Transformation of processing trade into "current time"

Abstract: In the first quarter of this year, Shenzhen textile and garment exports ranked first in the country's large and medium-sized cities. After the toy industry in Shenzhen experienced the great scenery of the 1990s, the industry development has been at a crossroads for various reasons. Similarly, the export hardware business accounts for 30% of the Shenzhen hardware industry, mainly small enterprises, mostly processed materials, few private brands, poor financing capacity, low profit margins, and the same ability to withstand the appreciation of the renminbi.

In 2009, Shenzhen's toy exports once again ranked first in the country.

In the first quarter of this year, Shenzhen textile and garment exports ranked first in the country's large and medium-sized cities.

After the toy industry in Shenzhen experienced the great scenery of the 1990s, the industry development has been at a crossroads for various reasons.

The recently concluded China-US Strategic Economic Dialogue, China and the United States have expressed a low-key attitude on the RMB exchange rate, which was interpreted by industry insiders as "predicting the expectation of RMB appreciation to be postponed." Shenzhen processing trade enterprises have once again won valuable transformation time. Faced with the loss of profits caused by factors such as the depreciation of the euro, the rising labor and raw material costs, "reloading the battle" has become a key choice for the sustainable development of processing trade enterprises in Shenzhen.

1 enterprises are unable to withstand the "heavy" value of appreciation

In April, an article reprinted on the Internet, "Renminbi appreciation of 5%, half of textile and garment enterprises will be closed down" pointed out: In the textile industry, good companies generally have a profit margin of around 5%, and some enterprises have only 3%. If the renminbi appreciates by 1%, nearly 20% of enterprises will reach the turning point of profit balance; if they appreciate 5%, it is estimated that more than half of enterprises are facing bankruptcy.

Although this is a bit alarmist, the reality is indeed not optimistic. "Under the current low profit, if the renminbi appreciates sharply in the short term, a large number of enterprises without brands and without independent intellectual property rights will be in trouble," said Xiao Xiaoping, general manager of Shenzhen Huasi Company.

Stress tests from the Ministry of Commerce and the Export Industry Association show that if the renminbi appreciates by 3% in the short-term, the profits of enterprises in the home appliance, automobile, mobile phone and other industries, which account for 60% of China’s total exports, will fall by 30% to 50%, and small and medium-sized enterprises with low bargaining power Will face losses. The reporter learned that the average profit margin of processing trade enterprises in Shenzhen toys, textiles and garments, plastics, hardware and other industries is 5% to 8%, and the profit margin of many SMEs is around 2%. If the renminbi appreciates by more than 3 points, it will be enough to cause blood loss and the survival crisis of small and medium-sized enterprises.

According to industry insiders, the near-euro devaluation of the euro is 15%, which can be said to be a preview of the appreciation of the renminbi against the US dollar. In this regard, the attitude adopted by the Shenzhen garment industry is a short-term wait and see, the order must be negotiated, and the short-listed ones are safe. Because such a high depreciation margin makes it unprofitable to export to Europe. But what about the long term? The person in charge of the company shook his head and smiled.

The relevant person in charge of the Municipal Toy Industry Association told the reporter that during the period of slow appreciation of the RMB from 2005 to 2008, combined with the financial crisis, orders were reduced, profits were diluted, and toy processing trade enterprises were shut down from 800 to 500, and the elimination rate was nearly 40%. .

As one of the more developed regions in the national plastics industry, in 2009, Shenzhen's plastics industry above designated enterprises completed industrial output value of 59 billion. More than 95% of the city's plastics enterprises are small and medium-sized enterprises, processing trade enterprises account for half, and innovation and research and development capabilities are weak. Such a company is likely to face a crisis of survival.

Similarly, the export hardware business accounts for 30% of the Shenzhen hardware industry, mainly small enterprises, mostly processed materials, few private brands, poor financing capacity, low profit margins, and the same ability to withstand the appreciation of the renminbi.

In the first quarter of this year, Shenzhen textile and apparel exports exceeded US$2.3 billion, ranking first among large and medium-sized cities nationwide. However, considering the price hikes of raw materials such as cotton yarn and metal fittings and the pressure of RMB appreciation, the industry is full of concerns about the future market. A person who has been involved in processing trade for many years said that European and American customers also understand the difficulties of China's processing trade, and will consider price increases in due course, but this has a lot to do with the size of the company and the intimacy of the two sides, and it is not universal.

2 industry transformation into "current time"

The difficulties faced by Shenzhen processing trade enterprises include the slow recovery of the European and American economies, the increasing barriers to international trade, rising labor costs and the appreciation of the renminbi. Under tremendous pressure, processing trade enterprises are more proactive in seeking transformation and upgrading. The experience of Japan and South Korea shows that after the gradual loss of low-cost competitive advantage, efforts are needed to improve the ability of independent innovation, master intellectual property rights, and form new competitive advantages.

It is understood that the processing and transformation enterprises in Shenzhen are currently undergoing upgrading and transformation. The methods adopted or planned include: developing production service outsourcing, getting involved in upstream supply chain production, increasing domestic sales, and cultivating brands.

