Pearl River Delta Shoe Enterprises Adjust Production Layout

Since the beginning of this year, the continuous rise of costs has made the labour intensive export enterprises in the Pearl River delta face unprecedented challenges.

They are in a dilemma when ordering the quotations. They are worried about the excessive price and the competitive advantage. They also worry that the price will not keep up with the cost increase and lead to a loss.

"Quotes" plagued enterprises "toy exports in 1~2 months this year is not ideal, mainly because of the appreciation of the renminbi exceeded our expectations, coupled with the sharp rise in labor costs, some of our export products have already seen losses.

At present, many toy export enterprises are very puzzled, do not know how to take the next order. "

Li Zhaoxin, general manager of Guangdong light out Toy Co., Ltd. recently said in an interview with reporters.

Li Zhaoxin said that the biggest challenge facing Guangdong toy enterprises is the pressure of cost.

Because of the rising cost of labor and raw materials, many toy factories have raised prices by 10% to 35% this year, and the biggest test for foreign trade enterprises is the prediction of RMB appreciation in the coming months.

If this part is included in the unit price in advance, the price increase is too high for the customers to accept. However, if the price increases can not keep up with the magnitude of the appreciation of the renminbi, it is easy for the enterprises to lose money.

"Guangdong toys are facing a shuffle. After the elimination of some enterprises, we hope the whole industry will have a new development.

We are adjusting the strategy to pass the cold winter. On the one hand, we will hand over a lot of production orders to factories in Hunan and Jiangxi. The cost of the factory in the mainland is slightly lower than that in Guangdong, so as to digest the cost of the partial increase. On the other hand, it mainly takes short-term small bills to reduce risks.

Li Zhaoxin said.

The recent appreciation of the renminbi can be described as accelerating.

According to the 7.1418 intermediate price of last Friday (22), the cumulative increase of RMB against the US dollar since the exchange rate reform has exceeded 13%, and the increase has exceeded 2% since 2008.

Last year, the increase was only 6.9%.

The rise in labor costs has also led to a headache for the labour intensive enterprises in the Pearl River Delta region.

Li Peng, the Secretary General of the footwear association of Asia, said that according to the preliminary calculation, the implementation of the new labor contract law will make shoe enterprises invest more than 130 yuan per worker per month on average, and the cost of sharing the shoes to each pair is increased by 1 yuan, which will have a greater impact on some enterprises with low added value.

Zhang Huarong, chairman of Huajian group, China's largest exporter of women's shoes, told reporters that the profit margins of almost all shoe companies were compressed by the intersection of various factors.

Last year, the company raised its order price by 3%, but its profit fell by 5%.

Orders for the first, second quarter of this year have been raised by 3% to 4%, third and fourth quarter continue to rise, and the planned price increase is 8% this year.

"We are mainly processing large brands in the United States, and it is estimated that most customers will be able to accept the increase.

No matter whether the customer accepts or not, we must raise the price. We do not exclude the possibility that the price increase will affect the reduction of orders, but it will be very difficult for enterprises to manage the price without mentioning the price.

Zhang Huarong said.

As a result of rising costs and increased market risks, many large enterprises have said that the production scale of the Pearl River Delta will not be expanded this year.

Guo Weiwen, a spokesman for Taiwan funded enterprises, said in recent interviews that recruiting workers in Guangdong was relatively difficult. However, this year, because of the closure of some shoe companies, the difficulty of recruitment will be reduced.

But the company has no plans to expand production in Guangdong's Qingyuan plant this year, but it will expand its capacity in India.

Zhang Huarong also said that in the past every year after the Spring Festival, workers were added to expand production, but this year will not expand the scale of shoemaking in Dongguan.

At present, the production capacity of Huajian group in Jiangxi Ganzhou factory is approaching the capacity of Dongguan in Guangdong. The two production bases have more than 10 thousand employees, Ganzhou produces 8 million pairs of shoes annually, while Dongguan produces 10 million pairs of shoes annually, and the labor cost of Ganzhou is more than 10% lower than that of Dongguan. More importantly, the workers of Jiangxi are relatively stable. Next, the production layout is further adjusted, and the large number of low price shoes are pferred to Jiangxi processing, and the high-grade shoes with small quantity, difficulty and high added value are placed in the production of Jiangxi.