Rising labor costs once again engulf shoes manufacturers profits

In 2011, the shoe and clothing industry experienced a sudden change in the market. In the first half of the year, “price increase” was the key word of the industry, but it was not long afterwards. After entering the autumn, the shoe and clothing industry experienced an unprecedented low tide, and production, suspension, and closure of the shoe and clothing base in Zhejiang were in turn staged. Although there is nearly one month from the Spring Festival, many shoe and clothing companies in Zhejiang have already started the annual vacation in advance. What caused the industry to appear so bleak? How will the company survive the crisis?

In winter, shoe and clothing companies in Keqiao, Shaoxing, discovered that their electricity billing is changing. In the past, the factories here paid monthly electricity bills, but in the past two months, they had to pay the electricity bill every 10 days. The reason for this change is that power companies are concerned that the shoe and clothing companies here have suddenly closed down.

From the reporter’s recent visits to Zhejiang shoe and clothing companies, shoe and clothing companies have experienced sudden changes in the market during the past year. After a brief glory in the first half of the year, orders fell sharply, inventory pressure was huge, labor costs rose, *** appreciation, raw material price fluctuations, and ** interest rate hike. The superposition of various unfavorable factors caused many companies to be forced to cut production or even stop production. A crisis in the footwear industry is being staged.

Rising labor costs engulfed the profits of Hangzhou's evergreen, known as "China's clothing First Street," said Xiaoshan, Hangzhou, Keqiao, Huzhou, Quzhou and other shoe clothing industrial park is the backing of the reputation of supporting the Four Seasons.

Zhejiang Xiangrun Garment Co., Ltd. is a large-scale garment manufacturer in Xiaoshan Industrial Park. Zhang Yuequan, deputy general manager of the company, told reporters that as an export-oriented garment company, the current gross profit will not exceed 10%, and the net profit will also be 4%-5. The appreciation of %, ***, increase in labor costs, changes in raw materials, the impact of these three are very fatal for export-oriented garment processing companies.

This is not just the hardship of Zhang Yuequan. In Shaoxing, Quzhou and Huzhou, Zhejiang and other textile and garment enterprises, a number of business executives told reporters that various factors are causing many companies to fall into such unfavorable factors as rising labor costs, *** appreciation, raw material price fluctuations, and rising financial costs. The predicament, which is the most affected by the rising cost of labor, has only reached 20% for some employees in this year alone.

Take Xiangrun Garments as an example. In 2009, the average wage of the company's operating workers was 1,900 to 2,000 yuan per month. By the end of 2010, their average wages rose to 2,600 to 2,700 yuan per month. The average wage of workers at the end of this year was Has increased to 3000 ~ 3100 yuan / month. At present, the number of workers in the company is 1800 to 1900, that is to say, only labor costs, the company will spend 20 million yuan more than in 2009 this year.

Even for a large garment company with nearly 2,000 people, 20 million yuan is not a decimal, and only the increase in labor costs may swallow up most or all of their profits.

Yu Xueyi, general manager of Hangzhou Haide Garment Co., Ltd., Zhejiang's largest manufacturer of trousers, told reporters: “In the domestic textile and garment processing enterprises, the annual profit is less than 30 million yuan. Take our company as an example. At present, one trouser is also earned at most. For 4 dollars, this year's output is more than 5 million, that is to say, this year our factory's profit is only 20 million."

It is understood that for shoe and garment processing companies, the cost of fabrics accounts for about 70% to 75% (after the increase in labor costs, the proportion of raw material costs is about 65% to 70%). Now, the raw material cost of the market is similar. If the cost of the fabric increases, it will increase the price, so the customer can accept it. At the same time, because the labor costs of various companies are not the same, if the processing costs are raised due to the increase in labor costs, customers are generally difficult to accept.