The Epidemic Situation Accelerated The Transfer Of Production Capacity Of Shaoxing Huitai Textile Co., Ltd

An epidemic situation accelerated the transfer of production capacity of Shaoxing huitai Textile Co., Ltd. The factories in Zhejiang Province closed in April this year, and the production lines of weaving, printing and dyeing and home textile were all transferred to Henan Province.

Ma Xiang, general manager of Shaoxing huitai Textile Co., Ltd., told reporters the reason: the epidemic situation caused a sharp drop in export orders, and also made a number of cost pressures including rent, taxes and manpower difficult. If all the production lines are transferred to the central and western regions, we can not only save more than 6 million yuan in rent for the next year, but also obtain more abundant labor resources, "don't worry about labor shortage.".

Ma Xiang's choice is neither typical nor typical.

This is a sample of labor-intensive enterprises transferring from the east to the Midwest, and it is also one of the paths of capacity transfer of traditional foreign trade manufacturing industry in the context of the epidemic.

However, compared with most of the enterprises that have just started production and can transfer their ideas, as early as 2017, Ma Xiang bought 200000 square meters of site in Henan Province to establish a factory building under the investment invitation of the local government of Henan Province, and the land price investment is only one fourth of that of Zhejiang Province on average. Because of this, after transferring all the production capacity from Zhejiang to Henan, millions of high rents can be simply written off in her account book.

For enterprises that have not purchased land at one time, the difference between factory rent and land price in Henan and Zhejiang is about 1:4, which can not completely eliminate this cost, but can save more than half.

On August 12, the general office of the State Council issued the opinions on further stabilizing foreign trade and foreign investment, encouraging central and western regions and Northeast China to give full play to their advantages and undertake labor-intensive foreign trade industries.

Under the guidance of the state, what are the driving forces and concerns of foreign trade enterprises' capacity transfer? The economic account behind it is the most realistic and crucial.

The power to transfer the central and Western Regions

In Ma Xiang's words, the biggest attraction for enterprises to transfer production capacity to the central and western regions is workers. The "labor shortage" problem commonly faced by Jiangsu and Zhejiang regions is no longer a problem in Henan Province.

"Except for the ordinary workers in Henan, 90% of them are skilled workers." Ma Xiang told the first finance and economics reporter that an example with Chinese characteristics is that because most of the workers are in their hometown, their holidays during the Spring Festival can be postponed or shortened. If you are in Zhejiang, because it is difficult to buy tickets for returning home, you may have to give workers a holiday half a month before the Spring Festival, until the 15th day of the first month. However, after the production capacity is transferred to Henan, it is OK to give workers a holiday five days before the Spring Festival. The difference between the two is at least half a month.

In the textile industry, there is almost no difference in the wages of skilled workers between Zhejiang and Henan; the wages of ordinary workers in Henan are slightly lower than those in Zhejiang by 100-200 yuan per month. For Ma Xiang, the difference is almost negligible.

In addition to the advantages of employment, the land resources in the Midwest are more abundant and the cost is lower. This is also the main driving force for enterprises to transfer production capacity to the Midwest.

In terms of taxes and fees, in order to attract investment, the central and western regions often provide relevant manufacturing enterprises with corresponding tax and fee reduction and other preferential policies. However, there is little difference between the two countries in terms of preferential policies at the national level, "basically all of them can be implemented in place".

In Ma Xiang's opinion, the subsidy policies temporarily issued by local governments for investment promotion are generally only given to the first few years after the establishment of the factory. It is not clear how to change them after that, so it will not become the main reason for enterprises that pay attention to long-term development.

Enterprise concerns and cost increase

"There is a factory that supplies raw materials to our company all the year round. Originally, we wanted to go to Henan with us, but later it was found that we might be the only customer who moved to Henan." Ma Xiang said that compared with the eastern region, there is a gap in the improvement and intensity of the industrial chain in the central and western regions. This enterprise, which was originally located in the same park with them, gave up the idea of capacity transfer.

Some studies have shown that, at present, the matching rate of related industries in the eastern coastal developed areas has reached more than 96%, but this index in the central and western regions is still less than 30%.

In fact, in order to reduce the problems caused by the imperfect local industrial chain, Ma Xiang has also spent a lot of energy. From raw materials to weaving, printing and dyeing, and then to home textile products, the company has made layout in advance to continuously extend the industrial chain and strive to complete its production in a "one-stop" manner.

It is also because of the relatively perfect industrial chain and overseas layout over the years that Ma Xiang's Henan factory has been through the most difficult off-season of the epidemic and ushered in the busy peak season. "We only need to purchase thousands of tons of raw materials from large raw materials factories, and then we can produce them ourselves and then ship them from Qingdao to Hong Kong." She said so.

"When we first returned to Henan, we bought the weaving machine, and later added the raw material texturing equipment. This year's epidemic situation has made our industrial chain more perfect. I even began to consider purchasing various small equipment for accessories and producing various accessories for home textiles The reason for Ma Xiang's continuous investment in increasing equipment is that in Henan Province, the concentration of upstream and downstream enterprises is not enough. When purchasing in the East, it will not only face the logistics cost, but also the time cost. "Sometimes it takes 3-4 days, and the logistics may not arrive.".

