Wenzhou Apparel Industry In Crisis

Police in Wenzhou are offering awards for the apprehension of factory owners who've fled and absconded with fraudulent export rebates. There's also the old case of Zhuangji, an apparel maker that went into the shipbuilding business........................................the firm lost a ton of money and the government had to find a buyer for its apparel business. While this case takes the cake, 2014 started off badly for apparel makers and there are fears that many firms could go under this year. Many will be linked by credit guarantees.......

温州商界奇女子跑路遭悬赏 温州服装业爆危机
Garment industry in Fujian and Zhejiang series of "Where the boss" on foot incident, Wenzhou Tengxu chairman Xu Yunxu dress who is undoubtedly one of the most watched. Kill from the business community, to be Reward, Xu Yunxu more than three months of ups and drama, and even in Wenzhou, Zhejiang circle caused ripples.

Early August, Wenzhou Municipal Public Security Bureau issued a circular, the export tax rebate fraud case involving absconding, police apprehend 徐云旭 reward Yinmei Pan and his mother, and arrested one person every assistance award 10000-30000 yuan.

In addition, due to the earlier Zhuang Ji clothing shipbuilding huge loss of cross-border operations, had led the government to find a listed company Shandong Ruyi [ 0.98% funding research report ] (002193.SZ) to acquire its apparel business from the outside.

According to 21st Century Business Herald reporter interviewed understand the field, similar to the above are not isolated cases, several well-known garment enterprises in Wenzhou operation more have been hanging by a thread, precarious.

"Wenzhou famous garment and footwear enterprises collapsed in the back will be more." Wenzhou businessmen, a local veteran told reporters bluntly.

As one of the pillars of Wenzhou in the real economy, the apparel industry staged a perilous since entering in 2014, well-known companies are involved in various local negative news, the old city is experiencing apparel severe vibration.

Wenzhou will have this situation outside the garment industry, attributed to fatigue caused by backward for industrial upgrading and business owners philosophy.

However, the reporter interviewed found inside the garment industry in Wenzhou, enterprise micro-level tangle between macroeconomic policy direction and guidance, there are deviations.

Wenzhou Clothing Chamber of Commerce, Federation Vice President, Zhejiang Austrian Ben-ni (Group) Co., Ltd. Chairman Zheng Chen love to dress in an interview with 21st Century Business Herald said this: "garment industry transformation and upgrading, the policy formulated by the presence of local government certain issues., such as the transition to clean energy and shipbuilding to do these projects, many of which are mandatory administrative in nature, ultimately interfering with the market. enterprises should do whatever thing, rather than excluding restructuring risk. "

Behind sacked: Lost grassroots entrepreneurs

In Wenzhou, the local, skilled individuals dressed, specializes in the business of women entrepreneurs Xuyun Xu banquet shuttle, has been popular attention. Because of humble origin, coupled with the special aura of feminine identity, 徐云旭 Tengxu her clothing business has been seen as the legendary garment enterprises in Wenzhou are everywhere learn.

This also allows the image of a beautiful woman is even more dramatic in the final collapse. May this year, the "Garments Co., Ltd., chairman of Wenzhou Tengxu lost contact," the news uproar, after the Wenzhou Municipal Public Security Bureau confirmed that 徐云旭 export tax rebate on suspicion of being a criminal investigation, Economic Investigation Department task force set up a joint tax department investigate the matter.

August 1, the event is further clear qualitative. Wenzhou Public Security Bureau issued a notice to its mother and wanted a reward on its official micro-blog: "Recently, Wenzhou Municipal Public Security Bureau is investigating the case along with defrauding export tax rebates, a huge amount of money involved, the main suspect 徐云旭 Steven Silver sister fled after the incident. Xuyun Xu, female, born in 1974, Wenzhou people may harbor 6-7 months pregnant. Pan silver girl, female, born in 1952, Wenzhou people. provide clues arrested a person will be given every 10,000 to 30,000 yuan reward. "

Reward apprehend absconding due to economic cases involving boss rare. And there are senior people familiar Tengxu Group to 21st Century Business Herald reporter revealed 徐云旭 tax problems and others may not be true, but it is more huge financial chain behind the crisis is the core cause of the series of induced events.

Xu Yunxu operated Tengxu clothing was founded in 1993, was just an ordinary textile workers identity, almost no Industry experience, she successfully small workshop-style company a step by step to achieve large-scale garment Wenzhou local well-known enterprises.

With many local garment enterprises in Wenzhou locate similar Tengxu dress is the design, development, production and marketing as a whole, and has the right to import and export export-oriented apparel business. Public information: Tengxu total land area of the industrial park of 75 acres, 320 million yuan in fixed assets, the annual output value of 350 million yuan, with more than 1200 employees.

"Because of the industrial base and a variety of historical reasons, a group of like 徐云旭 this from scratch, Industrial mediocre management experience in the apparel industry managers, quickly occupied the traditional industries in Wenzhou. Early price competition, given the development of these enterprises fertile soil, In the 21st century have left a small scale enterprises basically, however, the management capacity of entrepreneurs and industrial vision, but not with the passage of time has greatly improved. "aforementioned senior analysts believe.

