How To Prevent The "Southeast Flight" Of Dongguan'S Foreign-Funded Enterprises

In June 17th, China's processing trade products fair was held in Dongguan. This network makes some in-depth discussions on the causes and effects of the relocation of foreign-funded enterprises in Dongguan under the global supply chain, hoping to bring some thoughts and inspiration to readers.

"With the increasing cost of human resources, 80% of the shoe companies plan to set up factories in Southeast Asia to remove the processing links."

In June 17th, Liu Wei, Secretary General of Dongguan footwear industry association, said that after 2008, Dongguan's Taiwanese capital and Hong Kong shoe factories began to move abroad and had accelerated since last year.

In the early June,

The chamber of Commerce has just organized 16 footwear enterprises to go to Vietnam, Kampuchea and other countries to prepare for the next move.

Not only the shoe industry, but also in recent years in Dongguan.

Many industries, such as electronics, have accelerated the pace of "southeast flight".

A recent study by Standard Chartered Bank said that the rise of wage level in China's manufacturing industry is a subversive trend, and the global supply chain is reintegrated due to the loss of the low price advantage of China's traditional manufacturing industry.

As the world's largest source of supply chain, China will divest a large part of the low-cost manufacturing industry. India and ASEAN may benefit from the relocation of low-cost manufacturing.

Pessimists believe that Dongguan is facing a double squeeze from high-end manufacturing to developed countries, and that the middle and low end manufacturing will be diverted to developing countries, which may be abandoned by the global supply chain in this round of restructuring.

Behind the two viewpoints, it means that Dongguan urgently needs to solve a new proposition: how to make precise positioning of "Dongguan manufacturing" and how to better embed the global supply chain?

1. factors, price increase, processing link relocation

Liu Wei used to run a shoemaking machine manufacturer.

In the early days of his development, his business was also in the ascendant.

According to statistics, during the boom period of the footwear industry in Dongguan, about 65% of the world's high-end shoes or shoes were from Dongguan, and 100 million pairs of sports shoes in the world were produced in Dongguan.

"At that time, the business was good, and the machine was in short supply, but the two years were slow to sell."

Liu Wei said that since the 2008 financial crisis, Yuyuan group, Huajian group, oasis shoe industry, Luyang shoe industry and many other shoe making groups all over the world have been pferring to Southeast Asia and other countries.

Among them, Huajian group, one of the biggest manufacturers of Chinese women's shoes, has 8000 people and 6000 people in two factories in Dongguan. Now these two factories are merged into a factory of five thousand or six thousand people.

Unlike other shoe companies moving abroad, Huajian has run to Ethiopia, Africa, where there are thousands of workers.

Liu Wei said that the main reason for the relocation of enterprises is the cost of manpower and raw materials and other factors.

"In Southeast Asia, 1000 yuan can be recruited to general practitioners, but in Dongguan more than four times."

Dongguan Jinming Hardware Co., Ltd. (hereinafter referred to as "Jinming hardware"), Ms. Sheng told reporters that Jinming hardware mainly produces screw fittings and other products.

At present, it is also considering the layout of factories in Southeast Asia and Africa.

Talking about the reasons, Ms Sheng said: "the cost of manpower in Southeast Asia and Africa is relatively low. Meanwhile, there are some areas with scarce resources, and the market price is higher, which makes the layout of these areas have larger profit margins."

Speaking of the limitations of layout in Southeast Asia and Africa, Ms Sheng said the biggest problem lies in the integrity and business environment of the upstream and downstream industries.

"In some backward areas, it is very difficult to find the upstream and downstream industry chain of their own enterprises, and some business environment is also general."

Mr. Hu, the head of a furniture enterprise, also said that most of the enterprises moved out were labor-intensive industries such as footwear and clothing. When China's wages continue to rise, it is normal for these industries to move to other countries.

2. supply chain advantage is still in R & D procurement function reservation

From the point of view of "voting by feet", with the increase of manufacturing costs, the comparative advantage of Dongguan's manufacturing industry has changed.

But does this mean that the advantages of Dongguan's manufacturing industry no longer exist? In Liu Wei's view, the footwear industry in Dongguan has been developing for so many years to form a complete supply chain, which is Dongguan's greatest strength.

