Wenzhou Shoe Garment Industry Cluster Is Facing A Breakthrough

Walking into Wenzhou seems to be in the world of light industrial products.

Here, 10% of the country's clothing, 20% shoes, 60% razors, 65% locks, 80% glasses, 90% metal case lighters and 90% watercolor pens.

Here, there are more than 30 light industrial clusters, including "China Shoes Capital", "China lock capital" and "China skin capital".

However, nowadays, these industrial clusters that have greatly improved industrial competitiveness and promoted the rapid development of regional economy face unprecedented challenges and are faced with upgrading and breaking through.

The experts of the China Light Industry Federation point out that Wenzhou's light industrial clusters are epitome of the rise of "made in China" in terms of scale and market and brand.

In recent years, especially this year, they are faced with many difficulties due to the US subprime crisis, the appreciation of the renminbi, the rising of raw materials and fuel prices, the rising cost of labor, the adjustment of export tax rebates, the continuous increase of interest rates and the raising of the deposit reserve.

According to the survey of Wenzhou SME Development Association, about more than 30 of Wenzhou's SMEs now have about 20%% shutdown or semi shutdown. This means that 6 000 enterprises are facing a crisis of survival.

These enterprises are important components of light industrial clusters.

Data show that in recent years, the number of enterprises in Wenzhou lighters has been decreasing at the rate of 30%% per year, and now it has been reduced to less than 100 from about 600 a year ago.

The analysis report on the economic operation of shoe leather industry in the first quarter of 2008 shows that the shoe making enterprises have reached more than 70 enterprises in Wenzhou since the beginning of the year, and the shoe enterprises have dropped from 5000 in 2003 to 2600 this year.

According to the survey, this year, Wenzhou glasses, small household appliances and other industries are also worrying.

The experts from China Light Industry Information Center told reporters that over a long period of time, enterprises in Wenzhou's light industrial clusters appeared excessive competition and showed the situation of "a thousand armed forces across a single timber bridge".

The direct consequence of excessive competition is that there are too many low price competition, and the production and operation of enterprises are difficult. The industry continues to be in a low profit margin state, which affects the subsequent development ability of enterprises and seriously leads to atrophy and extinction.

For example, there are nearly 2000 or more than 10 thousand production enterprises in Wenzhou lighting industry, with a total industrial output value of nearly 3 billion yuan.

The current plight of small and medium-sized enterprises represented by Wenzhou has attracted the attention of China Light Industry Federation and national decision-makers.

The experts of the China Light Industry Federation, which has long guided Wenzhou's economic development, pointed out that the enterprises in Wenzhou light industrial clusters are basically small and medium-sized enterprises. At present, Wenzhou's industrial clusters are facing difficulties and breakthroughs. It is urgent to cultivate innovative industrial clusters, change the current situation of traditional industries, mainly SMEs, and the products are low technology and low added value. With the breakthrough of "characteristic industrialization, industrial characteristics and characteristic industry scale", we should vigorously develop circular economy, focus on fostering the leading characteristic industrial clusters with competitive advantages, and promote the scientific, intensive and sustainable development of the industry so as to realize a new leap from "quantity economy" to "quality economy" and then to "brand economy".

For example, CHINT group cooperates with General Company to build an international electric manufacturing base; AOKANG has cooperated fully with the world shoe giant GEOX Italy to build an international brand production base; Kangnai group has entered the Far East of Russia.

The industry pointed out that China's tax 70%% or more is created by small and medium-sized enterprises, and 80%% employment will be solved by small and medium-sized enterprises. In the case of the continuous improvement of national revenue, the state may be loosening and binding on small and medium-sized enterprises in the period of economic growth decline and inflation intensified stagnation. Tax adjustment, tax rebate, exchange rate, credit, subsidies and other policies may be adjusted. However, these policies are only "palliative" for alleviating the dilemmas of enterprises in Wenzhou's industrial clusters, and only industrial upgrading can help enterprises get out of the predicament.