Yi Hongyu, manager of Dongguan Hexin color printing packaging Co., Ltd. chose to raise funds in Hongkong.

"We registered in Hongkong and applied to the Hongkong monetary authority. Their threshold would not be as rigid as the mainland, and the assessment is relatively scientific. The equipment purchased can be directly mortgaged.

Hongkong will regularly send people to take photos to determine the use of equipment.

According to Yi Hongyu, among his fellow friends, 80% of the enterprises that bought imported equipment chose Hongkong financing to save the country through curves.

In 2008, Dongguan issued the "1 billion yuan financing support plan", which supported three parts of the venture capital compensation loan, the loan guarantee risk compensation fund and the loan discount interest fund, and the first more than 3000 key small and medium-sized industrial enterprises and processing trade enterprises benefited directly.

But the more than 3000 beneficiaries, compared to the size of more than 40 000 SMEs in Dongguan, can be said to have a drop in the bucket.

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For some small and medium-sized entrepreneurs, support is more than real implementation.

A company official who asked not to be named said: "1 billion yuan sounds like a big number, but small businesses are too far behind."

If the threshold is high, the enterprises want to get the government discount, but also have to pay a lot of hidden costs.

A company responsible for the "1 billion yuan financing support program" told reporters that the government's commitment to 2% of bank loans discount has not yet entered the company account.

Risks behind pformation and upgrading

The higher the threshold of bank lending, to some extent, the prosperity of private lending, but it can not avoid hidden risks.

At the same time, although the pformation and upgrading of manufacturing industry in Dongguan has created "opportunities" for the development of small and medium-sized enterprises to some extent, the short board is still in the protection of intellectual property rights.

"Small loan" advertisements can be seen everywhere in Dongguan town street.

The reporter telephoned, some were empty numbers, some directly indicated that it was "usury".

Microfinance companies are also beginning to exert their strength.

Reporters learned from the Dongguan Financial Work Bureau, this year, Dongguan's small loan companies will reach 16.

Dongguan plans to have a small loan company in every two towns and parks to help SMEs solve their financing difficulties.

At the same time, under the current regulatory policy, the small loan company has also sought out the investment way out of the property market, stock market, service industry and manufacturing industry for 30 years of Dongguan's private capital.

Zhong Zhengliang, director of the Finance Bureau of Dongguan Finance Bureau, said that the shareholders of Dongguan microfinance companies have strong industrial background, including textile, technology, real estate, agriculture, trade, chemical industry, auto parts and other industries, almost including Dongguan's local dominant industries.

But this is not all. The risks faced by small loan companies can not be ignored.

According to the reporter's understanding, because the small loan company has not access to the people's Bank credit information system, it can not quickly query customer information, and can not discriminate the customer's credit rating. Once the risk arises, it will directly affect the interests of its shareholders.

At the same time, the identity of non-financial institutions of small loan companies has basically paid taxes in accordance with the standards of ordinary service industries, 5.5% to 5.6% of business tax and additional taxes and 25% of income tax, which is obviously higher than that of financial institutions. The income tax of commercial banks is 15%, and sales tax has a half discount.

Wang Yuanyuan, vice president of Guanghui small loan company in Dongguan, counted out an account in the media interview.

"In 2010, from January to September, our office and manpower costs amounted to only about 1800000 yuan, while the business tax alone paid 840 thousand yuan, the corporate income tax was about 2900000 yuan, and two items were added together to a total of more than 3 million 700 thousand yuan.

We set up in March 2009 and have paid 2 million yuan tax by the end of the year.

Wang Yuanyuan said.

For Li Fanggui's Long Wei industries, counterfeit products caused by inadequate protection of intellectual property also led to a decline in its performance.

Long Wei Industrial is located in Houjie town of Dongguan, engaging in high-end packaging such as shoes and clothing. It belongs to the industry chain of footwear and garment industry.

"This season should be the peak season, but the order we received is less than 1/3."

Li Fanggui said, there are many reasons, one is because of the rising prices of raw materials and the expectation of RMB appreciation, customers are more cautious in placing orders, and some are moved to the mainland by some factories.

The main reason is that there are too many counterfeit products on the market. The appearance is exactly the same as that of M-BUSTER, but its material is inferior.

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On the morning of June 9th, Li Fanggui made a special trip to the Dongguan Municipal Industrial and commercial bureau to deal with the infringement.

Intellectual property protection has become another problem faced by Dongguan after its pformation and upgrading.

From the OEM to its own brand pformation, how to protect its own brand and crack down on malicious infringement.

After Li Fanggui's investigation, the counterfeiters took 1/3 of their orders. "We lost the profits equivalent to a Audi car per month."

"Our products are certified by France BV, Germany PFI, British SGS, Intertek and EU REACH," he said.

For these brand certification, it costs about 200000 yuan a year.

Enterprises spend a lot of money in R & D, design, brand promotion, and attending various exhibitions, but they are benefited by counterfeiters.

Ke Xiaoling, President of the four people's Court of the first people's Court of Dongguan, said that there were many cases of infringement of the exclusive right to trademark, involving a wide range of fields, such as mobile phones, clothes, shoes, wine, medicine and handbags, and infringement in all walks of life.

Infringement is harmful to the investment environment.

Li Fanggui believes that the Dongguan Municipal Industrial and commercial bureau received a more positive response to the infringement report. "It is not enough to provide a certificate of rights, but also to provide a considerable number of procedures such as tort evidence. The infringement evidence is collected by enterprises, and it is not necessarily possible to find infringing companies, because they may not have registered."

Li Fanggui tried to sue dozens of Dongguan businesses, but some friends advised him to spend more time in selling fake products than in sales.

Obviously, now he has reached the point where he can not bear it.

Now, because of the sharp drop in orders, he has plenty of time for infringement complaints.

"If intellectual property rights are not protected, how can we have confidence in pformation and upgrading?" Li Fanggui said.