Whether it is left to stay in the Pearl River Delta shoe companies to solve problems

From May 1st this year, Guangdong Province has adjusted the minimum wage standard for employees, and the new standard has increased by an average of 21.1%. At this point, the enterprises in the Pearl River Delta began to face the most severe “rising salary increase” in the recent 30 years. It is understood that, due to the impact of this "increasing tide of salary," 70% of enterprises have received passive pay raises, and 30% of companies have chosen to take the initiative to increase their pay.

In the face of the Pearl River Delta region’s widespread “income surge”, some scholars expressed concern that there were companies that threatened to “move in” and “move out”. There was even more sensationalizing that a sharp increase in salary would bring about the closure of companies in the Pearl River Delta. With all sorts of doubts, the reporter went deep into different companies for interviews.

Labor costs grow too fast and OEM pressure increases sharply

In Ganzhou, Jiangxi Province, the world's top 500 companies Flextronics' 80,000-square-meter plant is undergoing final equipment modulation. At the end of August, as the first Fortune 500 company to come to Ganzhou, Flextronics' power production line will be put into use.

As the world's second-largest electronic contract manufacturing service provider, Flextronics has 25 factories in China. All of them are in economically developed areas such as Shenzhen and Zhuhai without exception.

The Zhuhai Doumen Industrial Park, with an area of ​​1 million square meters, is currently the largest production base of Flextronics in China. During its heyday, 60,000 employees work here. However, the "labor shortage" and the "rising salary increase" that spread throughout the Pearl River Delta have caused pressure on management. In July of this year, the basic salary of ordinary employees in the park has been raised from 935 yuan to 1,100 yuan; at the same time, the increasingly scarce land resources have also constrained the further development of Zhuhai Flextronics.

In contrast, the current minimum wage in Zhangzhou is only 660 yuan, and the labor cost alone is reduced by 40%. According to Fu Jun, vice president of Flextronics Zhuhai Industrial Park, the Luzhou plant will employ approximately 10,000 workers at the beginning of next year, and another project with a scale of 30,000 people is also under planning.

However, Flextronics does not believe that their projects in Chenzhou are “outward”, and it also denies that companies are investing because they are facing upward pressure. “Flextronics' corporate main body is in Shenzhen, Zhuhai and other places. Ganzhou is only a small part of the entire production kingdom. This is a partial trapezoidal adjustment based on customer requirements and our development needs.” Fu Jun said.

But it is precisely because of this small step "adjustment" that OEM companies in the Pearl River Delta have smelled the same flavor.

Following Shenzhen Foxconn's large-scale inward migration, Inventec’s factory in Chongqing for HP’s OEM laptops is expected to enter volume production in November, and Dongguan, another foundry company in Dongguan, has also reached an agreement with Hunan to Ganzhou New Production Project...

“The rising tide of salary has brought about rapid increase in labor costs. This is the first time I have felt the pressure of operating due to salary payments. I am considering whether to move to the Midwest. In any case, the factory is rented.” Guangdong Province Zhang Yisheng, owner of the garment factory in Kaiping City, said that labor costs in processing enterprises accounted for 60% of the company's total expenditure. The current profit of producing 400,000 ski suits is equivalent to the production of 60,000 pieces of profits in 1998. The minimum wage rate has risen by about 20% at one stroke, which has further reduced the already meager profits. He believes that the labor force in Jiangxi, Sichuan, and other places is cheaper than Guangdong, and the transportation is also convenient. They intend to transfer to these places.

“For many enterprises in Guangdong, the relocation is an expansionary relocation.” According to the Guangdong Provincial Department of Foreign Trade and Economic Cooperation, most companies still choose to leave the company’s headquarters and management, R&D, marketing, and finance centers on the ground and add some new ones. The relocation of production capacity has really moved the headquarters out of the Pearl River Delta.

Comprehensively comparing various factors, it is difficult to transfer to “outside”

"Recently, Chuangxin has adjusted the wages of its production lines in Guangzhou and Shenzhen. Among them, the adjustment rate of Guangzhou employees has reached 25%." Wu Zhenchang, chairman of Guangdong's shoemaking industry and chairman of Guangdong Genesis Footwear, understands very well that if it is to be maintained in Guangdong, The huge production scale of the footwear industry is necessary to increase the wages of workers.

Wu Zhenchang introduced that 20 years ago, his monthly salary for ordinary employees was 200 to 250 yuan. At that time, if these workers stayed in their hometowns, they could only earn between 80 and 90 yuan per month. The spread was very large, so workers were willing to work. Now, even if he gives the worker a basic salary of more than RMB 1,000, he will not be sufficiently attractive because the wages in the Mainland have already risen.

