The Export Of Wenzhou Shoes Industry Encounters "Cold Current"

In January and February of 2008, the number of Wenzhou footwear exports was 98.44 million pairs, with a total value of US $440 million, a year-on-year increase of 1.13%. Among them, the export in January was 280 million US dollars, a year-on-year increase of 25.32%; in February, it was 159 million US dollars, a year-on-year decrease of 24.54%. After deducting the Spring Festival in February and other reasons, the downward trend is still obvious. 60% of Wenzhou shoes are used for export, so they are equally sensitive to anti-dumping, reduction of export tax rebate, depreciation of US dollar, rise of labor cost and raw material price. Due to Wenzhou's local shoe enterprises, most of their trading partners are from the European Union, which is different from most orders from Guangdong from the United States. Therefore, in the second half of last year, Wenzhou footwear industry showed "paralysis" to the severe export form. However, since the beginning of 2008, labor costs have risen suddenly due to the implementation of relevant laws and regulations. At the same time, many domestic shoe-making export enterprises have turned their attention from the United States to the European Union countries, and the industry competition has intensified. Wenzhou shoe enterprises, which originally had meager profits, are facing a severe price war, leading some small and medium-sized enterprises to choose to withdraw. The most direct performance of the industry level is the continuous decline in profits. According to the report provided by the association, since 2008, due to various comprehensive factors, it is estimated that at least 15% of the profits of enterprises, especially foreign trade enterprises, have been squeezed. After decades of development, Wenzhou shoe industry has formed a complete industrial cluster. A shoe enterprise is equivalent to an automobile factory, which is only responsible for assembly. Dozens of enterprises are matching the heel, sole, leather, shoe machine and accessories. Therefore, more than 70 shoe enterprises that have stopped working and transformed will have a magnifying effect in the whole industry chain. Insiders of Wenzhou shoe enterprises such as Aokang and lailisi said that the problems faced by upstream suppliers were more severe. Because it was difficult for them to transfer all the pressure of cost rise to the stronger downstream large enterprises, some supporting enterprises chose to close down or half shut down. Wenzhou shoe and leather industry association describes local small enterprises as "struggling" and many enterprises can only open one of the three production lines. The average net profit of Wenzhou shoe enterprises in the past years was about 5%, and according to this calculation, it is not an individual phenomenon that the shoe industry with export as its main industry will suffer losses in 2008. In recent years, the shoe industry bases in Sichuan, Taizhou and other provinces have risen. The price of shoes in Taizhou is lower than that in Wenzhou. The domestic overcapacity is obvious. Even without the impact of international trade, it is inevitable to shuffle. At present, large export enterprises are now relying on price increases to keep their profits and losses even. Small enterprises without the ability to raise prices only have losses. At present, Wenzhou footwear export enterprises are affected by the backward industrial structure, rising costs and other factors, and the industry is facing re integration. A large number of small and medium-sized enterprises which rely on the low price of products to occupy the market are faced with the risk of withdrawing from the market or being merged by large enterprises due to their inability to bear the pressure of rising costs. In Wenzhou shoe-making industry, enterprises that have established brand and reputation can alleviate the impact of cost rise on profits through price transfer through the advantages of product production structure. Therefore, banks should be more cautious about the credit of Wenzhou footwear industry and export trade credit financing with accounts receivable as collateral. Due to the decline of international competitiveness of Wenzhou Small and medium-sized shoe-making enterprises, the value of actual accounts receivable may decline in the future and affect the quality of bank credit.