Pearl River Delta Survey: Manufacturing Enterprises Run Hard Under Cost Pressures

Under the anticipation of a doubling of revenues, together with the "reality" of some Chinese manufacturing enterprises, it is the unbearable burden of rising costs.

Li Yining, executive vice president of Peking University and China International Economic and exchange center, said at a forum recently that because labor supply is becoming more and more limited, the rise of labor costs is rigid, and it will not come down once it gets up.

Just like the "most expensive" scarce resource land in twenty-first Century, the increase in labor costs has become an inevitable trend as China's demographic dividend continues.

According to the research conclusion of the Chinese Academy of Social Sciences "Research on population and development of a well-off society in an all-round way", in 2009, the proportion of working age population reached 72.35% in China, and then the total began to decline, and it was expected to decrease to 67.42% in 2030.

In addition, the cost of raw materials, the appreciation of the renminbi, the tax burden and the land cost add a "roadblock" to the growth of enterprises.

Self salvation or sitting still is a problem.

Worries about rising costs

"Last year, the minimum wage of our employees was 2500 yuan, and this year we mentioned 3000 yuan."

Zhang Yi, director of Publicity Department of a commercial vehicle manufacturing enterprise in Anhui, said.

Zhang Yi's company mainly produces heavy trucks, and now there are more than 2000 full-time employees.

"In light of this, enterprises should pay at least 1 million more."

And when interviewed some manufacturing enterprises in Dongguan, many responsible persons also poured bitter water on the author.

And from March 1st this year, the minimum wage in Dongguan will be raised to 1100 yuan again.

The increase was only 10 months up to 19.6%.

In the interview with Dongguan, I learned that the frequent flow of workers forced enterprises to raise their wages continuously.

Dongguan city human resources bureau director Yu shakes said, "now no 1100 yuan / month, the enterprise simply can not recruit people."

"In addition to labor costs, raw material prices are rising all the way."

In the memory of Zhang Yi, since last June, the price of steel began to rise all the way, at least 30%, and the price inflection point of steel did not appear at the beginning of this year. Baosteel, as the domestic steel price vane, recently issued a price adjustment document. On the basis of the price rise of steel in January, the factory price of steel will increase by 100 yuan to 300 yuan per ton in February.

Subsequently, Shagang and other steel manufacturers also responded, issuing the February price adjustment information.

"We have significantly more investment in fixed assets than ever before."

Zhang Yi said.

But Zhang Yi's enterprise is a large enterprise after all, compared with some small and medium-sized manufacturing enterprises, especially those labor-intensive enterprises, the compression capability is obviously stronger.

In July last year, cotton prices surged in the past six months, making the original price increase.

In early November of last year, the central bank forecast annual PPI growth of around 5%.

The data released by the National Bureau of statistics in September last year showed that the prices of major industrial products in some key enterprises in the middle and upper September were higher.

In addition to the rising cost of raw materials and labor, for some foreign trade enterprises, the RMB exchange rate is still overhanging Damour's sword.

Zhaoli, chairman of Guangdong Zhaoli International Group Zhaofeng Logistics Co., has been stabbed by this "sword".

"At the end of 10 last year, I just returned from the first phase of the Canton Fair, and the central bank suddenly announced the news of raising interest rates. The pressure of RMB appreciation immediately increased, and the list signed at the Canton Fair basically lost money."

Chi Guangshao said to the author.

"Most enterprises, especially export oriented small and medium-sized processing enterprises, have low profitability. Under the circumstance of large fluctuations in exchange rates, they dare not undertake large bills or long lists. The production and operation of enterprises are greatly affected."

Tang Yuan, director of the Department of industry and trade of the State Council Research Office, told the author.

In the comprehensive cost of enterprises, tax burden has always been a factor that has not attracted much attention, but it is a threshold that enterprises have to face.

The world bank survey shows that the tax burden rate should be around 20% in low income countries with per capita GDP of around 750 dollars; the tax burden rate of countries with GDP per capita of more than 2000 dollars should be around 23%; the tax burden rate of countries with GDP per capita above 10 thousand dollars should be around 30%.

Some experts said, "China's per capita GDP2008 is only more than 3000 US dollars, and the government's income has reached the level of developed countries, which is too advanced and should be adjusted."

According to the State Administration of Taxation recently released data: tax revenue in 2010 completed 77390 billion yuan, an increase of about 22.6% compared to 2009, far higher than the GDP growth.

