The meager profit of the financing is difficult for the Pearl River Delta LED SMEs to fall into the "chain debt"

Zhong Liang is a small enterprise engaged in LED R&D and production in Dongguan. In 2011, the operating income was nearly 50 million yuan. In Dongguan, where small and medium-sized enterprises are everywhere, Zhongliang’s company is not eye-catching. However, due to the flexible nature of the private enterprise mechanism and the fact that Zhong Liang is skilled in business, the company, which was established only five years ago, has developed rapidly. What makes Zhong Liang unexpected is that his life has been bad since 2012.

"Products can't be sold, workers can't get it, and there is no channel for financing." Zhong Liang told reporters that he came to Beijing this time and wanted to borrow some money from the bank through acquaintances. But for now, "the possibility of success." Very small."

Zhong Liang’s experience is not a case. According to industry insiders, this is the most difficult day for SMEs since the 2008 financial tsunami. The “Pearl River Delta” has been the core of “Made in China” for many years. It is the small and medium-sized enterprises that have blossomed here to support the global influence of Chinese manufacturing. However, in the past two years, the “Pearl River Delta” SMEs have experienced various levels of difficulties in their operations, and even caused many economic and social problems.

Low profit

Dongguan has more than 300 LED companies in 2011, an increase of about 30% over the previous year. More than 90% of the company's products mainly face the international market. However, the general sales are now declining, some companies have closed down, and some have been transformed into other industries. According to Zhong Liang, two years ago, the total gross profit of his company's products was 25%, but the 12% of labor, factory, rent, sales, tax and other management and sales expenses, only 8% of net profit. And it also includes insurance accruals as a payment for defective products.

According to industry insiders, LEDs are typically labor-intensive, and many companies can occupy a place in the market by assembling LED components even if they don't understand technology. "Many companies are currently concentrated in the low-end market, and there are more and more LED products with less weight, and about 90% of enterprises are playing price wars." Zhong Liang said.

Excessive production capacity has triggered a vicious price war between enterprises, which has caused the prices of downstream enterprises in the LED industry to continue to fall, and profits have naturally been diluted. At present, the gross profit margin of the LED industry is only around 20%, while the net profit is less than 5%.

In addition to the LED industry, SMEs in other industries are also facing the dilemma of low profits. A friend of Zhong Liang opened a small company engaged in car radiators in Dongguan seven years ago, and the same profit is low. The person in charge of the company said that it is mainly unable to bear the rising costs. According to its introduction, from 2008 to 2012, raw material prices rose by 15%, and workers' wages rose from 2,500 yuan to 3,500 yuan per month.

At the same time, the continued weakness of the world economy and the appreciation of the renminbi and the depreciation of the US dollar have kept the sales prices of products basically at the level of three or four years ago.

In fact, in recent years, as the costs of raw materials, labor, land, logistics, and financing continue to rise, the pressure on production and operation costs faced by SMEs in China has intensified, and the profit margin has been repeatedly compressed, seriously affecting the healthy development of SMEs in China. And become an important factor that weakens the international competitiveness of China's manufacturing industry.

On the one hand, under the dual pressure of macroeconomic downturn and rising costs, the profit margin of SMEs has been shrinking and production and operation difficulties have intensified. At the end of September 2012, Standard Chartered Bank announced that the “China SME Confidence Index” for the third quarter of 2012 was 46.71, which fell for the second consecutive quarter and continued to fall below the 50 threshold. Among them, the investment confidence index plummeted by 22 percentage points. In Chongqing, Hunan, Zhejiang, Guangdong and other provinces and cities, there have been phenomena such as the decline in corporate profits, the increase in losses, the suspension of production and the increase in semi-discontinued enterprises.

On the other hand, rising costs have weakened the competitiveness of China's export prices. According to the statistics of the Ministry of Commerce, in the first half of 2012 compared with the end of 2011, China’s exports accounted for 1.7, 0.62 and 1.04 percentage points respectively of the major trading partners of the European Union, the United States and Japan. Among them, the decline in the export competitiveness of China's labor-intensive products is particularly severe.

At the same time of falling profits, the tax and non-tax expenses incurred by SMEs have grown rapidly, even exceeding corporate profits. The data show that from January to July 2012, the tax increase of small and medium-sized enterprises in Hunan Province was 14.3 percentage points higher. In the first half of 2012, the State Council Development Research Center found that in the case of industrial enterprises' profits fell by 30% to 40%, the survey The tax revenue growth of the provinces still exceeds double digits, indicating that the tax burden of enterprises is too heavy.

It is worth noting that since 2012, due to the impact of macroeconomic downward pressure and real estate regulation and control, in order to ensure the expected fiscal revenue, many places have increased the collection of various non-tax charges. In the first three quarters of 2012, the growth rate of non-tax revenues in Tianjin, Anhui, Guangdong and other provinces was 40, 30 and 18 percentage points higher than the increase in tax revenue, which fully reflected the practical dilemma of the implementation of fiscal and tax incentives for SMEs.

Financing difficulties

In addition to the compression of profit margins, financing issues have also been a “big mountain” that SMEs have difficulty to overcome.

Zhong Liang’s visit to Beijing came for the sake of funds. “Banks don’t give us such corporate loans, so they have to come to Beijing to find friends.”

According to industry sources, there is a widespread "linkage" problem in the LED industry. Many companies work with suppliers to rely on credit to ensure the turnover of corporate funds. According to the general rules in the industry, many people choose to write off to upstream raw material suppliers, while allowing downstream customers to owe money to maintain long-term corporate orders. In this cycle of arrears, once the sales market of the company is unstable or the profit margin is declining, and the product quality cannot meet the customer's requirements, the arrears chain will break.

