China Economic Weekly reporters Li Yonghua and Guo Zhiqiang | Reported by Zhejiang, Guangdong and Hunan
Foreign trade enterprises received orders to explode, but said that they would not make money.
Cross-border e-commerce has sprung up, but the head enterprises have been close to "annihilation" by the Amazon platform.
For goods shipped from Chinese ports, the price of sea freight soared more than 10 times.
The global spread of the new crown pneumonia epidemic has changed China's foreign trade and brought new opportunities to China's foreign trade.
On September 9, Shu Jueting, spokesperson of the Ministry of Commerce, introduced that since the beginning of this year, China's foreign trade has maintained a rapid growth momentum, and the resilience and vitality of foreign trade have been continuously enhanced. From January to July this year, There were 497,000 import and export enterprises in China, an increase of 7.4% year-on-year. From January to August, the proportion of exports from general trade, mechanical and electrical products, emerging markets and private enterprises increased by 1.5, 0.3, 1 and 2.2 percentage points respectively over the same period last year.
"While achieving rapid growth, we are also soberly aware that China's foreign trade development is still facing many uncertain, unstable and unbalanced factors." Shu Jueting said.
"Many textile and garment companies in Ningbo have orders scheduled for next year, and now they basically do not take orders, and they can't do it." Mao Yihua, secretary general of the Ningbo Garment Association, said in an interview with China Economic Weekly.
Customs data show that in the first half of 2021, China's textile and apparel exports were 140.09 billion US dollars, an increase of 12.1% year-on-year. The scale of textile and apparel exports not only exceeded the level of the same period in 2019 before the epidemic, but also set a new record for the same period in history. In the first half of this year, China's textile products exported a total of US$21.912 billion, an increase of 53.89% year-on-year, an increase of 19.99% over the same period in 2019 before the epidemic.
Overseas demand soared and orders soared
Ma Huiguang, who has been engaged in foreign trade services for decades, introduced that before May last year, many development zones called him to recommend foreign trade enterprises to invest, after May 2020, the people in charge of investment in the development zone said that they were too busy to receive four or five groups of investors a day, and there were also bosses of plastic machine CNC machine tools who said that there were too many orders in hand and wanted to be pushed away.
Liu Long, who is doing business in Yiwu, Zhejiang Province, produces pumps, small generators and other products, mainly exported to Africa. He told the "China Economic Weekly" reporter: "The business in the African market is very good, and the order line will be in February next year." ”
Why are orders flocking?
Liu Long believes that in recent years, the demand for overseas markets has continued to grow, and under the situation of the global spread of the epidemic, China has well controlled the epidemic and can ensure production and supply, and the market is more dependent on China's supply chain and has more orders.
Shao Tian, head of a cross-border e-commerce company in Huizhou, told China Economic Weekly that due to the unstable supply chain, many orders from Southeast Asia have begun to shift to China.
In Mao Yihua's view, affected by the epidemic, many orders in Southeast Asia have flowed back to China, "many places in other countries require enterprises to shut down or lay off half of the workers." Vietnam is the most obvious, with more than 100 garment companies closing their doors."
On July 19, Shenzhou International (02313. HK) announced that in line with the Vietnamese government's social distancing measures, from now on, the production capacity of its cloth production base in Ninh Province, Vietnam, will operate at about 30% of its normal production capacity, the garment factory in Ninh Province, Vietnam will suspend operations, and the production capacity of its garment factory in Ho Chi Minh City, Vietnam will operate at about 33% of its normal capacity for a period of 14 days.
Shenzhou International is China's textile and garment leading enterprises, the company said that its export amount for many years ranked first in China's knitted garment export enterprises. By 2020, the Vietnam plant has contributed about 40% of Shenzhou International's garment production capacity. Shenzhou International expects that for every 14 days of affected operation at the Vietnam plant, the company's total annual production capacity of fabrics and clothing will decline by about 2% and 1%, respectively.
On August 2, Shenzhou International once again announced that the above-mentioned quarantine measures were extended by 14 days, and that "according to the latest development of the epidemic in Vietnam, the Vietnamese government may further extend the measures after the expiration of the 14-day period".
Not only overseas orders are flowing into China, but the recovery of the domestic consumer market has also brought strong demand.
According to the data released by the Ministry of Commerce, from January to August, the total retail sales of consumer goods totaled 28.1 trillion yuan, an increase of 18.1% year-on-year, an increase of 8% over the same period in 2019.
Mao Yihua said that many Ningbo enterprises that were originally mainly engaged in foreign trade also undertook many domestic orders this year.
