Corporate Christmas orders are unspeakably happy: Orders increase profitability as thin as paper

In order to complete Christmas orders from abroad, the factory is still desperately processing because it has indeed received many orders this year. But our profits are already so low that we can't lower it. On average, every piece of Christmas clothes can't be measured in "points," but only in "PCT." This is a typical example of the “use of hundreds of millions of clothes in exchange for U.S. Boeing airplanes” in the outside world.

According to the latest data released by the General Administration of Customs, in November of this year, China’s total exports amounted to US$153.33 billion, an increase of 34.9%, and import value reached US$130.43 billion, an increase of 37.7%, both setting a record high. At the same time, the total value of imports and exports set a new record for September this year, and reached the $280 billion mark for the first time on the monthly import and export scale. From the experts' point of view, the strong rise in import and export data is an important manifestation of the “remaining good” of the Chinese economy under the pressure of price increases and inflation expectations.

However, for Chinese garments, handbags and toys, it is difficult for them to experience the happiness of “still better” near Christmas. The reporter interviewed a number of related companies and learned that despite this year’s corporate Christmas orders, The number is not too small compared to last year, but their profits "have become so low that they can't be lowered." Even in the previous period, they have been making "lossy trading."

Orders increased, profits fell to open the lights of the small room, a house decorated with Christmas logo bags and Christmas gift boxes caught the eyes of reporters. "Like it, just pick one." Mr. Zhang told reporters, "This is my own factory production, quality is not bad. Originally it was exported to foreign countries, but now there are foreign customers, "Poor love rich," do not. I can only ask people to ship a lot of goods to Shanghai. I am ready to "sell out" these goods to relatives and friends before Christmas."

Mr. Zhang is the head of a small bag processing company in Jiangsu Province. For this year's Christmas order, he had been busy for several months and had recently “finally hardened” to rest. A few days ago, the reporter interviewed him at Mr. Zhang’s home in Changning District, Shanghai.

“We received some Christmas orders at the end of June this year. In the next few months, we have continued to receive a lot of Christmas orders from Canada, the United States, and Germany.” Mr. Zhang told the “International Financial News” reporter, said: “Until recently, our factory really took a break. In any case, it finally completed the “task” of foreign customers and middlemen.”

"Carefully, the number of orders this year is much higher than last year, especially when compared with the financial crisis of 2008." Mr. Zhang took a tea and said, "But the days are a bit harder than the financial crisis. The foreigners and middlemen still use the financial crisis as a means of getting more and more difficult and lowering our bids. On the other hand, we are somewhat "back-to-back" this year, which greatly exceeds my expectations at the beginning of the year."

What Mr. Zhang called the "back-to-back enemy" is the rise in raw material prices. Data show that since the beginning of this year, cotton prices have been rising under the influence of many factors. At the same time, as of the end of November this year, cotton cloth, rib cloth and other cotton cloth used as raw materials have risen by 2/3.

“For some time, I have tried several times to change to lower-quality raw materials, but the requirements of foreign customers are relatively high. I fear that in the future we will lose both “sesame seeds” and “watermelons.” Mr. Zhang said that after all, quality Bad will affect the reputation of the company.

Mr. Zhang said, “Now, in the double “pinch attack”, our profits have been too thin to be thinner.Even, some of the orders are only to maintain the cost out of the goods.And, I am still worried about part of the “unruly” foreign The customer will return the goods because there will be similar incidents every year. If so, I am worried that my workers will not receive full pay this year."

Mr. Zhang reluctantly told reporters, “I don’t hope to get “Watermelon” now. I only hope to return “sesame” through orders to “fill in” my own factory.”

The worries of labor and exchange rate Mr. Zhang's troubles are not cases. A relevant person in an apparel export company in Shanghai's Xuhui District told a reporter from the International Finance News recently. “In order to fulfill orders for Christmas abroad, the factory is still desperately processing because it has indeed received a lot of orders this year. But our profits are already low. Again, it can't be disclosed, but on average, every piece of Christmas clothes can't be measured in “points,” but only in “PCT.” That’s what the outside world’s “can use hundreds of millions of clothes for exchange.” "A typical case of a U.S. Boeing airplane."