Zhang Xiaofei, director of the High-tech LED Industry Research Institute, pointed out that if the supplier's credit period is extended, the bad capital situation of the company will be transmitted to the industry, and several suppliers will simultaneously ask the company for accounts. This will be like a bank run. When you ask for your account and you are out of stock, the company will soon get rid of it.

The difficulty of financing SMEs is an indisputable fact. The increase in external costs has led to an increase in demand for funds. In the case of tightening monetary policy, SMEs have limited access to credit resources and low satisfaction in financing needs. In addition, the effective collateral of SMEs is insufficient, and the difficulty of loans increases. Even if the loan is paid, the interest rate on the loan and the guarantee fee will make the SME unable to bear it.

According to the National Federation of Industry and Commerce survey, 90% of small and medium-sized enterprises have no loan relationship with financial institutions, and 95% of small enterprises have not obtained loans from financial institutions. There are 252,000 small and medium-sized enterprises in Beijing, accounting for 99.7% of the total number of enterprises in the city. The proportion of financing for these small and medium-sized enterprises from direct financing channels is only 2% to 5%; there are 340,000 small and medium-sized enterprises in Shanghai, and only 10% of enterprises enjoy Through the bank's loan service.

The figures also show that about 30% of SMEs in China are closed down each year, and about 60% of them are due to the lack of financing. What factors have caused the financing difficulties of SMEs?

According to industry sources, first, China's long-term macroeconomic policy orientation is not conducive to SME financing. The main problem is that macroeconomic policies adopt growth priority orientation rather than employment priority orientation. Second, because SMEs are less efficient, credit is insufficient, and risk is resisted. Due to weak capabilities, financial institutions are more inclined to finance large enterprises in terms of cost, risk, and income, resulting in insufficient financing for SMEs. Third, low interest rate policies have made SME financing extremely difficult.

Therefore, many small and medium-sized enterprises have to move toward the “curve loan” road, with the help of guarantee companies and microfinance companies to obtain bank funds indirectly, and some even forced to accept some of the bank’s almost demanding requirements, which greatly improved the financing of small and medium-sized enterprises. cost.

Helpless to leave

Under the dual pressure of profit squeeze and financing difficulties, the ending of SMEs is very helpless. Some bosses run away; some go bankrupt directly; some take risks and choose high-risk ways of private lending; some companies have to be forced to move. But no matter what method you choose, the ultimate fate of SMEs is worrying.

In the absence of legal financing, some SMEs have no choice but to turn to private markets, namely financing companies such as guarantee companies and underground banks. Although these channels can provide loans, the interest rates are surprisingly high and can lead to greater risks.

According to data from the People's Bank of China Wenzhou City Center Branch, in September 2011, Wenzhou's private lending comprehensive interest rate was 25.44%; Wenzhou private lending market reached 110 billion yuan, 89% of households or individuals, 60% of enterprises participated.

Zhong Liang believes that trade companies need cash flow most, and four or five months of goods do not flow, and cash is immediately cut off. "If you urgently need funds, borrowing usury from the private sector is equivalent to eating chronic poison."

Zhejiang Zhijianjiayu Co., Ltd. is currently mired in private lending. Huang Juyun, chairman of the company, said that since March 2012, her Zhejiang Zhijianjiayu Co., Ltd. has been loaned by banks such as Tailong, Pufa and Agricultural Bank of China for about 40 million yuan, accounting for 2/3 of its loans. In order to fill the vacancy of funds, Huang Juyun’s private lending has risen to more than 30 million yuan, most of which are usury. This is undoubtedly a fatal blow to a company with annual sales of more than 80 million yuan and a net profit margin of only 6% to 7%, which ultimately led to the fiasco of this company.

In the face of the increasingly severe employment environment of the "Pearl River Delta", many labor-intensive SMEs have to choose to leave.

Hong Ming operated a toy company in Dongguan. When the “double transfer” was initiated in Guangdong Province in 2008, he did not intend to leave Dongguan. At that time, he had calculated a logistics account and went to Hunan to open the factory. The raw materials were purchased from the “Pearl River Delta”, and the finished products were exported to Yantian Port in Shenzhen. Therefore, the rough estimate of transportation costs will be greatly increased from 4% of the original cost to 10%, and he is more willing to use this part of the cost to improve the treatment of workers. However, the sudden increase in salary and recruitment of the "Pearl River Delta" made him determined to leave.

Hong Ming introduced that they first transferred some production lines to Huaiji County, Zhaoqing City, Guangdong Province, and then went to Hunan Zhangzhou to open a branch. With the same number of orders completed, the total number of employed workers at the Dongguan factory has decreased by 20%.

But from the current point of view, Hong Ming's two transfers are not very successful. Because the employment in the Mainland also faces many problems, such as the employees in the Mainland like to live at home, the staff dormitory is unoccupied, so it is very difficult to find people from the surrounding towns; and many industrial parks have poor transportation facilities, many enterprises want I am equipped with a passenger car to pick up workers.

However, he said: "If the company wants to continue, it must be transferred, there is no choice. Although the labor costs in the Mainland are also rising, and the transportation costs, the cost of the mainland is similar to that of the "Pearl River Delta", but at least the mainland can Recruit people."

Some companies have begun to consider moving abroad. A toy business owner said that Vietnam, Cambodia, Myanmar and other places are where many factories are transferred, and the investment environment there is still ok. However, he also said: "The employment problems in those places have been looming. For example, the limited local labor force makes it difficult to expand the scale of enterprises, and the cost of labor is also rising in recent years."

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