China's factory is struggling to survive under the new economic normal

Abstract Chinese leaders are vigorously advocating the “new normal”, that is, the rate of economic growth is slowing but the quality is improving. However, this has also caused many companies to struggle on the line of life and death. In a temporary market in Tengzhou City, vendors sell clothing. Tengzhou...
Chinese leaders are vigorously advocating the "new normal", that is, the rate of economic growth is slowing but the quality is improving. However, this has also caused many companies to struggle on the line of life and death. In a temporary market in Tengzhou City, vendors sell clothing. The industrial city of Tengzhou, with a population of 1.5 million, was hit by the closure of local factories. Tengzhou is an industrial city with a population of 1.5 million in Shandong Province, China. In the days when capital was cheap and abundant, Tengzhou developed rapidly. However, since the Chinese economy began to slow down, a large number of textile mills, machine tool factories and chemical plants have closed down.

According to data released on Wednesday, China's economic growth rate in the second quarter remained at 7%, which was the same as the first quarter. Some analysts who had expected lower growth rates were surprised. However, the figure is still below the 7.4% in 2014. The Chinese government recently launched a “Made in China 2025” blueprint for the nationwide initiative to promote traditional factories to seek industrial upgrading and specialization in the face of increasing global competition. One of the most worrying factors for the government is that a large number of corporate failures may cause instability in society. The HSBC/Markit Purchasing Managers Index (PMI) shows that the factory has cut jobs for 20 consecutive months. In May, it set the fastest layoff rate since the global financial crisis.

Jun Bo, director of a small shop selling drinks and instant noodles in Tengzhou, said his store business has plummeted since dozens of factories closed. Xiangyuan Apparel is a few blocks from his shop. The company covers an area of ​​more than one block, and the building has a roman-like column that resembles Romanes. At the time of its glory, the number of employees reached 2,000. However, the company seemed to be defeated very quickly: almost everyone in the building went to the building, and half of the jeans that were sewn were placed under the nose of the sewing machine. For some of these factories, it is difficult to maintain operations by simply continuing to produce shirts or common chemicals. Weak demand is quickly dissipating the factories that are trying to adapt to the development of the situation.

Hu Yiteng, deputy general manager of Flying Eagle Textile Co., said that many factories will close down, and it takes time to build a good business, not to introduce new machinery and equipment. The family business Mountain Eagle reflects both aspects of this process. The company's traditional cotton yarn business has stalled, but specialization has made the company with 100 employees through the storm. When China's economy was still booming in 2008, Hu Yiteng returned to Tengzhou after studying business management in Shanghai to help run this family business. He soon disagreed with his father. He believed that the Mountain Eagle should be slimming and concentrate on developing its main business; his father insisted on a low-margin, high-yield operation. Hu Yiteng said that the corporate culture here is very conservative. In the end, his father reluctantly agreed to upgrade half of the business and developed a polypropylene roller for use in garment manufacturing machines. This kind of rubber roller is higher in quality than the domestic competitor's rubber roller, and cheaper than foreign rubber roller. After 2011, Shanying did not invest another penny in its troubled cotton mill in the suburbs of Tengzhou. The land in the suburbs of Tengzhou is relatively cheap. The company has expanded its production base to Vietnam or remote areas in western China.

Hu Yiteng said that the rubber roller business has brought more than RMB 30 million (about 4.8 million US dollars) of revenue to the company. The traditional cotton yarn business has a revenue of 200 million yuan, but the former has a higher profit margin. Local governments have advertised the Mountain Eagle as a model innovation company. Tengzhou did not disclose information on how many factories were bankrupt and how many workers were cut. The reporter tried to contact the owner of the closed Xiangyuan garment factory, but did not succeed. The local government rejected the reporter’s request for comment. Tengzhou City estimates that the local economy grew by 9.2% last year. This growth rate seems to be strong, but it has reached the lowest level in the past 25 years, only half of the growth rate in 2005. The Tengzhou government stated in its 2014 statistical report that the local economy was affected by the severe and complicated domestic and international economic situation, the local construction industry slowed down, and the factory production efficiency was low.

This pressure is reflected in some companies that publish financial results, as is the Tengzhou subsidiary of Jinjing Glass Co. Jinjing Glass Co., Ltd. is affiliated to Jinjing Technology Co., and its Tengzhou subsidiary's revenue increased by 14% in 2014, but its profit fell 89% to RMB 20.5 million (US$3.3 million). Other signs also show that these companies are having a bad time. In Tengzhou's largest wholesale and retail mall, Zhenai, there are so few customers that shopkeepers can ride electric scooters in empty corridors. Song Changxiu, a shopkeeper at a shroud store, said that the current business is almost the worst in 25 years. He said that the number of people who died has not changed much compared with the past, but people who cook things will choose cheap chemical products instead of pure cotton products.

In Tengzhou, there are dozens of large vacant and unfinished residential projects, most of which have good names, such as Family in Harmony and Enjoy Life. In a project model called Peaceful World, marketing manager Zhu Qirui said that she pinned her hopes on the locals who came back from the outside, hoping they would buy a home in their hometown. She said that she said that it would be bad for this year. Hu Yiteng said that his father recently admitted that his decision to let Shanying focus on developing its main business was correct. He said that instead of making the company bigger, it is better to make the business smaller and stronger.

Aluminium Slitting Coil

Aluminum Sheet Roll,Aluminium Slitting Coil,Aluminum Slitting Coil,Aluminum Rolled Coil

Zhengzhou Yearshine Industry Co., Ltd ,