"This year, in addition to rising cotton prices that have engulfed our profits, the rise in labor prices and exchange rates has also affected our business." The above-mentioned sources told reporters, "For example, in terms of labor prices, some of our corporate processing We have migrated to Southeast Asia where labor costs are lower. We haven't measured the impact of **, but it is certainly not small."

In fact, Xue Meng, Secretary-General of the China Light Industry Arts & Crafts Import & Export Chamber of Commerce's Toys Sub-Committee, has said to the media: “The appreciation pressure is the most important reason for the already low profit margin of the toy industry.” In addition, China’s light industry process The questionnaire survey conducted by the exporters on 45 light industrial export enterprises shows that “As of the reopening of the exchange reform on June 19, 35 of the 45 companies have experienced a decline in profits. If the exchange rate of the *** exchange rate rises by 1% in the future, 45 companies will There will be 20 profit margins falling by more than 3%.”

Not only export processing companies in Jiangsu and Shanghai, but export enterprises in the Pearl River Delta region are also facing the dilemma of “increasing orders and thin profits”. Data show that from January to October this year, Guangdong exported 770 million U.S. dollars worth of Christmas goods, a 3.9% increase from the same period last year. However, under the influence of many factors such as rising raw material prices, *** appreciation, and trade barriers, the company’s profits have not increased, and even some companies have gone unprofitable and closed down.

Under pressure, many companies have chosen to increase prices. It is reported that at the Canton Fair held at the end of October this year, known as the "barometer" of Chinese export enterprises, the offer price of Chinese Christmas products rose by about 15%, which also reflected the various difficulties Chinese export companies faced.

Transformation or tap potential?

In fact, the “increase in income” brought by the Christmas market is only one of the embarrassing phenomena that “Made in China” has been facing. People once again questioned why "Made in China" still cannot get out of the embarrassment and embark on the road to transformation and upgrading.

“The most important thing is the core brands and technologies.” The relevant person of the garment company explained to reporters, “Our company is owned by foreign companies. Some products are sold to Canadian headquarters with very low profits after processing in China. After affiliating the company with its own brand, it sells it at a very high price. This highlights the importance of the brand."

Niu Haipeng, a professor at the Renmin University of China Business School, agrees with the importance of the brand. "This is one of the important means for export-intensive companies to improve their competitiveness and is one of the current directions in which they can operate. Further, it is still necessary to upgrade the industrial structure." Niu Haipeng said, "This may be a long time For example, a large number of export-intensive enterprises went bankrupt, etc. In addition, local government departments may also have to weigh in the “dilemma” of short-term interests and long-term interests, in particular, local governments are still faced with guaranteeing growth and protecting people’s livelihood. The pressure of employment, etc. But overall, the transformation and upgrading will definitely benefit China's economic development."

“I also thought about the transition. But under the current conditions, I still don’t think it is realistic.” Mr. Zhang said, “First of all, the cost of transformation and upgrading, and even of the banks, is a problem. Second, no one is guiding us in transition. What if I made a mistake and turned it wrong? Thirdly, how do I install the original workers after the transition? How can I explain to the workers and friends who have followed me for so many years? Again, I had received requests from relevant departments before. Temporarily stabilize relevant employment indicators and not cut people."

"For export companies that are difficult to transform in the short term, perhaps they should consider tapping their potential internally." Niu Haipeng told the "International Finance News" reporter, first of all, can't sit still, or can start to improve efficiency, such as shortening processing time; If conditions permit, related companies may be transferred to areas where the cost of domestic labor is relatively low. Third, relevant government departments should give guidance and arrangements to SMEs, especially labor-intensive export enterprises.

In addition, industry insiders reminded that exporting companies may also consider using the “online trade” model to reduce cost pressures. According to reports, at present in Yiwu, many companies have already obtained orders through online transactions and approached customers.