Is Manufacturing Facing Winter? What Is The Manufacturing Industry In The Pearl River Delta?

In from July 4 to 5, 2008, vice president Xi Jinping and his party, accompanied by the relevant leaders of Guangdong, went into factories, visited farmhouses, marina and lower communities. In Shenzhen and Dongguan, we conducted in-depth research on Guangdong's implementation of Scientific Outlook on Development, further cooperation in Guangdong, Hong Kong and Macao, strengthening and improving Party building.

Manufacturing was once a source of pride for GDP in Guangdong and the Pearl River Delta. Is manufacturing really facing winter now?

What should we do to make the manufacturing industry go?

It is the concern of many people.

"By the end of 2007, a town in Humen had left 200 enterprises.

This year is more serious than last year! "

Li Shixian, director of the propaganda office of science and education of Humen Town, Dongguan, said.

In the first quarter of 2008, the closure of enterprises in Humen town was more than that at the end of 2007. Humen's foreign workers were evacuated in large numbers, and labor arbitration came together.

In the first quarter of town village two, the severance payment for migrant workers cost about 20000000 yuan.

The factory that has not left has also become empty shell. Usually, there are only a dozen people left in the factory of No. more than 1000.

It can be said that the processing industry is leaving Humen. "

Li Shixian was very worried about this.

Dongguan Humen town is famous for its clothing industry, and there are more than 1400 foreign-funded enterprises.

Tao Dong, chief economist of Credit Suisse, believes that in the next 3 years, 1/3 export enterprises in Guangdong may face the fate of closure.

"The depression of the international environment, the rise of energy and raw material prices, the increase in labor costs and the appreciation of the renminbi" have been called the four economic ropes for prying up the throat of the PRD enterprises.

The manufacturing industry in winter is walking along the streets near the industrial zone of Fenggang town in Dongguan. Many shops that have lost consumers as factories and migrant workers have left, have already started a batch of land closures.

Everywhere, there was a billboard on top of the closed iron gate.

"The boss left, the factory collapsed, and everyone was empty."

The owner of a restaurant said.

Although it was a meal time, there was no visitor in his restaurant.

The shadow of enterprise failure is enveloped in Dongguan.

In fact, the collapse and relocation of factories have been accelerating since 2008.

This process is accompanied by the wave of layoffs.

A recent survey conducted by the Chinese manufacturers' Federation of Hongkong also revealed that 20% of the Hong Kong businessmen in the Pearl River Delta were planning to close factories or abandon production businesses, and thousands of Hong Kong funded enterprises in the Pearl River Delta will be closed down.

Tao Dong, chief economist of Credit Suisse, believes that in the next three years, 1/3 of export enterprises in Guangdong may face the fate of closure.

More and more enterprises in Dongguan are investigating and preparing for the next step.

Mainland, Vietnam, Malay...

They are within the scope of their inspection.

A businessman has no borders, and the manufacturing industry is characterized by "water flowing downwards".

"Moving is very troublesome, but without food, you can only go."

Ye long ten, a former president of the Dongguan City Association of Taiwanese businessmen, visited many places, but there was no place to satisfy him.

Neighboring Vietnam has only about 86000000 people and will be saturated after several years of development.

The population structure of the inland provinces is also worrying, coupled with the increase in pport costs, "many places do not even have international airports", which makes the success rate of investment in many parts of the mainland difficult to stand high.

According to Taiwan businessman Cai Yanlong, at present, northern Guangdong, southern Jiangxi, southern Hunan, Guangxi and other places are within five or six hours from Dongguan's drive, which is the preferred area for migration after the inspection of Taiwan businessmen.

At present, some manufacturers have moved to these places for production and processing.

Intend to plan, but no one wants to go.

Taiwan Business School for "changes in the Pearl River Delta investment environment, in the end or go?"

According to the survey, only 5% of Taiwanese businessmen indicated that they were ready to evacuate; 20% of Taiwanese businessmen said they would not be affected; the remaining 75% of Taiwanese businessmen were affected, but they were making efforts to overcome them and would not leave easily.

Most of the Taiwanese funded enterprises are small and medium-sized enterprises. They have formed a close industrial cluster in Dongguan. It is difficult for an enterprise to evacuate its supporting industries.

"We have one hundred families to go together."

Ye ten disclosed that this is the evacuation advice from the Taiwan Businessmen Association.

