Shoe Industry In Guangdong Is Heavily Dependent On The International Market.

"Guangdong produces 4 billion 500 million pairs a year. shoes It accounts for nearly 50% of the total output of the country, and exports 3 billion 500 million pairs each year, accounting for 70% of total export output. " Guangdong Province Leatherwear Wang Jianxin, chairman of the association, described Guangdong's status as a shoe maker in the whole country. However, after the 2008 financial crisis, the "made in Guangdong" model has been faced with great challenges. According to its disclosure, the annual export volume of leather shoes in Guangdong has reached 1 billion 100 million pairs at the peak, but now there are only 700 million pairs. The profits of the industry have also been greatly reduced, and the profit margin has dropped from 20% at the peak to only 5%. Against this background, the local enterprises in Guangdong have quietly made their own brand transformation from the past to hiding behind. However, with very few brands on the table and Jinjiang and Wenzhou schools on the branding Road, the transformation of Guangdong's local enterprises is rather difficult.

　 Footwear industry in Guangdong is heavily dependent on the international market.

Guangdong's position in the shoe industry is unparalleled. At the 13th anniversary prize presentation ceremony of Heshan footwear industry association, Wang Jianxin introduced more than 8000 shoe factories in Guangdong, producing 4 billion 500 million pairs each year, accounting for nearly 50% of the total market share. Every year, there are 3 billion 500 million pairs of shoes exported, accounting for 70% of the total export volume of the country.

In Wang Jianxin's view, such a huge industry is mainly concentrated in the Pearl River Delta, Guangzhou, Dongguan, Shenzhen, Huizhou East, Hezhou, Jieyang and Chaozhou. "Heshan is dominated by high-grade leather men's shoes. There are more than 1000 shoe factories in the region, producing 80 million pairs of shoes each year. The unit price is relatively high, the annual output value is nearly 10 billion, accounting for 15% of the total output value of cranes. Huidong is mainly women's shoes, although the annual output is 600 million pairs, but the unit price is lower." Wang Jianxin said.

"Fashion, good quality, perfect industrial chain." In Wang Jianxin's view, this is the advantage of the footwear industry in Guangdong. If it were not the advent of the global financial crisis in 2008 or the growth of Guangdong's footwear industry, it would be a burden to start from 4 years ago.

"The footwear industry in Guangdong is heavily dependent on the international market." Wang Jianxin said that although the footwear industry in Guangdong developed steadily this year, exports declined. "International consumer market downturn, orders fell by 20%- 30%." Wang Jianxin said that at the best time, Guangdong exports up to 1 billion 100 million pairs of shoes every year, but now there are only 700 million pairs left.

Shi Zhijian, chairman of the Heshan footwear General Chamber of Commerce and chairman of Hua Lida Shoes Co., Ltd., is deeply impressed by the current predicament of Guangdong shoe industry in the international market. "The appreciation of the renminbi has weakened the competitiveness of Guangdong's footwear industry in exports." The cost advantages of Vietnam and India are highlighted. The same 100 US dollars, obviously, procurement in Vietnam and India has an advantage over purchasing from the Chinese market.

　　 Profit shrink industry is not yet warm

On the one hand, the export market of Guangdong's footwear industry has been hit hard. On the other hand, the industry is also facing another challenge -- rising costs. "When the market was good, the net profit of a pair of shoes used to be as high as 30 yuan at the time, but now, with the rising cost of staff and raw materials, the profit space has been greatly compressed." A person familiar with the footwear industry in Guangdong said that wages rose by more than 20% in the first two years because of recruitment difficulties. Although the growth rate has dropped to around 10% now, the overall cost of personnel will continue to rise.

In this regard, Wang Jianxin admitted that after the promulgation of the new labor law, labor costs rose, and the profits of former enterprises may be 20%. Now the average industry is only about 5%.

For such a decline in profits and losses, the industry admits that there is no sign of a rebound in the industry, and even some enterprises are more difficult than last year. "On the one hand, the European and American markets have not fundamentally improved. On the other hand, the cost of enterprises is still rising."

The contraction of profits is not only reflected in the export dependent local enterprises, but also the local enterprises that take the road of brand. As a leader of the shoe industry, BELLE is also hard to escape. The reporter learned from BELLE's annual report in 2012 that BELLE's annual sales volume was HK $32 billion 860 million in 2012, an increase of 13.5% over the same period last year, which is the first time that BELLE has exceeded the 30 billion Mark since its listing. However, its operating profit increased by only 2.6% to 5 billion 403 million yuan, the slowest year in nearly 5 years. In 2012, the sales volume of footwear business was 21 billion 45 million yuan, up 13.6% from the same period last year, which is obviously slower than the 25% increase in the previous two years. The profit margin dropped by more than 1 percentage points. In the first half of this year, although BELLE's sales revenue increased by 11.1% again, net profit did not increase or decrease by 1.9%. "The market environment is generally lower than expected, consumer confidence is sluggish, abnormal cold weather in April, and the outbreak of avian influenza in some areas in spring has further increased pressure on retailers." This is BELLE's description of the current shoe industry environment.

Foshan brand On Saturday, the footwear industry, despite its revenue growth of 20.86% to 897 million yuan in the first half, dropped 34.78% to only 31 million yuan. Although the main brand's revenue grew 10.64% to 483 million yuan on Saturday, its brand revenue of Sophia and Febe Lil declined by 4.71% and 2.08% respectively, only 138 million yuan and 99 million 580 thousand yuan. Net profit margin is only 3.46%. On Saturday, the footwear industry said in a semi annual report that the sales price of domestic leather shoes dropped by 1.47% because of the increase in discount rate of shopping malls. The unit cost was increased by 2.12% as a result of the increase of labor cost and raw material cost under strict control.