In his opinion,徐云旭and she represents this group of grassroots entrepreneurs in Wenzhou, a few years ago because of financial lending and short-lived outbreak lost judgments, strayed into real estate investment, and expand the area of investment now direct drag on business development.

2008, the central four trillion investment plan greatly stimulated Wenzhou, Ningbo, Jiangsu and Zhejiang such cities, the real estate market continues to expand, in Wenzhou spawned a well-known real estate group , but also for many in itself has nothing to do with real estate investments Wenzhou businessman, blood from the enterprise real estate .

"The ability to 徐云旭 in business management and investment, the original scale Tengxu clothing has its limits when a sudden burst of local loans, bank loans to come to want companies to invest, such as 徐云旭 almost overnight entrepreneurs' net worth boom ', flush with cash to invest where I do not know, but most likely heard of real estate to make quick money, so BaoTuan enter. "the source told the 21st Century Business Herald reporter said," at least 20% -30% of companies are involved the investment in real estate. "

In the Chamber of Commerce witnessed a number of garment enterprises cross-border investment, and then later by the burden of operational difficulties, Zheng Chen love to reporters bluntly, today's Wenzhou clothing companies have already received a painful lesson. "Before, entrepreneurs tend to feel that there is no risk of real estate, after this major setback, basically are afraid to go to the mess made these investments."

Sleepy transformation: Low Gross Forced diversification?

In addition to the lack of awareness of risk control operators, with a diversified business to supplement the main idea of ​​low-margin industry, in fact, make the garment industry in Wenzhou severe blood loss.

Labor costs brought about by the disappearance of the demographic dividend soared, making the already quite general Wenzhou garment industry profits become more thin. Zheng Chen love to 21st Century Business Herald reporter revealed that before 2008, a labor and employment market in Wenzhou clothing only 20,000 average annual salary of five, now this figure has become fifty thousand, six years doubled.

"Increase the cost of five hundred workers, it can burn off the profits of the company more than ten million, while larger enterprises are thousands of employees level, which gives companies a great deal of pressure."

At the same time, increase the price of a profit of practice, it seems difficult to implement. Observers pointed out that the simple act of marketing evolutions bring prices in global markets have little buyer, and hopes to return and upgrades designed to bring scientific research, but also must bear the huge costs and consider the early post- Risk factors for SMEs managers faced all sorts of contradictions.

"Today Wenzhou garment enterprises are seeking ways to improve employee efficiency, cost management and some companies have chosen to reduce labor, substituting machines to reduce costs;. Others through training, doing some technology application, do everything possible to reduce labor costs." Zheng Chen Love said.

At this time, a huge transformation temptation to appear in front of the clothing business owners.

The second half of 2013, Wenzhou City, issued a highly significant weathervane "Opinions on Supporting distributed photovoltaic power generation," clearly "program to 2015, Wenzhou, distributed PV installed capacity 800 MW or more, Wenzhou Economic and Technological Ruian Economic Development Zone and the end of October in the year prior to the completion of the planning. "

On the basis of national policy level and on the level of Zhejiang Province, Wenzhou City, also said it would add up additional electricity subsidies. Any PV companies registered in Wenzhou, which in Wenzhou City, the new photovoltaic power generation projects, will get its electricity subsidies, Wenzhou, 0.1-0.2 yuan per kWh, equivalent to guarantee the basic profit and loss according to its annual generating capacity.

As a result, many of the traditional enterprise began to transition into clean energy. Has triggered a huge hot outside.

Zhuangji "Shipbuilding": Ten years Nankeyimeng

The same situation also appears in Wenzhou "ship fever" on. Ningbo, Taizhou, Zhejiang Province, traditional ships and other heavy manufacturing city compared to Wenzhou shipbuilding resources had not prominent. With the transformation of government departments frequently blowing shipbuilding "spring", many clothing, jewelry manufacturing companies scrambling to enter into this completely unfamiliar territory.

The suit was big Zhuangji apparel manufacturing, is one of the typical. Founded in 2004 in the village Kat costumes, as its company name indicates, has been to clothing as the core business. Clothing business was to make the top 500 private enterprises in the Chinese and " Chinese clothing [ 1.07% funding research report ] Top Ten Influential Brands "award.

But a decade ago, ambitions extend to the external aspects of Zhuang Ji gradually stronger, and are made of non-diversified management related areas, in shipbuilding, mining, real estate and other areas more than a foot in.

2004, Chuang Chuang Ji Ji aspect funded the shipping industry, the company registered capital of 300 million yuan, with a total investment of 1.272 billion yuan (total liabilities accounted for 10 billion). Initial creation, shipbuilding business who Zhuangji bring brief glory - two 82,000 t bulk carrier orders settled Chuang Chi, which is the largest in the history of Wenzhou shipbuilding tonnage ships.