"Although many factories are moving out, they are actually moving out of production, but the functions of raw materials procurement, product development and so on remain in Dongguan".

In Liu Wei's view, Dongguan's raw materials and technology have been very complete, mature engineers are also concentrated here, so it has considerable comparative advantage.

According to incomplete statistics, Dongguan has concentrated nearly 100 thousand shoemaking talents from Taiwan, Japan, Korea, Brazil and other countries and countries, and has become the most important distributing center for footwear professionals in the world.

In addition, Dongguan has brought together more than 1500 global footwear buyers and traders, including the world's largest trading companies such as Levi, and so on.

The goal of this year's world shoe industry headquarters is to promote Houjie and Dongguan to become the world's largest high-end service center for shoe industry supply chain.

Ms. sun is the head of a shoe material supplier in Houjie, Dongguan. She laughs to witness the "southeast flight" of Dongguan shoe enterprises.

Sun said that the company mainly supplies sports shoes and leather materials, and has been working with Baocheng Shoes Co., Ltd., a well-known brand foundry, such as Nike.

In recent years, in order to reduce manufacturing costs, Baocheng group has gradually reduced its production line on the mainland and accelerated its pfer to Vietnam and Indonesia.

But during this period, their cooperation was never interrupted.

"Manufacturing industry needs the coordination of upstream and downstream industrial chains, which is similar to an organic ecological chain.

Years of development have made Dongguan's supply chain quite mature.

Ms. sun further said that if the quality of local raw materials was not good, such migration would not be cost-effective, which also made some small businesses unable to migrate to Southeast Asian countries. After some large enterprises moved to other countries, raw material procurement was still in Dongguan.

Reporters interviewed found that there are many companies like Ms. sun in Houjie. Most of them did not reduce orders due to the relocation of enterprises, but the business scope shifted from "domestic trade" to "foreign trade".

Some mature R & D engineers, who have settled in Dongguan, have not followed the relocation.

Although many factories are located in Southeast Asian countries, R & D and procurement centers are still in Dongguan.

In this regard, several years ago, the production gradually shifted to Zhang Ronghua, chairman of Huajian group in Africa. The analysis showed that Dongguan's pfer of shoes to other Southeast Asian countries was not successful at present. 80%

He said that the expansion of the production of leather shoes industry in Dongguan is not large enough, and labor-intensive factories always go to low wage areas.

However, these achievements in the development of trade and new materials in Dongguan will not disappear.

Future trade, clearing, R & D, and personnel training are the space for Dongguan shoe industry.

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3., form new comparative advantages to fill industrial pfer vacancies.

Ye Tan, a famous financial and economic scholar, told reporters that the relocation of manufacturing enterprises such as Dongguan to some extent is a gradual loss of comparative advantage.

Looking at the global supply chain, Dongguan has been integrated into the market through low-cost manufacturing advantages, and now this advantage is gradually losing as labor prices rise.

At the same time, the advantages of Dongguan's high-end manufacturing industry are not strong enough, and the stability of products is not high. Therefore, it is facing a turning point.

"Under such a premise, if we can't keep up with the manufacturing level, we will be abandoned by the global supply chain."

Ye Tan said that the more optimistic view is that in the process, Dongguan's manufacturing industry will pform from low end to high end, forming new comparative advantage, and fill the market vacancy after the pfer of low-end industries in time.

In June 6th, the Chinese modernization report 2015 released by the Chinese modernization research center of the Chinese Academy of Sciences showed that the level of China's industrial economy in 2010 was about 100 years behind that in Germany and Britain, and 60 years behind Japan.

"No matter how much we lag behind, the reality is that China must be embedded in the global industrial chain and supply chain, and find a precise positioning in addition to low-end manufacturing."

For example, due to its technological advantages, such as mobile phone LCD screen, flash memory, processor, camera and other key parts, China mobile phone manufacturers need to purchase a lot from Korean enterprises.

The screen used by Apple iPhone6 comes from the LCD screen supplied by LG. The better the iPhone6 sells, the better the product of LG will be, and share some profits from it.

In contrast, China's mobile phone companies have the ability of learning and marketing, and have the ability to integrate platform resources, but basically do not have the technology and manufacturing capabilities of chips. Core components rely on imports, such as mobile phone chips, or the purchase of Qualcomm's Xiaolong series, or from Samsung.