But walking or staying is not a matter of speaking alone.

If you want to stay, it depends on whether or not you can sustain it.

In July, every four shoe manufacturers in the Pearl River Delta will attend the Las Vegas international shoes exhibition and accept orders.

"Our quotation will be higher this year, and we need to take into account the factors of cost increase and exchange rate."

A director of Guoxin shoe industry told reporters that this is the common hope of PRD enterprises.

But hope is always not easy to achieve. The price increase is faced with the danger of losing customers.

As early as 2008, Dongguan Fenggang Town United Thai Holdings Limited had to abandon some of its customer resources because of its disapproval of price increases.

"Overseas buyers such as the US and Europe do not accept new quotations after rising costs."

Dongguan's local industry insiders say that the US and European Importers are very sensitive in price and adopt an unprecedented strategy of tight procurement.

Unable to raise prices, enterprises can only reduce their own profit margins, but the reality is that the average shoe net profit level of the footwear industry is only 3% to 8%.

If we can't raise the price, then the order will mean loss.

In the process of striving for price increases, enterprises in the Pearl River Delta are facing an increasingly tight network.

The United States is Dongguan's largest export destination.

Every year, 17 billion dollars of Dongguan's goods are directly exported to the United States, and 13 billion U.S. dollars are sold through Hongkong to the United States.

The subprime mortgage crisis in the United States is getting worse and worse, and the global economy is slowing down. This will inevitably lead to severe hypoxia for the PRD enterprises mainly exported to Europe and the United States.

The reduction of orders is a common problem encountered by Dongguan's export enterprises recently.

The appreciation of the renminbi has also become an influential factor.

Many factories that pick up orders will suddenly find that the profits calculated according to the exchange rate at that time should be evaporated completely, even at a loss.

Domestic raw material prices and labor costs have not declined, but on the contrary, they are on the rise.

"Fundamentally speaking, the core problem of Dongguan's export oriented enterprises is the contradiction between falling demand and increasing competition, that is, the global demand has declined sharply, especially the subprime mortgage crisis in the United States has triggered an economic recession. At the same time, manufacturing industries in Southeast Asia and other emerging countries are developing rapidly, competing with" Dongguan manufacturing ", while" Dongguan manufacturing "has led to a significant increase in costs and weakened competitive advantage because of the appreciation of the renminbi.

Ye Hong, who served as the chairman of the Dongguan Taiwan Businessmen Association, analyzed the situation of "Dongguan manufacturing".

Yu Hongbin, who graduated from vocational high school, came to Dongguan in 1996 and worked in a hardware Furniture Hong Kong funded enterprise. At present, the salary is 2000 yuan per month.

But he believes that such a low salary, with his technical conditions, can get 3000 yuan per month.

And Yu Hongbin has been looking for such an opportunity. Every weekend he goes to some job fairs to try his luck.

Relatively speaking, the recruitment of enterprises has completely put down the height of the body.

The average worker in most enterprises in Dongguan has mentioned about 1500 yuan a month.

But even so, it is still unable to reduce the mobility of workers.

Raising wages is not the whole problem.

"The most troublesome problem now is that the ideology of labor has changed, and their bargaining power has increased, but it is very irregular, and factories are surrounded."

A business owner has no choice but to say, "the relevant laws and regulations need a period of adjustment, the needs of enterprises, workers also need!"

"How many workers are familiar with relevant laws and regulations?

Hardly any!

Now we renew contracts with workers who work for more than ten years, and everyone has to pay compensation.

In the early years, there was no overtime payment stipulated, and now workers should also pay compensation according to relevant laws and regulations.

He said.

The impact of relevant laws and regulations on enterprises has aroused controversy in various circles of society.

"As far as I know, most small factories fail to do so. They are still watching."

At the beginning of the implementation of the relevant laws and regulations, Zhao Xinchun, who was engaged in the foreign trade processing and manufacturing industry in the Pearl River Delta for nearly 20 years, gave his mastery of the situation.

Under the circumstance of lack of supervision, most of the small and medium-sized enterprises in the Pearl River Delta have "factory rules" or "staff rules" which are full of overlord clauses.

In the labor contract signed by the factory and the staff, the "factory rules" or "staff codes" are included, which are defined as documents that have the same effectiveness as the labor contract.

So the labor contract law is very difficult to give play to the expected effect.

