Pearl River Delta textile and clothing “small business body slimming”

Because the price did not reach a conclusion, an old customer who had been working for three years broke up with Hong Ruilin.

“It has never been so hard.” On June 8th, Hong Ruilin, a clothing company owner in Nanhai, Foshan, said that according to current costs, companies must at least increase their prices by 15% to have normal profits, while customers are only willing to raise prices by 5%.

There are not a few SME owners who are frustrated with Hong Ruilin. The reporter visited several factories in many industries such as clothing, ceramics, and toys in Guangzhou and Foshan. The difficulties are almost the same.

The semi-cession of enterprises, the drastic drop in the number of workers, and the phenomenon of stockpiling are common. There is a shortage of working capital due to monetary tightening, and many business owners are eager to retreat.

“As far as I know, many small business owners have not increased their investment in factories in the past year and have begun to transfer to other industries.” said Wu Haoliang, secretary-general of the Foshan Textile Industry Association, which has more than 700 member companies.

The unpleasant production costs of old customers have continued to rise for a few years. The cumulative effect has squeezed corporate profits to the limit, and companies must continue to survive. The only way to increase prices is to continue.

“The most difficult thing to do is to keep old customers. Previously, they had used certain prices. Now they have to raise prices so much that they do not accept them,” said Xue Qing, general manager of a plastic inflatable toy company in Baiyun District, Guangzhou.

Accumulated cost factors will eventually have a limit. The rise in raw material costs alone has made it difficult for apparel companies to support. The price of cotton reached 35,000 yuan/ton some time ago, but now it is also down 25,000 yuan/ton, compared with 16,000 yuan/ton one year ago.

“If you add labor costs, the production costs of garment companies have at least doubled in the past year.” According to Wu Haoliang's survey data, Foshan's garment enterprises have a gross margin of only 8%, and the average net profit is only 3%.

In this case, the price increase can no longer be conceded. However, Wu Haoliang is very worried about the fact that companies have no stable orders and it is difficult to maintain their old customers. “Many of the old customers and large customer orders have been transferred to Southeast Asia, where the cost of labor and raw materials is low.”

In addition to the passive inventory price increase, inventory backlog has also become a difficult portrayal of many companies.

Some garment companies in Guangzhou have to start selling clothes at a low price due to a serious inventory backlog. The price of clothing may not even match the cost of fabrics. Foshan ceramics was once famous at home and abroad, and today ceramics companies have had a hard time.

On June 8, Liu Hui, a forklift worker in a ceramics company in the Hongsha Industrial Zone in Nanhai, Foshan, confirmed to reporters in an interview: “The warehouses are now full, and the open space is also full. People are arguing that prices are too high to sell. Do not go out. Only pile there."

"I didn't rest in the past year. I was too busy. I sent out a lot of goods every day. Some of the tiles were not even polished, and they were taken away by others." Liu Hui said that the company had more than 1,000 people last year and only 300 this year. More workers.

A ceramics industry insider in Foshan said: "The rising cost is a factor. There is also a combination of factors such as the downturn in the real estate market and sluggish external demand."

** Without the solution of multiple unfavorable factors, the company’s operating funds have also begun to become unprecedentedly scarce.

The annual output value of a children’s wear enterprise in Shiken Industrial Zone, Nanhai District, Foshan, is approximately 40 million yuan, and the current funding gap has reached 5 million yuan.

This company does not only make orders but also has its own brand in China. With rising production costs, stocks are increasing, and the capital chain is about to break. "Because the collateral is not enough, the bank loan is not available, only through the guarantee company.** The cost is very high, more than 15%." The person in charge said.

According to Wu Haoliang's introduction, Foshan's garment enterprises are not large in scale, and the capital turnover is generally around 2 million yuan. These companies are now generally very tight in the capital chain. "Under the premise of monetary tightening, not to say that the new ** cannot get it, is to renew the mortgage, and the quota has also been squeezed a lot. The original ** 1 million yuan will only get 600,000 yuan upon expiry. It's up."

According to the reporter's understanding, the cost of ** is also generally high, even if the credit guarantee company does not pass the guarantee, the commercial bank's lending rates have also exceeded 10%.

The head of an investment company in Tianhe, Guangzhou, who is mainly engaged in short-term lending, told this reporter: “Many small and medium-sized enterprises have particularly difficult capital turnover this year. Private loans in the Pearl River Delta are very good, with a monthly interest rate as high as 10%.”

"The current state of the enterprise is indeed more difficult than after the financial crisis in 2008. If the momentum continues, corporate mergers and acquisitions are inevitable." Wu Haoliang does not want to mention the word "collapse."

Liu Hui, a forklift worker who moved or switched to a ceramics company, misses the days of last year.

"The wages have gone up a lot last year," he said. Liu Hui has worked in Foshan for 10 years and is well aware of the salary situation. According to him, wages have been rising since 2008. He was paid 1,500 yuan per month and rose to 1,700 yuan a year later.

What really satisfied him was last year. "Because the factory can not recruit people, the factory began to implement piecework wages. My salary suddenly rose to nearly 5,000 yuan." Liu Hui said.

Because the increase in labor costs has become the largest increase in production costs, Liu Hui's ceramic factory has begun to reduce staff in the past two months. The above-mentioned general manager of the Guangzhou Toy Factory Xue Qing said: “Our raw materials have risen by about 15%, and the increase in labor costs is the bulk of the increase. It has increased by more than 20% in a year.” According to Xue Qing, workers are now very young. "Slightly dissatisfied, we wouldn't do it." This reporter saw a number of industrial parks in Nanhai, Foshan. Most of the factories are recruiting workers. There are similar banners such as "Our factory recruits production sewing".

The status quo of laborers who “was out of wages and lack of people” has caused the Pearl River Delta enterprises to increase their pace of relocation. The above-mentioned children's wear factory and ceramic factory have established branch factories in Guangxi and Guangdong Qingyuan, respectively, to reduce labor costs.

"Some small bosses are very difficult to do, they simply sell the factory." Wu Haoliang said. According to Wu, these bosses have turned to do what, and some of them have bought several houses and rented to make money.

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