The mobile phone's LCD screen also comes mainly from LG, Samsung or SHARP suppliers.

China has become the largest export market for mobile phone components in South Korea.

In the view of Ye Tan, after enjoying the advantage of low price, Dongguan needs new and indispensable comparative advantages: well-trained workforce, huge engineer team and convenient infrastructure logistics network.

Whoever can master the key of intelligent manufacturing can have the advantage in the supply chain.

"Dongguan has the advantage of manufacturing standardization, the advantage of refinement, and the industrial chain logistics chain is relatively developed. This advantage can not be abandoned."

Ye Tan said that the so-called refinement is to replace people, products to maintain a certain spirit of innovation.

Dongguan's supply chain has been well developed, supporting related parts can be bought, and now we need to make products more stable and high-quality.

Wang Xianqing, director of the Institute of circulation economics of Guangdong University of Finance and economics, also believes that the impact of supply chain changes is twofold. On the one hand, with the increase of costs in all aspects of Dongguan, it is inevitable to move out as a traditional low-end manufacturing industry.

But conversely, relocation has left room for emerging services.

And from the relocation mode, the most of the move is the processing link, and the design and sales links remain in the local area.

This is also a pition from manufacturing to supply chain, which is a mode of industrial pformation and upgrading.

Some experts point out that China's manufacturing industry has been in a big and not strong state in the past, because the mode of relying on cheap labor has made China's manufacturing industry at the low end of the industrial chain for a long time, earning the least amount of money and undertaking the most serious pollution.

Wang Xianqing also believes that the industrial ecology of some OEM enterprises in Dongguan is not perfect, and the supply chain is very short, so the impact of elimination and relocation is not large.

4., strengthen channel control and make manufacturing and circulation coordination.

The supply chain is centered around the core enterprise, through the control of information flow, logistics and capital flow, starting from the purchase of raw materials, intermediate products and final products, and finally sending products to consumers by the sales network, linking the suppliers, manufacturers, distributors, retailers, and the end users to a whole network and chain structure mode.

Martin Christopher, a famous supply chain expert, once said, "there are only supply chains and no enterprises in the market. The real competition is not the competition between enterprises and enterprises, but the competition between supply chains and supply chains."

This indicates that the market competition in twenty-first Century will rise from the competition among enterprises to the higher level of "expanding enterprises" - the competition between supply chains.

This kind of supply chain management, which emphasizes system optimization and operation process integration, will become the core competitiveness of enterprises. In the era of economic globalization and informatization, people will show their creativity and flexibility.

Wang Xianqing agrees with this statement.

He said that the competition between supply chain and supply chain is essentially the competition of channel control right. Whoever has mastered the channel and the right to sell will have life.

Enterprises must have their own procurement and sales network, so as to achieve autonomy and not be restricted to others.

Wang Xianqing suggested that Dongguan should first play the advantages of Dongguan's manufacturing industry, such as mold, electronics, furniture, clothing and other industries. The industry chain is perfect, the technology is mature, and the workers are rich. This should concentrate on the advantages and give full play to the advantages.

At the same time, keep up with the high-end manufacturing industry, further improve the supply chain, especially the circulation channel link should be strengthened, so that the manufacturing and circulation coordination.

Recently, Dongguan has set up a bonded logistics center with the aim of creating an import and export distribution base. It can reduce the overall logistics cost of Dongguan enterprises by providing integrated supply chain services including global shipping services, customs declarations, import and export agents, distribution and supply chain finance.

At the same time, it will introduce internationally renowned third party logistics enterprises to provide full supply chain services, help manufacturers reduce costs and clear the "going out" obstacles.

Jiang Lin, director of the Department of Finance and taxation of the south of the Five Ridges College of Zhongshan University, said that the change in Dongguan is, on the surface, a problem of rising labor costs and changes in China's overall economic environment. It is inherent in the previous investment bonus that there is no way to improve the core competitiveness of the supply chain. Under such a background, building logistics advantages may be a way out to get the core link of the supply chain.

But this is the first step to get rid of the small peasant workshop consciousness. Throughout Dongguan, there are still many GDP in the impression that it is generated by the mode of "living on the upper hand and under the workshop".