Not making money? Raw material and labor costs are rising
"The factory looks like it's hot, and the problem is that it's not making money." Liu Long told the "China Economic Weekly" reporter that last year's products sold for 200 yuan rose to 300 yuan this year, but the factory still did not make money, "Many customers placed orders in December last year, and we were forced to refund our own orders in March this year." The price of raw materials rises, and the order is returned; the freight rate rises, and the order is refunded. ”
Mechanical and electrical products are the largest sector of China's export products. According to customs statistics, in the first 8 months, China exported 7.98 trillion yuan of mechanical and electrical products, an increase of 23.8%, accounting for 58.8% of the total export value.
Many clothing companies also do not make money. Mao Yihua introduced that some enterprises in Ningbo export knitted clothing, and the average profit of a piece of clothing "may not be more than a dollar".
Xie Longfa, who does garment processing in Yudu County, Ganzhou City, Jiangxi Province, said that the factory profit is very thin, shipping about 500,000 pieces of clothes a year, "everyone mainly relies on running volume, no amount can not make money, the profit of a piece of goods is less than a dollar."
According to the Data Bureau of Statistics, in the first half of the year, 33,000 textile enterprises above designated size in the country achieved a cumulative operating income of 2,343.49 billion yuan, a total profit of 107.89 billion yuan, and a revenue profit margin of 4.6%.
Mo Xiaoguang is the head of a Bluetooth headset company in Huizhou, Guangdong Province, with an annual output value of about 100 million yuan. He said that the net profit of enterprises is at three or four points, and the profit margins of small and medium-sized enterprises in the industry are similar, "basically if they don't do well, they will lose money."
Rising raw material prices are a black hole that eats up profits.
Shao Tian believes that the sharp increase in orders, enterprises must suddenly organize manpower, supply chain and raw materials, resulting in some raw material manufacturers and manpower prices with the market to raise prices. This affects the operation of the entire industrial chain.
Liu Long said that the raw materials for pumps, generators and other products are mainly copper, iron and aluminum plus some plastics, and all raw materials have risen sharply. "A ton of national standard aluminum was 11,000 to 12,000 yuan at the end of last year, and now it is 27,000 yuan (per ton); copper was 38,000 yuan (per ton) in December last year, and now 70,000 yuan (per ton)."
Guangdong Huizhou Tianyang Precision Parts Co., Ltd. produces automotive injection molding parts, the company's chairman Mao Yihua said that the price of raw materials is too fierce, in the middle of the manufacturing chain of the enterprise at both ends of the pressure, one is the supplier price increase, the enterprise does not pay to get the goods; the other is sold to customers but can not increase the price, "very painful, can survive is not easy."
Mao Yihua introduced that the raw materials of the garment industry from chemical fiber, cotton, to fabrics, accessories, zippers, buttons, linings, all the way down, the entire industrial chain is rising.
In addition to the increase in raw material prices, Mao Yihua believes that the rising labor costs have a greater impact on the profits of garment companies. She said that before the epidemic, the average wage of garment workers in Ningbo was 5,000 to 6,000 yuan / month, and this year the skilled workers rose to about 8,000 yuan / month, even in the inland Jiangxi, the monthly wages of garment industry workers also rose to about 4500 ~ 5000 yuan.
But even with a sharp rise in wages, garment and textile companies still encounter difficulties in recruiting people. "After the epidemic, ningbo garment workers have decreased by 30% to 40%." Mao Yihua said.
Deep in the Luoxiao Mountains, Yudu, Jiangxi, is known as a county with a large population and abundant labor. Still, Mr. Xie said, it was getting harder and harder to recruit. The reporter of "China Economic Weekly" saw in the local area that many enterprises have posted recruitment notices.
Liu Long, who does mechanical and electrical products, also said that enterprises cannot recruit people, especially young people, and they do not like to enter the factory to work.
An executive of a leading mobile phone electronic parts company said that as a large employer, the company has been short of people for many years, especially young people.
In the first half of this year, Foxconn, a leading consumer electronics assembly company, released a message that employees who join Foxconn can get up to 11,500 yuan if they have been on the job for more than 90 days.
And not only Foxconn company to do this, China Economic Weekly reporter learned that many electronic companies are like this, some companies give higher recruitment subsidies.
For foreign trade enterprises, the soaring maritime prices and related costs this year are even more "gold-devouring beasts". A 10-fold increase in freight rates is a common phenomenon in the industry.
In order to supplement the overseas supply, Shao Tian sent more than 200 boxes of goods to the United States through air transport channels in early September, and the bulk cargo alone cost the company more than 20,000 US dollars to go to sea, "Due to the blockage of the sea channel, the cargo turnover is slow, and the air transport channel is also no way to do it, which invisibly increases the company's logistics costs by 3 times." If the sea route continues to be in a difficult situation, we may have to choose to use air freight frequently, but the cost will also increase significantly."