Labor and enterprises do not have sufficient time to learn relevant laws. Most of them do not understand the relevant laws and regulations.

It can be said that it is not a pressure on the operation cost of most small and medium-sized enterprises.

As for a large number of large enterprises that process foreign famous brands, they often accept the audits of strict human rights, industrial safety and moral trade.

The wages enjoyed by migrant workers in these enterprises have reached or even exceeded the requirements of relevant laws to some extent.

Zhao Weinan, Secretary General of Dongguan Association of Taiwanese investment enterprises, said that since the "shortage of migrant workers" in 2004, the bargaining power of migrant workers has generally improved. The emergence of the new law has a greater impact on business owners than workers.

The original intention of the relevant laws was good, and the implementation details were promulgated nearly six months after the implementation of the law.

A phenomenon appeared in Dongguan - "labor judicial yellow cattle".

A Dongguan toy enterprise in Hong Kong, which has just closed down, may be a typical case. Some people from Guangdong toy industry revealed that recently, some lawyers contacted Dongguan workers in the South and expressed their willingness to recover all kinds of protection and overtime payments that the owners did not pay according to the regulations last year.

After a long stalemate between factories and workers, the Hong Kong businessmen made a compensation of 2 million yuan, and the factory also announced the closure.

The trend of the Pearl River Delta is industrial pfer. According to the statistics of Dongguan foreign trade and Economic Cooperation Bureau, there were 909 foreign-funded enterprises in Dongguan in 2007.

But in Dongguan, it is hard for you to find a small and medium-sized enterprise owner whose factory has been closed down.

Most of the owners of these enterprises started from workshop factories, and they used to run the 2465 square kilometers of land in Dongguan vigorously.

But nowadays, the bosses of these enterprises are hard to find in Dongguan.

For these enterprises, which are called "no roots", bankruptcy means evaporation.

However, this result may have been foreseen by the government.

"Do not worry too much if you pour ten homes every day."

Luo Ziqiang, deputy director of the labor and employment service management center of Dongguan Labor Bureau, said, "this will help to make the land available and bring in enterprises with few people, good efficiency, high technology and environmental protection."

In recent years, Dongguan has become a pilot project for the pformation of Guangdong's industry, while Guangdong has carried out more efforts in upgrading the industry.

In the Dongguan Fu'an dyeing and printing plant, which was declared bankrupt in February 29th, the industry saw the shadow of regulation.

The plant is a wholly owned subsidiary of Futian group, a publicly traded company in Hongkong. In 2006, the printing and dyeing industry in Fu'an encountered the "environmental storm". The environmental protection department discovered the sewage pipeline which was privately built by the environmental protection department. It has stolen nearly 10 million tons of high concentration printing and dyeing wastewater every year, and the factory reported only 6 million tons of sewage.

Dongguan has lost its face.

A Guangdong textile industry source said: "after the accident, Futian group also knew that its good days in Guangdong had come to an end, and gradually moved their subsidiaries out of Guangdong and turned them into factories in the mainland."

Huang Huahua, governor of Guangdong Province, said during the two sessions of this year that many industries in Guangdong are at the low end of the international industrial chain, and the ability of independent innovation is not strong enough. The government hopes to turn over the extremely limited and expensive land in the Pearl River Delta to more high-tech enterprises.

Reflected in the policy level, export tax rebates, processing trade and environmental monitoring are constantly being adjusted, including export enterprises, including shoemaking enterprises.

From 17 to 21 February, Li Miaojuan, director of the Guangdong provincial development and Reform Commission, studied with the provincial Party Secretary Wang Yang to three provinces and cities in Shanghai, Jiangsu and Zhejiang.

"An eye opener is deeply shocked," she told reporters.

After returning to Guangdong, she put forward ten proposals to the provincial Party committee and the provincial government, of which sixth relate to industrial pfer. "Unswervingly push forward the large pfer of low-level labor intensive industries in the Pearl River Delta. At the same time, we should focus on strengthening the development of industrial clusters and constructing a modern industrial system, so as to enhance the international competitiveness of the industry.

We should eliminate backward industries and vigorously develop modern service industries, new and high technology industries, advanced manufacturing industries and basic industries.

But the industry also believes that industrial upgrading is a spontaneous market process, and can not be too concentrated.

Tao Dong said that policymakers may not be aware of this and talk about upgrading industries. In fact, inefficient industries are easy to eliminate.