"Enterprises have to pay a lot of taxes, I understand that there are value-added tax, income tax, urban construction tax, education surcharge, and some businesses have to pay business tax and consumption tax."

A member of the Jiangsu State Administration of Taxation who did not want to be named told the author.

Zhang Wenkui, an Enterprise Research Institute of the development research center of the State Council, visited a western mining enterprise on the cost of Chinese enterprises. At that time, the mine owner gave him an account: assuming that the profit per ton of ore is 1000 yuan, the value added tax is deducted by 17%, and the resource tax is calculated according to the 5% newly implemented, the enterprise income tax is 25%, and the three tax is added up to 47%.

Mining costs generally account for 33%, management costs 10%, and the rest of the remaining 10%.

The remaining 10% should be allocated to individuals and personal income tax.

Only taxes are heavy. Enterprises must face various kinds of fees.

The national development and Reform Commission announced on the last day of 2010 that the management of enterprises related to the Ministry of finance, the Ministry of civil affairs and other departments could reduce the burden of enterprises by more than 10 billion yuan a year.

Therefore, some scholars believe that the government can help to ease the pain of pformation by reducing the burden of enterprises' taxes and fees and making room for wage increase for the manufacturing industry.

With the increase of tax reduction fees, we can effectively cope with the rise in labor prices.

Difficulties in upgrading and pformation

In the reality of high cost, migration, pformation, upgrading and pformation are the 3 choices for most manufacturing enterprises.

Zhang Yongqiang, general manager of Shanghai Wei shark International Trade Co., Ltd., unable to bear the high cost of Commerce in Shanghai, has moved its manufacturing base to India, leaving the city which made him "start" but is becoming more and more expensive.

"Although moving to India will face unknown political risks, it is not much compared with cheaper labor and land."

Zhang Yongqiang said to the author.

It is reported that there are many enterprises similar to the Shanghai shark moving out of the way, and most of them move to destinations in India, Vietnam and other Southeast Asian countries.

More coastal manufacturing enterprises choose the way to move inland, and the central and western regions open arms to undertake the pfer of coastal manufacturing enterprises.

As a representative of the demonstration area to undertake industrial pfer, the Wanjiang City Belt in Anhui used more than 1 trillion and 500 billion yuan in the Yangtze River Delta region last year, and invested more than 2500 yuan in 100 million yuan or more, with an increase of over 40%.

And Sichuan, Chongqing and other places have also stepped up the policy preferences, attracting a large number of electronic manufacturing enterprises to settle down.

And "

"We also want to upgrade, but it's not that easy."

A Dongguan OEM shoe company official told the author, "we earn money for processing for others, and there is no capital upgrade at all."

Indeed, many enterprises have been caught in such a strange circle: if we want to pform quickly and improve the competitiveness of products, we must increase R & D investment, but the profit portion directly consumed by various costs is just an important source of R & D investment.

There is no doubt that the long-term rising trend of exchange rate, labor cost and raw materials is forcing enterprises to intensify their pformation.

Huajian group has always been an example of the pformation and upgrading of Dongguan shoe enterprises.

When I visited the Huajian group, I told the author that in 2001, Zhang Huarong, the chairman of the group, invested heavily in the establishment of R & D center in Dongguan headquarters, employing more than 2000 employees in R & D work, and employing nearly 30 professional designers from Italy, Brazil and Spain.

After that, he created his own brand, introduced Alan Delon from abroad, and bought the famous brand of women's shoes, Carver, and created COLCO.

Nevertheless, "we have invested nearly 50 million, but the benefits are not very good. The brand is obviously not as easy as it is theoretically."

The person in charge told the author.

But Huajian seems never to stop on the road of pformation and upgrading.

I visited the world shoe industry (Asia) headquarters built by Huajian, and found that it pformed from the original shoe processing to a comprehensive enterprise, and controlled the complete industrial chain of R & D, trade, manufacturing, logistics and distribution, and headquarters base.

This industry chain can save 4% to 5% of the cost for Huajian every year - all of which makes China strong in the situation of financial crisis.

However, when the cost of production is rising and forcing enterprises to make a path choice, some enterprises simply choose to give up, instead of speculation and speculation.

Lang Xianping, a professor at Chinese University Hong Kong, recently said, "our manufacturing industry has lost the pricing power of products and made the profits too low, resulting in a substantial withdrawal of the real economic capital of the manufacturing industry. These should be invested in the real economy to enter the property market and stock market, which spawned the property market and stock market bubble in 2006."