Wu Zhenchang came to set up a factory in Panyu, Guangzhou from the Taiwan region in 1990 and was one of the first shoe manufacturers in Taiwan to move production lines to the mainland. He used the original order channel and domestic cheap labor to build a large number of large clients such as Nike and quickly developed in Guangzhou. Later, he simply shut down the Taiwan factory and transferred all orders to the mainland. At the peak of orders, Chuangxin used to have close to 20,000 employees and exported more than 100 million U.S. dollars annually. And now, his shoe-making kingdom has maintained more than 10,000 workers. At the very least, it has only 6,000 workers.

In view of the current operating conditions in the Pearl River Delta, Wu Zhenchang believes that shoes currently under $30 are not suitable for production in Guangzhou, and production lines in Guangzhou, Shenzhen and other places should produce products with higher technical content and higher added value. In this way, part of the company's production capacity "transfer" will become inevitable.

However, Wu Zhenchang is a bit guilty of problems in the transition of companies to “inside” or “outside”. A few years ago, Wu Zhenchang began to represent some brands to expand domestic sales, but the progress was not smooth. At present, it still accounts for less than 10% of the company's sales. It is very difficult for a purely export-oriented foundry company to transform into an internal sales market.

Wu Zhenchang visited Vietnam and Southeast Asian countries more than once, hoping to transfer some of his production lines to Southeast Asian countries. The labor cost advantage of Southeast Asian countries is obvious. According to his research, the current level of wages in Vietnam is equivalent to only 40% of the Pearl River Delta. Other Southeast Asian countries are on average less than half of the Pearl River Delta, and some are even lower. Moreover, setting up factories in Southeast Asia can rely on the China-ASEAN Free Trade Area to avoid some trade frictions.

However, there are many unsatisfactory areas for the transfer to “outside”. “Now in Southeast Asia, water, electricity, transportation, infrastructure, and production facilities are far less than the Pearl River Delta, and the business environment is far less than that of China,” Wu Zhenchang said.

Whether to leave or stay, we must carefully consider

Also in Zhangzhou, Zhang Huarong, 53, the chairman of Zhangzhou Huajian International Shoes City, has a little time to remember his days in Dongguan.

As the first Guangdong businessman to eat crabs in Zhangzhou, Zhang Huarong came to Zhangzhou from Dongguan 7 years ago and built a shoe production line. The cost of labor in Ganzhou is cheap, and the monthly salary per capita is about 300 yuan less than that in Dongguan, and the manpower is sufficient. The cost of water and electricity in Zhangzhou is also a lot lower, only 0.68 yuan per kilowatt-hour, while the electricity price in Dongguan is more than 0.9 yuan; the price of water in Chuzhou is 0.9 yuan per tonne, and that in Dongguan is 1.5 yuan.

At first, Zhang Huarong did well in Zhangzhou, but then he discovered many unsatisfactory. Due to the imperfect local industrial facilities, the vast majority of accessories and raw materials have to be transported from Dongguan, and the transportation and logistics costs increase accordingly. “Dongguan freight in Shenzhen only accounts for 3% of production costs, and at least 10% in Ganzhou.” In addition, the lack of skilled technical workers and experienced management personnel also increases the company's management costs.

Zhang Huarong stated that after 30 years of development, the Pearl River Delta has formed a complete industrial chain that matches production capacity. Relocation to other places, of course, can reduce the cost of labor, but the cost of supporting raw materials will also rise. And the two offset, he did not feel the ease of cost.

“At present, the pay rise in the Pearl River Delta region is mainly due to the fact that the market compensates for the low wages of foreign workers and slow wage growth in the Pearl River Delta over the years. From the long-term perspective, the rising labor costs in the Pearl River Delta region, the tense land, energy and various production factors, It will prompt some companies to "transfer" to areas with low production costs, which is an inevitable phenomenon under the conditions of market economy," said Ding Li, director of the Guangdong Provincial Academy of Social Sciences Competitiveness Research Center.

For many OEMs, the transfer to the Mainland does not necessarily solve all problems, and even unexpected problems. Ding Li, for example, said that a casual wear manufacturing company in Zhongshan, Guangdong Province, has transferred to a provincial capital city in southwest China, and has obtained preferential policies in terms of taxation policy, land, and supporting facilities. However, the first trouble in the business process is procurement. In order to find a cuff button, the purchasing department traveled around several counties and cities in the surrounding area, and finally had to purchase from Guangdong and ship it to the company. At the end of the period, the company's accounting, the time of delay, and the cost of shipping, etc., made the transfer cost almost the same as when it was produced in Guangdong.

Ding Li believes that from the current perspective, the Pearl River Delta does have a phenomenon of “turning out” of individual companies, but there has not been a trend of large-scale “industrial chain transfer”. In the market competition, enterprises are not lonely, all need supporting upstream and downstream industrial chains, and the cost of the company is not only the labor cost, but also the collaboration costs, logistics costs and other operating costs, under many constraints, the company is Staying must be careful, "transfer" may be in line with the company's development strategy, leaving to digest the cost, transformation and upgrading in place, may also be able to come up with a new path.