China’s role in international trade is that of a “processing center”. Because it does not master brands and core technologies, it has long been at the lowest end of the industrial chain. However, in the financial turmoil sweeping the world, some foreign trade companies have found new channels to expand the market. Xinhuajin Group has set its sights on some good foreign brands and is currently actively acquiring a hair products retailer in the United States; Qili Group has successively established operations in Qingdao. Acquired 2 foreign-invested enterprises.
An ordinary suitcase costs US$9 to be produced by a mainland Chinese manufacturer. It is sold to a Southeast Asian middleman for US$10, then sold to Walmart, the world’s largest retailer, for US$20, and then sold in the US market at a price of US$40. “MADE IN CHINA” has since entered thousands of households in the United States, but there are very few Chinese brands. In this industry chain, Wal-Mart earns US$20 by virtue of its brand advantage, middlemen in Southeast Asia earn US$10, and manufacturers in mainland China earn only US$1 in processing fees. “Made in China” is at the lowest end of the industrial chain.
“In fact, mainland China is a passing god of wealth. Don’t just look at the total foreign trade volume, but also the distribution of wealth and profits behind it.” In January 2006, Li Deshui, director of the National Bureau of Statistics, talked about China’s foreign trade surplus and foreign exchange reserves in 2005 said when there was a substantial increase. China’s role in Asia is that of a “processing center.” A large number of components from Japan, South Korea, Taiwan, and Southeast Asia are shipped to China for processing, and then exported to Europe and the United States after being assembled in China. Therefore, China has a deficit with Japan, South Korea, Taiwan, and Southeast Asia, and a large surplus with Europe and the United States.
Due to its geographical location, Qingdao has particularly prominent “processing factory” characteristics, so it has been particularly affected by the wave of the global financial crisis. Recently, it was learned from the 11th Qingdao Outstanding Entrepreneurs Commendation Conference that at the beginning of 2008, there were 7,533 companies with import and export businesses in Qingdao, and currently 1,200 companies are unable to continue. However, in the financial turmoil sweeping the world, some foreign trade companies have found new channels to expand the market. Xinhuajin Group has set its sights on some good foreign brands and is currently actively acquiring a hair products retailer in the United States; Qili Group has successively established operations in Qingdao. Acquired 2 foreign-funded enterprises…
■Sigh: A picture of the skyrocketing price of a piece of clothing
“I bought an ESPRIT jacket from the United States for only 200 yuan.” Ms. Zheng, a 28-year-old manager of a 5-star hotel in Daocheng, said excitedly: “I stayed in the United States for a week. , the most unforgettable thing is that brand-name clothes are super cheap, I chose several pieces at once.”
According to Ms. Zheng, she likes to wear ESPRIT clothes very much. Before going abroad, she always buys clothes at Jiashike ESPRIT store, usually priced at 600-900 yuan. “The price of the same clothes in China is 2 or 3 times more expensive than abroad. It’s really no better than I don’t know. I’m shocked when I compare it.”
What makes consumers like Ms. Zheng even more embarrassed is that when she came back and opened her clothes, she found that the clothes she bought in the United States all had “MADE IN CHINA” labels.
Why are clothes produced in Chinese factories more expensive in the country of origin? Industry insiders pointed out that the root cause lies in the “brand”. The brand is American. It is only produced as “rough” in China, and when it is “plated with gold” abroad, its value is a hundred times higher.
Mr. Zhao was interviewed by a fashion company that processes clothing for ESPRIT in Qingdao. They usually sign an agreement with the customer first. To use their design and brand, high-end fabrics need to be imported by themselves.
Although they produce high value-added “carrying goods”, these companies are barely surviving on meager profits.
According to reports, it costs about 100 yuan to make a coat like the one Ms. Zheng bought. After OEM, we get 25% profit. After the operation of ESPRIT company, the price in foreign countries began to rise sharply to 200 yuan, and it reached 200 yuan again. Domestic prices have doubled several times.
“In 2008, with the changes in exchange rates, the increase in raw material prices, and the increase in employee wages, the 25% profit we obtained from OEM could easily be swallowed up. Our current business situation can be described as ‘living on’.” Mr. Zhao introduced.
■A flash of inspiration: buy foreign brands directly
According to Director Zhang of the Industry Management Office of the Qingdao Municipal Economic and Trade Commission, 95% of Qingdao’s textile enterprises are engaged in processing and OEM with supplied materials. Even such a leader mainly processes and OEMs with supplied materials. Affected by the economic situation, At least 350 million yuan in exports will be affected.
According to the relevant person in charge of the Qingdao Enterprise Federation, there is currently a gap in Qingdao’s brands. Although large companies such as Haier, Hisense, and Tsingtao Brewery have their own brands, Qingdao’s brands lack middle power. “There are 813 textile companies in Qingdao, most of which are small and medium-sized enterprises. In 2007 alone, 134 companies suffered losses.” Director Zhang said that these companies only receive about 10% of the processing fees and have long been at the lowest end of the international industrial chain. “Without technology, and brand are the main reasons.” It is understood that there are now nearly 100,000 small and medium-sized enterprises in Qingdao, accounting for more than 99% of the total number of enterprises in the city. Due to constraints such as talent and funds, most companies have seriously insufficient innovation capabilities, with R&D investment accounting for less than 1% of sales revenue. According to Director Hu of the Entrepreneurship Service Office of Qingdao Economic and Trade Commission, it is generally believed internationally that R&D investment accounts for 1% of sales revenue.Retreat. Waiting for mergers and acquisitions may be the only way for them to survive.
Liu Yuhui, director of the China Economic Evaluation Center of the Institute of Finance, Chinese Academy of Social Sciences, suggested that instead of the government directly using foreign exchange reserves, it is better to fund and entrust domestic enterprises to actively participate in overseas investments and mergers and acquisitions, so as to seize opportunities in a timely manner and avoid them as much as possible. Losses caused by poor decision-making.
Among industries that intend to go global, the manufacturing industry is of particular concern. Manufacturing and related industries will remain the foundation of China in the long term. The most effective way to quickly improve the strength of my country’s main manufacturing industries is to conduct in-depth cooperation at the equity level with industry-leading companies in European and American countries. Although my country’s enterprise development has made great progress in the past 30 years of reform and opening up, there is still a certain gap in the core technology and management level between major enterprises compared with foreign countries. To narrow this gap, it is not enough to rely solely on domestic companies to “practice behind closed doors.” Chinese companies must “go global” and form close equity partnerships with advanced foreign companies by taking shares in them. Only by staying close to these companies and learning their strengths can we shorten the gap between the two. In doing so, Chinese companies can gradually move from the low end of the industrial chain to the mid-to-high end and enter the “mainstream” of the global market, thus improving the overall level of China’s manufacturing industry. .