However, even if the logistics cost is increased, Ma Xiang is more willing to go back to the eastern region to purchase packaging boxes and other auxiliary materials at present. Due to the full competition and mature suppliers, the procurement cost will be much cheaper than that of Henan Province, "including the freight charges.".

Another additional cost item that will be added to moving to the Midwest is the inland freight costs of exports from factories to ports.

Ma Xiang has calculated a sum of money. If the enterprise's profits are not so much, or the enterprise's scale is small, it will lose money.

For her, the production capacity of the factory is not small. The inland cost of 500 containers is about 500000-1000000 yuan, and the overall profit can be covered.

Meng Zhuo, manager of Anhui garment import and Export Co., Ltd., told the first finance and economics reporter that more research is needed to guide enterprises to transfer to the central and western regions to solve the real pain points of enterprises.

Zhuji Hangfeng needle textile Co., Ltd. provides pillow, blanket and other textiles for domestic and foreign airlines, with an output value of about 200 million yuan last year. Mi Fengyun, the general manager of the company, also told the first financial reporter that the company has also visited the central and western regions in recent years. But the conclusion is that the lack of upstream and downstream supporting facilities, the increase of transportation costs, and the continuity of local policies are the main concerns of enterprises.

Who is suitable for capacity transfer?

Considering a number of costs and factors, Ma Xiang believes that production capacity transfer should not only focus on rent or labor costs, especially for small-scale enterprises, "it is not appropriate to act rashly", unless the local government provides complete supporting industrial parks or auxiliary materials market.

According to her experience, many companies have gone to the central and western regions. The local preferential policies are not small and the implementation is good. However, the local investment promotion officials are not fully aware of the market and enterprise operation, and it is easy to have the regret that "enterprises can not survive if they are recruited back".

At present, enterprises suitable for transferring production capacity to the central and western regions are large-scale enterprises with relatively perfect industrial chain, and some e-commerce enterprises that can operate normally by using domestic express delivery and logistics in the domestic market.

In Meng Zhuo's view, whether the production capacity is transferred to the Midwest or Southeast Asia, enterprises will inevitably consider the efficiency of input and output. He concluded that in the textile industry, the low labor cost can not offset the low efficiency, the lack of supporting industry support, and the increased cost of transportation costs.

However, each enterprise faces different customer groups, so the social environment and considerations will also be different. Meng Zhuo believes that for those foreign trade enterprises facing the European and American markets, the transfer of production capacity to Southeast Asia can avoid the risks brought by trade friction and tariff increase, while the manufacturing enterprises mainly engaged in domestic sales can consider running factories in the central and western regions, because the domestic logistics and transportation are perfect enough, and the related costs generally will not bring pressure on enterprises.

For Ma Xiang, as the overseas market of the company is mainly in developing countries, she has no incentive to build factories in Southeast Asia. Instead, because some of her customers are in South America, she has set up factories in Paraguay as early as five years ago to enjoy the tariff preference and convenience of the South American economic integration organization Mercosur.

She confessed that her team had visited India many times and wanted to set up a factory in India, but it failed because of the fluctuation of Sino Indian Relations and the instability of local policies.

In addition to "encouraging the central and western regions and Northeast China to give full play to their advantages and undertake labor-intensive foreign trade industries", the general office of the State Council issued the "opinions on further stabilizing foreign trade and foreign investment" on August 12, which also suggested that localities with conditions should be encouraged to support the gradient transfer of processing trade in combination with local conditions and through funds and other means. We will cultivate a number of processing trade industrial parks jointly built by the eastern, central, Western and northeast regions. With the help of China processing trade products Expo and other platforms, we will improve the industrial transfer docking mechanism.

At the same time, we will further increase support for export enterprises of labor-intensive products such as textiles, clothing, furniture, shoes and boots, plastic products, bags, toys, stone, agricultural products, consumer electronics and other labor-intensive products export enterprises on the basis of implementing various inclusive policies, such as tax reduction and fee reduction, export credit, word of mouth guarantee, stable employment, electricity and water use.

These policies make Ma Xiang more and more confident in running a factory in Henan Province. According to her plan, all the production lines will be transferred to Henan, while the trading company will continue to stay in Zhejiang, with 1000 square meters of offices and exhibition halls to facilitate negotiations with foreign businessmen coming to China.

For MI Fung Yun, the most timely and effective way to deal with the challenge of export value falling to zero suddenly in the epidemic situation is not to transfer the production capacity to the central and western regions or Southeast Asia, but to pay close attention to the layout of e-commerce and domestic market.

After more than two months of water testing, MI Feng Yun's e-commerce transformation has improved. "I thought that we could keep the normal production of the factory by selling 200 pieces a day. As a result, after a week, our daily average sales volume reached 1400 pieces, but the output began to fall behind." In the crisis of the epidemic, MI Fengyun has opened up new sales channels, and turned the pressure of "raising workers" a few months ago into a "sweet worry" of increasing the recruitment of workers.