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Dongguan shoe factory remote survival: recruitment difficult!
From: Dongguan YuRong shoes material co.,LTD Post date: 2018-09-14

As reported by China business news on sept 10:
See the shoe factory of liupanshui finally begins profit, dongguan yong du shoe industry limited general manager xu wenxiong is relieved. Since he set up a branch factory in liupanshui, guizhou three years ago, the factory has been in a state of loss, until this June, the profit and loss balance.
Xu wenxiong told China business news that the original choice of liupanshui is in fact the local government took the initiative to find, hoping to undertake some industrial transfer.

Dongguan houjie is the Chinese shoe capital.
Inland open factory: worker's salary can save half
China is the world's largest producer and exporter of footwear. For labor-intensive industries such as shoemaking, the biggest costs are labor and factory rent, which is the prominent "comparative advantage" of inland provinces.
Xu remembered clearly that when he visited the industrial park in liupanshui, guizhou three years ago, the average monthly salary of local workers was between 1800 and 2000 yuan. At that time, the monthly salary of the workers in dongguan was between 3,800 and 4000 yuan. In other words, the salary of local workers was only half that of dongguan.
At that time, liupanshui regarded attracting investment as the top priority in accelerating the economic development of the whole city. In addition to formulating a series of preferential policies, including supporting industrial land, it also organized investment promotion teams to carry out precise investment promotion of fixed, follow-up and continuous development in coastal developed areas, and strived to improve the application rate of investment projects.
"" to this day, the cost advantage of liupanshui remains. At present, the monthly salary of the workers in liupanshui factory is 2,800 ~ 3,000 yuan, while that in dongguan factory is more than 5,000 yuan. In addition, when we first went to the local government, the rent of the factory was exempted for two years. Xu wenxiong told China business news. Even with the cost of shipping raw materials and finished products, it is still cost-effective.

The initial investment, combined with the losses of previous years, put nearly 20 million yuan into xu wenxiong. This in recent years has been repeatedly affected by the domestic and foreign market shoemaking enterprises, has been a considerable cost.
But xu was prepared. 'it's a learning process,' he says. 'it takes more than two years to make a profit from a normal operation of the factory. Fortunately, the factory of liupanshui can already see the return.
Another shoe factory, changjian shoes co., LTD., also located in houjie, dongguan, went inland earlier than yongdu shoes co., LTD. Tong shuishun, chairman of changjian shoes, opened the factory in hunan and jiangxi province after the global financial crisis in 2008.
"At that time, due to the pressure of RMB appreciation, I wanted to try to go to places with lower costs. I chose hunan and jiangxi because the workers in our dongguan factory came from these two places. Tong shui shun said.
Since the "pan-pearl cooperation" was proposed, the footwear industry in dongguan has gradually transferred to inland provinces and cities such as jingzhou in hubei province, fuyang in anhui province, zhoukou in henan province, ganzhou and nanchang in jiangxi province and changde, yiyang and chenzhou in hunan province. At the same time, it has shown a trend of transferring from simple vamp processing to the entire middle and low grade production line.

China's shoe output (unit: 100 million pairs, %) from 2010 to 2017. Source: forward-looking industry research institute
Scale reduction: recruitment is difficult and inefficient
Despite its low cost, tong shuishun's factories in hunan and jiangxi were closed until 2014 and relocated to Vietnam and Cambodia. To tong shuishun's surprise, in addition to the tariff issue, unable to recruit people became the main reason closed factories.