However, a great demand for funds and investment gains and losses shipbuilding garment industry is far from stable, the economic crisis struck in 2008, Wenzhou, Chuang Chi will be plunged into an unprecedented predicament.

Owners abandon ship, under heavy pressure pumping bank loan, clothing main industry simply can not save new shipbuilding industry, to the end of 2012, on the verge of collapse and apparel Zhuangji involving 30 billion guarantee traced circle.

Wenzhou local Industry sources said:. "Government is unwilling watched this 'business card' transformation giants this bankruptcy, then shot multiple seek disk access, and ultimately find Shandong Ruyi timely manner."

August 30, 2013, the clothing company called "Wenzhou Zhuangji Garments Co., Ltd.," the establishment of Jining Ruyi Group Investment Limited and Zhuangji were invested 51% and 49%. Legal representative of Shandong Ruyi Group [ 2.48% funding research report ] chairman, president and chairman of Shandong Ruyi Qiuya Fu.

According to the latest news in the 21st Century Business Herald reporter was now Zhuangji original single boat has been handed over to the Bank [ 0.70% funding research report ] and other banks took over, the bank injected directly to the ship contractor. After create vessel, immediately auctioned off to super-low prices even as low as the market price of one to two fold. Chuang Chi shipbuilding machinery and plant itself has been the auction is completed, just waiting to digest the original blind after this batch of orders foreign investment, the shipbuilding industry as a whole will be cut off from the village guitar.

Industrial upgrading: environmental requirements and lack of motivation

Under the outer blind expansion of investment and madness, hidden Wenzhou garment confused in the future.

In fact, Wenzhou clothing industry put forward the slogan of industrial upgrading, can be traced back to ten years ago. But today, in the low-end design and processing of industrial structure does not seem radically reversed. Whether it is the "official version" or "folk version" upgrade attempt, success is minimal.

2010, Wenzhou City garment industry to upgrade the program announced. In this industry were high hopes remodeling plan, the government promised to set up special funds for the development of the garment industry, increase financial support for the garment industry. Meanwhile, the "group will be established to promote headed by the Deputy Mayor in charge of the development, trade, science and technology, foreign economic, industrial and commercial departments and clothing will be responsible for the implementation of human composition."

2012, from Wenzhou City, Wenzhou Clothing Chamber of Commerce and co-sponsored the establishment of apparel Tengxu "Wenzhou Garment Development Platform" officially put into use, the total investment of 150 million yuan, with a total construction area of ​​over 30,000 square meters of large-scale platform designed by semi-official nature, integrate resources, garment industry restructuring and upgrading. Wound design enterprises settled more than 180, mainly for Wenzhou garment industry chain upstream and downstream business matchmaking.

Vision of the platform set up very nice - "by 3-5 years of efforts, the integration of 2-3 annual output value of 1 billion yuan of large garment enterprises, cultivating five or so virtual business clothing enterprises, the introduction of high-end clothing, or the formation of R & D design agencies, creates Chinese brand, China's export brand, Chinese well-known trademarks, and strive to build a world famous brand, total economic output generated will be more than 50 billion yuan. "

However, more than two years later, when it was founded in addition to a lively, outgoing Wenzhou Garment Development Platform no exciting news. One of those established Tengxu clothing, but also troubled head Paolu events.

Zheng Chen love the view, the traditional garment enterprises in Wenzhou pursue industrial upgrading enormous difficulty. "Upgrade cycles are often long, big risk. Previous years, Wenzhou financial circles mutual serious, if rely on high-interest loans to do this thing, the more the risk is magnified., And the longer the period, the interest burden is heavy. The current financial situation makes it difficult to upgrade the industrial enterprise that knows how to turn, but insufficient funds. "He further to the 21st Century Business Herald reporter said that at this stage most of the enterprises in Wenzhou businessmen have long in profit or non-profit. From the perspective of the transformation and upgrading to speak in foreign counterparts success stories are maintained during the low interest rate environment support.

"In Wenzhou, while the market forces you to have to upgrade, while confidence in the power of transformation and upgrading are insufficient. Does not turn no, they did not turn up the intensity. Resulting in Wenzhou garment industry has been upgrades are minor, no big move. "Zheng Chen Love said.

Just this year, Wenzhou municipal government issued the 2014 version of "five hundred ten industry training to enhance the project," the apparel industry, industrial upgrading major plan to "focus on the development of high-end suits, business casual clothes, women's fashion and clothing trends and other leading brands. Build 'Chinese clothing brand central city', the formation of urban fashion apparel center, modern garment production base, modern clothing materials production base 'a nuclear North and South to lead the expansion of' layout. "

Scale-out is imperative, however, Zheng Chen love for the garment industry bottomed out after the throes of Wenzhou still have confidence. "Quality is still accounted for the majority of enterprises, more than 70% of the companies are in a team strength, channel resources, brand value has merit, retention continue to develop strength. Once out of the current financial difficulties, adjust the direction of rally there is still hope. "

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