OEM Shoe Enterprises Move: How Much Can The Cost Drop?

In August 5th, Chen Xiaoming, chairman of Xun Jiahe shoes group, was busy planning to invest and build factories in Ganzhou, Jiangxi. Act as Foundry Enterprise His factory has been losing money almost every month since 2008. Compared with the coastal areas, the mainland The labor The cost is not too cheap.

"Basically not this year. profit " Hong Qihui, the honorary president of Hongkong SME Association, has a garment processing enterprise in Dongguan, Guangdong. In April of this year, he also chose to invest and build factories in Hunan and Chenzhou to transfer some capacity.

"Although Guangdong has been talking about" cage changing birds ", most companies chose to wait and see in the past few years. Hong Qihui said, unexpectedly, there was a serious labor shortage in Dongguan earlier this year. More and more new generation of migrant workers can not tolerate repeated monotonous work and life, and the old employees have returned to the mainland to get married and have children, so they do not want to leave their home again. Therefore, the factory can only be moved to their "doorstep". Another reason for moving inland is that business in Europe and the United States is becoming more and more difficult. Wages in the mainland are generally rising. He believes that the main battleground in the future will be the domestic market.

However, the cost of moving to Hunan can not be reduced too much. Because of the low profits, many friends around have simply closed the factory and invested in real estate speculation. "The idea now is to survive first." Hong Qihui said he hopes that after the shuffle, the number of foundry factories will be substantially reduced in one or two years, and there will be more pricing power.

How much can the cost of coastal subcontracting enterprises move to the mainland? Liu Weidong, Deputy Secretary General of Shenzhen Leather Industry Association, said at least 10% to 15%, which attracted considerable interest in OEM enterprises. He pointed out that the "raise tide" has nothing to do with the relocation of leather industry enterprises. As a traditional labor-intensive industry, the hard cost of leather industry is very high, and it began to move inland very early and continues to this day.

According to Cui Shuquan estimates, the average labor cost of the coastal enterprises entering the Xi Yong micro park can be reduced by about 30%. However, this is only the average cost of all enterprises. For Foxconn, quanta and other OEM enterprises, the wage level is not significantly different from that of the Pearl River Delta and the Yangtze River Delta.

"Our wages are not lower than those in Shenzhen and Longhua." Outside the Foxconn workshop in the West Wing Park, Xiao Zhang, a Foxconn employee, told the China Securities Journal reporter that the basic salary of the general staff package is about 950 yuan / month. If the package is not occupied, it will be 1450 yuan / month. The total overtime pay will be less than 2000 yuan / month, which is not much different from that of Shenzhen general practitioners.

For enterprises, compared with the labor force, the mainland has more advantages in land, water and electricity prices. Take the Bishan Industrial Park as an example, the average cost of large industrial electricity price is 0.6 yuan / degree; the operating water is 4.6 yuan / ton; the price of industrial land is 120 thousand yuan / mu, which is about half of the average price in the Pearl River Delta region. However, if we calculate the logistics cost, the overall cost of the enterprise will be reduced less than expected.

"According to the type of products, our comprehensive cost falls by about 5% to 10%, most of which are at 5% level." Sun Mingzheng said that although the cost of land has dropped, raw materials have been imported from Japan, Korea and Germany, and freight ports are centered in Shanghai. After setting up a factory in Bishan, the cost of transportation from Shanghai to Chongqing will increase.

If we only consider the cost, Sun Mingzheng can set up the enterprise to the more remote west, but the cost is not the only factor. "Our products are changing very fast and we must cooperate with customers." Sun Mingzheng said that a laptop could not be sold to the terminal in one or two months, and the price might fall. Taking into account the transport costs of enterprises and the convenience of service customers, we must focus on the layout of customers.

But for Foxconn and other OEM enterprises to do supporting services is only part of the reasons for whale science and technology in Bishan. Sichuan Mianyang's Changhong electric appliances, the rising Chongqing LED industry, the automobile industry and so on will all become the business growth point of whale whale technology. "We are expanding our capacity rather than moving." Sun Mingzheng stressed that the parent company whale whale technology set up a factory in Suzhou 7 years ago, and set up a factory in Ningbo 4 years ago. This year, a factory was set up in Bishan, and the original plant is still operating normally in the Yangtze River Delta.

According to Yang Gang's statistics, there are many enterprises in the coastal areas that come to Bishan Industrial Park, some expand production, some transfer part of production capacity, some are overall migration. On the whole, expanding enterprises account for more.

This phenomenon also exists in Xi Yong micro park. Cui Shuquan said that in addition to the "hens with chickens" mode, the park also had its own "chicks", which accounted for about 30% of the enterprises. Some of them want to come to Chongqing to expand their markets. Some have obtained new orders in Chongqing and need to set up factories locally.

"The most important thing for an enterprise is to look at it. market Plus, if it has a cost accounting system, if it feels uneconomical, please come over. " Zhang Tingting, Minister of the service department of Chongqing Industrial Service Center, received a number of enterprises that came to Chongqing for inspection. She believed that cost is only one of the factors that enterprises consider to move inland, and more importantly, the logistics radius and the level of upstream and downstream industries gathering for customers.

Wang Jun, Dean of the Academy of Social Sciences, Zhongshan University, believes that the promotion of land prices is the main factor in the transfer of industries. Although Guangdong has long proposed upgrading industries, the gap between land prices and the mainland is not particularly large, and the motive force for enterprises to migrate actively is not strong. After the financial crisis, the premium of the first tier cities brought by excess liquidity brought crowding out effect on manufacturing enterprises with large demand for land.

The most important thing for enterprises is to look at the market, plus it has a cost accounting system. Once it feels worthwhile, it will come over.