Crisis: Bad Shoe Growth In Wenzhou Shoe Leather Industry

Export bad debt is a nightmare for export enterprises, and many foreign trade enterprises in Zhejiang are particularly impressed this year.

According to statistics from China Export and Credit Insurance Corp Zhejiang branch, the amount of reported loss cases in the first 5 months amounted to US $30 million 340 thousand, up 80% over the same period last year, and the reparations were 8 million 950 thousand US dollars, up 525.6% over the same period last year.

Among them, the number of claims increased by 525.6% over the same period last year, and the overseas bad debt rate of local enterprises increased by about 268%.

The Zhejiang phenomenon is not an isolated case.

In the first half of this year, China's credit insurance company received 936 cases of export credit insurance claims nationwide, with an amount of US $234 million, an increase of 108% over the previous year, of which 202 cases were reported in the United States, an increase of 31.2% over the same period last year.

More than 5000 overseas buyers who are in arrears with the payment of loans or insolvency due to bankruptcy have been registered.

Zhejiang's export bad debts amounted to 1 billion US dollars, and the subprime mortgage crisis made the US enterprises default rate rise sharply.

Lin Chen, director of the business management office of China Export and Credit Insurance Corp Zhejiang branch, told reporters that Zhejiang's export enterprises reported sharp losses this year, especially in major cases involving the United States and over 1 million US dollars or more.

In the 1~5 month of this year, the company accepted 41 cases of damage cases involving the United States, with an amount of 11 million 280 thousand dollars, compared with only 19 or 4 million 410 thousand dollars in the same period last year.

During the same period, other overseas bad debts of local enterprises also surged.

By the end of May, China's Zhejiang branch has received 169 cases of reported losses, involving 30 million 340 thousand US dollars, and has claimed 8 million 950 thousand US dollars, an increase of 525.6% over the same period last year.

Zhou Yi, head of China Insurance Office in Wenzhou, said that as of May this year, the company had paid $950 thousand for the insured export enterprises in Wenzhou, an increase of 493% compared with 160 thousand US dollars in the same period last year, and the reported losses amounted to US $1 million 980 thousand, up 191% from the 680 thousand US dollars in the same period last year. The number of reported losses reached 12, representing a 71% increase over 7 in the same period last year.

A series of influences were finally pferred to the export enterprises.

Due to the impact of the subprime crisis, the US market demand declined, making Wenzhou shoe leather industry hit hard by the US as its export destination.

According to statistics, the loss of Wenzhou footwear enterprises has increased by 138% over the same period last year, and the growth rate of exports in dollar terms is only 0.3%.

Besides, the overall situation of Wenzhou's foreign trade is also not optimistic.

According to materials released by the Wenzhou Municipal Development and Reform Commission, 1~4 indexes of import and export, export and import were all lower than the national average and the provincial average level in the past three months, which were lower than the 5.7, 0.5 and 18.3 percentage points of the whole country, lower than the 6.2, 2.9 and 17.8 percentage points of the whole province.

Lin Lin Chen believes that the current export credit insurance business has a penetration rate of about 5% of the local general trade, and the insured enterprises can enjoy the credit investigation of foreign clients in advance, and the risk rate should be lower than that of the uninsured enterprises.

Therefore, in the 1~5 month of this year, the export bad debts of Zhejiang's export enterprises may be close to US $1 billion.

Compared with the export volume of about $59 billion in Zhejiang over the same period, 1 billion US dollars accounted for only 1.5%.

But considering that the average profit margin of export enterprises is below 10%, the export bad debt is equivalent to about 1/6 of Zhejiang's export enterprises in the same period.

There are signs that the US subprime crisis has spread to industries such as manufacturing and consumer goods.

According to the analysis of China's Zhejiang insurance company, its acceptance cases are characterized by a large number of cases, involving a large amount of money, and the high risk rate of US buyers. The products involve home decoration, building materials, textiles, auto parts and so on.

Affected by this, export enterprises' confidence is low.

According to the questionnaire survey of Zhejiang provincial foreign trade and Economic Cooperation Department, 32.8% of enterprises in the two quarter believed that exports would decline in the second half of the year, and export enterprises' prosperity index was 89.6, down 10.4 points in the first quarter.