Xue Xiaowei, the director of Baode, a large toy manufacturer, has been engaged in toy processing trade for many years. After experiencing the gradual appreciation of the RMB from 2005 to 2008, he also coped with the escalating trade barriers in Europe and the United States. He said that the processing trade should continue. But "playing" must change. Either carry out industrial upgrading and concentrate on producing high-end electronic toys such as sound control and electric power with high technology content; or implement industrial output. With the favorable policies of Southeast Asian countries, the more stable investment environment and the improvement of infrastructure, the establishment of factories in Southeast Asia, outsourcing manufacturing In the link, the domestic headquarters is responsible for operation, design and management to reduce costs.

The relevant person in charge of the Municipal Textile and Apparel Industry Association told the reporter that the Shenzhen garment industry began to change from OEM to ODM (design-manufacturing) before the financial crisis. The scale enterprises all have their own team of designers hired and nurtured. For example, Virginia International, the independent research and development of ultrasonic seamless technology is favored by the international premium brand "Victoria's Secret", and for the other party's OEM production, the company's brand of up to 500 brand designers also OEM design, occupying A higher value in the industry chain. At present, nearly 30% of the processing trade enterprises in the city are engaged in ODM, and the industry and product structure are continuously optimized.

In addition, the domestic market is also a strategic location for processing trade enterprises to release production capacity and expand space during the transition period. In the toy industry in Shenzhen, Hong Kong-funded enterprises that did not intend to expand the mainland market have been discussing domestic sales more and more this year. The original 80% of Zhongxinghua Electronics Co., Ltd. has been overseas. Since last year, it has quickly turned around. Currently, 80% of its business is in China and it is realized. The counter-market growth; the key processing products of the keyboard processing enterprises have all been OEM and exported. Now, the self-owned brand "Ray-Bao" sells well in the domestic market, ranking third in the industry in the rankings of authoritative organizations.

According to preliminary statistics, about 10% of the processing trade enterprises in the city have their own brands, and OBM (self-owned brand processing and manufacturing) business is gradually carried out. Among the self-owned brands of processing trade enterprises, there are nearly one hundred national and provincial brands.

3

Multi-pronged approach to alleviate transformation "pain"

The industry believes that the inertia of multi-year order production will continue for a period of time. Processing trade from "buried work" to "four-way search", enterprises need more initiative and strategic planning. For example, processing trade enterprises are basically in line with international advanced level in terms of equipment, quality and management. However, if they turn to the mainland market, they will need to spend a lot of human and material resources for brand building, channel establishment, after-sales service, etc., which were originally processed. Trade does not need to be "fearing".

Time is tight. Production service outsourcing still needs to wait for the maturity of Southeast Asian industrial environment. Site selection and construction cannot be completed overnight. Workers' quality and skills training also takes time. OEM design involves the differences between Chinese and Western cultures, especially clothing and toys. "Products, whether the design ideas of Chinese people can be tempered with the aesthetics of European and American consumers remains to be tempered; domestic sales depend on domestic demand, brand awareness and channels. These are long-term tasks with large investment and unclear prospects.

Fortunately, enterprises, industries, and governments have been working hard in this long-distance run of upgrading and transformation.

In order to support the upgrading and transformation of traditional advantageous industries including some processing trade industries, the Shenzhen Municipal Government has continued to invest 160 million in recent years to build 7 public technology service platforms to provide technical support, product research and development, personnel training and other services. . For example, the clothing research and development center has set up design courses, and has trained more than 6,000 person-times, and has trained a group of practical high-level design talents that are urgently needed by the industry.

The upgrade and transformation are inseparable from the financial support, which is especially true in the processing trade SMEs. It seems that the diversified financing channels need to be broadened. The launch of the GEM can solve the financing problem to a certain extent, but the scope is still limited. In response to the status quo, some small and medium-sized enterprises in Shenzhen proposed to integrate resources, mergers and acquisitions, and “retain control rights in exchange for development rights”, exchange smaller capital stocks for larger capital, and concentrate on powerful enterprises. Not long ago, Shenzhen Hardware Chamber of Commerce and Shenzhen Zhonghang Group established Shenzhen Zhonghang Microfinance Co., Ltd. to open short-term financing services for member companies and solve the financial problems of technological innovation and brand building. Due to the relatively familiarity with the industry, the microfinance company also relatively relaxed the loan conditions, and member companies can timely integrate the amount of 600,000 to 2.5 million yuan with equipment or inventory, and get it within 500,000 days.

In terms of industrial upgrading, the relevant person in charge of the Municipal Science, Industry, Trade and Industry Committee said that with the Huaxing Photovoltaic 8.5-generation LCD panel as the leader, the city is attracting a number of international supporting projects such as glass filter plates to form a virtuous circle of the flat panel industry. High-end projects and missing links in the industrial chain like this are the current needs of Shenzhen and the focus of investment attraction and structural adjustment in the next few years.