"If you go there, you can't find anyone. Maybe most people are still willing to work in guangdong for a higher salary. We only hired a few hundred people at our local factory. If there are not enough workers, the cost will not come down. Tong shui shun said.
At the peak of the shoe industry in dongguan, tong shuishun had opened five factories in dongguan with nearly 10,000 employees and annual output of 5 million to 6 million pairs of shoes. But he has so far reduced them to two factories, with fewer than 600 people. There are more than 1,000 factories in southeast Asia, with a total output of 1 million pairs a year.
Yongdu currently has 700 factories in dongguan and 1,300 in guangdong sihui and guizhou liupanshui, producing about 2 million pairs a year.
However, yongdu shoes factory in liupanshui also encountered the plight of the unemployed. The situation was good when 1,000 people were recruited in the first year, but then he fell into a labor shortage the following year, which made xu very depressed. Recruitment has picked up again this year, and even xu can't explain why.
Optimize the layout: build private brands
More than 30 years ago, dongguan houjie town was actively undertaking the international division of labor and step transfer of the world shoe industry, vigorously introducing and developing the shoe industry, attracting a large number of foreign shoe industry entrepreneurs and merchants represented by Taiwan, China, and gradually gathered into a large-scale international shoe manufacturing industry group.
Nowadays, shoe manufacturers in dongguan are seeking for transformation and upgrading. Relying on the sound industrial chain, they transfer the processing and production links, and keep the r&d design and procurement as a common choice for many enterprises.
First financial news reporter from houjie town government, according to incomplete statistics, in the town engaged in the production and sales of leather, shoe material, shoe machine, shoe hardware accessories about 4,000 enterprises, of which about 300 enterprises shoe machine production; There are more than 800 permanent traders and purchasers in houjie, and more than 5,000 employees from the United States, Brazil, Japan and other countries are engaged in shoe processing, trading and purchasing in houjie.
More importantly, dongguan has become the world's most important distribution center for shoe professionals, which includes not only skilled workers, but also designers and processing professionals.
In li peng's opinion, with perfect matching, even if the shoe industry in dongguan has been following the route of processing and labeling, the future still has potential.
More than 90% of yongdu's products are licensed, but Mr Xu is not worried about orders. Because the company mainly produces outdoor functional shoes, which are used in hunting, mountaineering, professional rock climbing and other occasions with high technical content and special requirements on raw materials and production process, there are not many factories in the market that can make such functional shoes.
The factory of yongdu shoes industry at present in dongguan mainly undertakes the functions of r&d, design and procurement, the production of accessories is mainly in the factory of sihui, and liupanshui factory is the main production base of finished shoes.
"Opening a plant in liupanshui actually reduces production costs and buys us more time to cultivate our own brand," he said. Jinji is expected to sell between 80,000 and 100,000 pairs this year. My plan is to make OEM for another five years and gradually let the private brand stand on its own. "Xu said.
The pan-pearl river delta region includes nine provinces and autonomous regions including fujian, jiangxi, hunan, guangdong, guangxi, hainan, sichuan, guizhou and yunnan (hereinafter referred to as "nine provinces and autonomous regions in the mainland") and Hong Kong and Macao special administrative regions (collectively referred to as "9+2" regions).
Yongdu shoes and changjian shoes are just the epitome of many pan-pearl regional manufacturing enterprises trying to transfer the industry.
Sun yat-sen university lingnan college professor Lin jiang said in an interview with the financial journalist, cooperation by pan pearl from 2004 to 2016, to rise to the national strategy, less developed areas to carry on the attitude of the labor-intensive industries transfer had certain difference, especially with the development of transportation infrastructure, pan pearl and closer contact between the area, regional integration development become a consensus.
Mainland over the past 15 years, the pan-pearl river delta nine provinces and regions set up dozens of different categories of industry transfer docking area, formed the pearl river - xijiang economic belt, for instance economic cooperation zones, YueGui cooperation special experimental zone, guangdong, sichuan and free trade area, the beibu gulf coastal industrial park, the hunan-kiangsi open area the experimental area of cooperation and cooperation platform, across the province.
Taking the guangdong and guangxi special experimental area for cooperation as an example, as the only inter-provincial cooperation experimental area across the east and west of China at present, by the end of 2017, nearly 30 billion yuan had been invested in attracting investment and attracting investment in three years, with an average annual growth rate of more than 30 percent, becoming a new growth pole of the zhujiang-xijiang economic belt.
Xu wenwei, deputy mayor of wuzhou city in the guangxi zhuang autonomous region, has said publicly that 60 percent of the projects in wuzhou city are from guangdong, Hong Kong and Macao.

On September 5, the 12th pan-pearl river delta regional cooperation and development BBS and economic and trade fair was held in guangzhou with the theme of "sharing bay area opportunities, opening up and innovative development".
Li believes that industrial relocation will not only create jobs for the region, but also help alleviate the problem of left-behind children and train local migrant workers to become industrial workers. On the other hand, the industrial transfer is also beneficial to dongguan footwear industry itself. The industrial chain layout has been optimized, accelerating the transformation and upgrading.
"" fundamentally, this is the inevitable result of market competition. A factory of 5,000 people has become 10 r&d centers. In terms of economic benefits, the output value of less people is higher. Although fewer workers have an impact on the tertiary industry in dongguan, they have improved the living environment in dongguan, with more green land and better public service facilities. Li peng told China business news.
Lin believes that even if the government is willing to take on the final market response, if the market is formed spontaneously should be encouraged. In order to guide enterprises to transfer to the central and western regions, the business environment of these enterprises is crucial, because these enterprises are from developed regions and have high requirements on market environment, which requires the local government to carry out the reform of "control and regulation".
"We can also raise the issue of industrial transfer from a higher perspective - the value lies not in what we do now but in bringing new ideas and new industries. In the past, enterprises in developed regions have taught local governments to support industries, cultivate industrial chains, develop modern service industries, etc. Meanwhile, is it possible for the industrial chain to overlap with and connect with advanced manufacturing industry and form a new development pattern after transformation and upgrading, which is of great significance for the central and western regions. Lin jiang said.

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