Mao Yihua said that during her investigation, she found that a suit company could not order containers and had to take air freight. The money earned by the business is not enough for empty freight. However, the head of the enterprise told her that if she did not air freight, she would default on the contract, and there was no way.
Liu Long said that because of the increase in the price of raw materials and the increase in freight prices, the company has received orders and refunded orders again and again, and although customers can still understand, they will also think that the company is not honest enough. He is worried that after the epidemic has passed, if customers can find other sources of goods, business will not be so good. He also revealed that from 2020, the size of the enterprise is already shrinking, and the number of workers is one-third less.
Reflow, transfer, upgrade
"Don't do business that doesn't make money." Mao Yihua gave such advice to some garment companies in Ningbo.
The reality, however, is that in order to survive, businesses still have to start work. Some business owners said that even if the order does not make money, as long as the enterprise is working, it can retain workers, and when the epidemic passes, the market returns to normal, and then find a way to survive, or transform and develop.
Guo Yan, a professor at the Beijing Institute of Fashion, said that although the clothing industry has a low profit margin, there has been a steady stream of demand.
The continuous return of orders to China is a new opportunity for foreign trade.
Mei Xinyu, a researcher at the Academy of International Trade and Economic Cooperation of the Ministry of Commerce, believes that in the context of the epidemic, China's manufacturing advantages will be further highlighted because of the efficient prevention and control.
In the view of a person from Sinotrans, the return of overseas orders to China is a long-term trend, one is because the company finds that the risk of overseas investment is still quite large, and the domestic is safer; the second is that foreign trade customers want a more stable source of goods, such as a large enterprise like Wal-Mart, after the epidemic, it will judge whose supply stability is better, and it is possible that some of its orders will return to China for a long time.
"Our order production is a cross-cycle state, for example, next year's orders must be placed this year, which has washed out the impact of the epidemic." Shao Tian told reporters that the downstream docking customer of his company is Wal-Mart, so the order quantity and price of the company's products are relatively stable, and they have not been affected by the repeated epidemics and supply chain fluctuations.
Some entrepreneurs interviewed by China Economic Weekly believe that for enterprises, the stability of the global supply chain is very important and will not change casually. Under the impact of the epidemic, once the supply chain changes, orders and production capacity are likely to stabilize when they return to China.
In Mao Yihua's view, the huge and complete domestic industrial chain is the strongest competitive advantage, and the enterprises that went out a few years ago found that the country is more stable. For example, he said, an automobile company was greatly affected by the fact that a motor could not be supplied in Vietnam.
In this context, many enterprises choose to transfer production capacity to the central and western regions, and upgrade in the transfer.
Mao Yihua said that over the years, the automotive mold industry is a gradient transfer, from Shenzhen to Dongguan, and then to Huizhou, "the next 5 years is to see Huizhou."
Mao Yihua said that compared with the risks faced by foreign investment, more and more garment companies have found that the country is more stable and choose to transfer production capacity to Jiangxi, Anhui, Yunnan and other places.
Li Qiguo, chairman of the Shunlong Garment Washing Industrial Park, told China Economic Weekly that he relocated the washing industrial park from Guangdong to Yudu, Jiangxi, and the scale, technology and environmental protection level have been upgraded to several levels, and the second phase of the park has further upgraded to intelligence, "more efficient, less water, more intelligent, workers can complete all the processes as long as they enter parameters to start the machine."
The overall technological progress of the domestic industrial chain has enhanced the global competitiveness of Chinese enterprises.
Mao Yihua introduced that the automotive mold industry chain was originally mainly supported by foreign-funded enterprises, and now Dongguan and Huizhou have formed industrial clusters, "I came to Guangzhou to work, the molds were all imported from foreign-funded enterprises, and now in reverse, we export a lot of molds every year."
On September 16, Zoomlion exported ZCC32000 crawler cranes from Turkey to the seaport, using nearly 100 large trucks for this equipment. Liu Jianqiang, general manager of Zoomlion Engineering Crane Company Overseas Marketing Company, said that this year, the overseas construction machinery market demand is very good, zoomlion engineering crane products from January to August overseas market growth rate of more than 60%.
Luo Kai, vice president of Zoomlion and general manager of Engineering Lifting Machinery Branch, said that the key reason why the company's lifting machinery can continuously break the export record is that it has achieved continuous breakthroughs in core technologies and has been recognized by overseas markets.
He also sighed that 10 years ago, China's construction machinery just entered the Southeast Asian market, when it was still the world of foreign brands; 10 years later, most of the products in the Southeast Asian construction machinery market are Chinese brands. In his view, in the future, China's lifting machinery will follow the "Belt and Road", more and faster to overseas markets, occupy more market share.
(At the request of the interviewee, Mo Xiaoguang and Shao Tian are pseudonyms)
Editor-in-charge: Yao Kun