Profit severely squeezes the "vicious circle" of exporting shoe companies' capital chain

The recently concluded 110th Canton Fair and the 14th China Dongguan International Footwear Exhibition have caused many shoe manufacturers to feel deeply uneasy. The high cost almost eroded the profit space of the company. At the same time, the capital chain also has the problem of convergence.

The profit was severely reduced. "Compared with last year, the number of buyers visited this year is at least reduced by half." Li Jin, sales manager of Chengdu Hi-tech Industrial Co., Ltd., which produces women's boots, said that due to the rising cost, the company's footwear cost is lower than Last year increased by 10% -15%, many buyers are unable to accept this price increase, and in order to save the old customers, only to "big profits and quick turnover" to sell shoes to old customers, and now the product gross margin has been less than 10% .

Since the beginning of this year, the prices of raw materials have soared, the *** has continued to appreciate, labor costs have risen sharply, the profits of shoe companies have been greatly reduced, and pressure from international peer competition has increased. The global trade protection situation remains grim.

The person in charge of Zhejiang Taiji Footwear Co., Ltd., which produces men's casual shoes, also stated that it is difficult to see the shadow of new customers at the current Canton Fair and new customers are more conservative than before. According to its introduction, the product price of the company rose by nearly 80% compared with that of 67 years ago. However, profits have been continuously reduced. At present, the profit per pair of shoes is only 5%-6%.

It is the soaring cost of footwear that has reduced the profits of our shoemaking companies. According to the analysis of customs data, since the beginning of this year, the prices of raw materials for leather, rubber, plastics, and chemical fiber have continued to rise. The price of domestic pig raw hides has risen from RMB 40 to RMB 50 last year and all the way to RMB 80 to RMB 90. It has now been exceeded. One hundred yuan mark. Other raw materials are also rising, coupled with recruitment difficulties, the state adjust the minimum wage and other factors, the footwear industry's labor costs rose by an average of 20% -30%. On the other hand, the exchange rate of *** keeps rising, further increasing the exchange loss of the company.

Statistics show that since the entry into the second half of this year, Guangdong's footwear exports have shown a sharp decline in single-month growth.

The poor link in the capital chain is even worse. The tight capital chain caused by the thinning of export profits of shoe-making enterprises has caused enterprises and fabric suppliers to fall into a “vicious circle”.

Some companies revealed that the financial pressure on small and medium-sized shoe companies is now high. In general, companies can only get 30% of the prepayments made by buyers, but they can use 60% of the funds to run the orders. The banks also do not favor SMEs, which results in abnormally high capital pressure.

The reporter learned that because fabric suppliers are afraid that shoe-making companies may “take people out of the air” because of capital chain breaks, they often do not dare to take orders easily, or raise the threshold for getting goods and increase the quantity of new fabrics, but the funds are not Affluent small and medium-sized shoe companies could not afford a lot of order quantity, so they were forced to use material suppliers' fabric stocks, which was in violation of the contract with buyers and reduced the credibility of export companies.

"The current situation is indeed very detrimental to small and medium-sized shoe companies, to see whether it can resume in the second half of next year." Li Jin said.

According to the information released by the website of the Dongguan Industrial and Commercial Bureau in Guangdong, in August of this year, Dongguan City had written off 103 different types of shoe enterprises, and 205 new registered shoe enterprises were registered in the current month. Although the relevant departments stated that such increase or decrease is normal, it is an indisputable fact that the footwear industry is difficult to do.

Order migration or domestic sales of "Eastern Shoes Westward Movement, South Footwear Northward Movement" is a trend of inward migration of China's coastal shoe enterprises in recent years.

Affected by cost pressures, export shoe enterprises located in the coastal areas of China are shifting part of their production bases to Southeast Asian countries such as Vietnam, Bangladesh, Indonesia, and others to the central and western regions of the country.

The relevant person in charge of Xiamen Jianfa Light Industry Co., Ltd., which manufactures sports shoes, said that three years ago, the company had opened another shoe factory in Wenling, Zhejiang, which is outside the shoe factory in Jinjiang, Fujian Province. In order to control the cost and expand the scale within the scope, the company has considered relocating factories in Jiangsu, Shandong, Yunnan, Chengdu and Jiangxi. In the future, Fujian Jinjiang will serve as a design and R&D center.

In order to survive the debt crisis in Europe and the United States, some export shoe companies also began to use "two legs" to walk - to develop domestic sales. At the Dongguan Shoes Show, an original export-oriented shoe company claimed that in order to enter the domestic market, companies have prepared for three years and have done a lot of market research.

However, the incomplete industrial chain and the lack of sales channels in the new production areas have also caused many companies to falter.

Some companies report that the current inward-moving shoe companies are not mature because too much of the raw materials, packaging materials, and parts needed for shoemaking are purchased from coastal provinces, which is also a significant cost.

In addition, before the domestic shoe exporters obtained orders through foreign middlemen, they mostly used OEM OEMs as their export methods. They lacked their own marketing channels and it was not easy to take the “domestic sales” route. A person in charge of exporting dance shoes told reporters that they had not thought about domestic sales. The main reason was that the domestic market was too complicated and there was no courage to get involved.