Due to the increase in labor costs and the appreciation of the renminbi, the footwear industry is deeply stuck in the “increasing orders and reducing profits”.

"Compared with the beginning of the year, gross profit has fallen by almost 20%." On October 28, Ling Dong, head of Guangzhou Leiyali Footwear Co., Ltd., told this newspaper that most shoe companies are currently working on the Single, tolerate the decline in profitability on the one hand.

Since 2010, China’s export market has grown strongly. According to statistics of the General Administration of Customs, China’s total export value reached US$144.99 billion in September, a year-on-year increase of 25.1%. In the first three quarters, China exported US$26.44 billion in footwear products, a year-on-year increase of 26.6%.

“Because the previous inventory has been basically digested, the European and American markets are gradually picking up, and many shoe companies have reported that this year's orders have soared.” Zhu Yulun, chairman of Adsale Exhibition Co., Ltd., believes that whether or not the export market recovers depends on whether this rebound can continued.

Sharp increase in orders: recovery or false fire?

Lingdong's factory has been doing OEM production for foreign shoe companies, and 90% of its products are sold in Europe. According to the commission, the burden is on the net and the darkness is playing with the R-shadow! In the winter of shoemaking, in 2009, many small shoe factories were forced to close down.

Musha, who has been engaged in the Middle East shoe trade for many years, told the newspaper that because some shoe companies that had previously cooperated have closed down, he must look for new suppliers. He has been busy participating in various footwear exhibitions in China since the beginning of this year.

In 2009, the impact of the financial tsunami on the global economy gradually spread, and the traditional export-oriented footwear industry bears the brunt. In 2009, China exported 8.17 billion pairs of shoes worth US$26.57 billion, a decrease of 0.8% and 5.5% year-on-year.

Chen Jinsheng, deputy general manager of Dalingshan Shengsheng Shoes Machinery Factory in Dongguan City, told reporters that in 2009 the company sold only 1200 Taiwan-made shoe machines in the mainland, but this year, due to the increase in orders for shoe companies, everyone is making a single production. The demand for aircraft has greatly increased. So far its company has sold more than 1,500 shoe machines. "We expect to sell over 2,000 units this year."

In 2009, China's footwear production reached 11 billion pairs, of which the total annual production of the three major footwear producing areas in Guangdong, Zhejiang and Fujian accounted for more than 80% of the national total. "There are 80 boxes out of every 100 boxes sold in the United States made in China," said Zhu Yulun.

"Before the financial crisis, we sold shoes for about 22-24 pounds per pair at Martha and now each pair of prices fell to 10-12 pounds." Wang Wei, head of Cordis International Ltd., believes that the current overseas market, especially The European and American markets have not recovered to the level of 2008. "The consumer sentiment is still not high." Wang Wei's company has factories in Zhangmutou, Liuzhou, and Nantong. Since 2002, the company has begun to transition to the domestic market. He said that the company must fight for it this year. The ratio of exports to 50:50, in his view, overseas market downturn at least until 2012 will be a true recovery.

Profit Margin: Cost Increase Is the Main Cause

The pressure of rising costs has touched the nerves of shoe manufacturers. "Originally, the profit margin is not large. Now that the renminbi has appreciated, the profits are even more subtle," Ling Dong said. Deeply sympathetic also includes traders, and Muzaa told the newspaper that this year's shoe prices have increased by 10%-20% over last year, and middlemen are under pressure and are even more sad than shoe companies.

Since 2010, the renminbi has appreciated by nearly 3%. Most shoe companies have reported to reporters that the company's profit margin has been further squeezed. Although Chinese shoe enterprises have increasingly focused on cultivating their own brands, they are still at the low end of the industrial chain. Products are low in price, large in quantity, and homogeneity is serious. Price competition dominates the export market. In 2009, the average export price of Chinese footwear was only US$3.3/double, which was a 4.8% drop from 2008.

However, in Wang Wei's view, the pressure for appreciation of the renminbi is much less than the pressure caused by labor costs and raw material costs. "The renminbi's rise has risen by 3%, but since the implementation of the new labor law, our labor costs have increased by an average of 20%-40% each year."

In addition, soaring prices of raw materials is also a shoe injury. Since October, the price of adipic acid (mainly used for soles and PU pulp) has been rising, rising from 17,500 yuan/ton at the beginning of the month to 19,200 yuan/ton at present, an increase of 9.7%.

"The more orders, the lower the profits, the company is like a vicious whirlpool." Ling Dong said that the current footwear industry encountered difficulties.

In this case, some shoe companies have set their sights on the domestic market. "Now, for some very long and troublesome export orders, we would rather give up and focus on domestic sales and brand building." Wang Wei said that the entry threshold of the footwear industry is low, the competition at the price level can not go Far, "In the future, more shoe companies will close down. This is inevitable."

However, Wang Wei also admits that shoe companies have a lot of difficulties in exporting from domestic sales to domestic sales. They not only invest a lot, but also have long payback periods. They also have to face competition from domestic and foreign brands. "So many shoe companies now rely on OEM to maintain their own brand." "Private brand building is a long-term process, in the face of mature domestic and foreign shoe brands, Chinese shoe companies to break through the design and innovation." Zhu Yulun said.