The Rapid Expansion Of China'S Footwear Industry Has Become An Economic Weakness.

China

At present, there are two plight of deterioration of investment and operation environment and serious surplus of production capacity. The rapid expansion of the footwear industry bubble has become the soft rib of China's economy.

China's footwear industry seems to be dependent on an unbalanced economic development mode: the result of increasing investment is to increase excess capacity in 2013 and 2014.

People are extremely worried about the danger of China's footwear industry bubble, but the author believes that the real threat to China's economy is greater and lasting: the footwear industry bubble.

Recently, a foreign company, Adidas, is closing down a factory in Huawei.

This is not the first multinational company to withdraw from "made in China". Obviously, it will not be the last one.

Recently, news also came out that it was going to close its Chinese factory and turn the production back to the United States. Before that, Nike closed its shoe factory in China. The number of Vietnamese made Nike shoes has surpassed that of "made in China".

The news of shutting down factories, moving to Southeast Asia, or even moving back to the mainland has never been interrupted in recent years. Behind it is "made in China" inevitably touches the ceiling.

Why is this happening? The rising cost of domestic labor is an important factor.

According to the relevant data, China's labor cost ranks third in Asia, the minimum wage is about two to three times that of India, plus welfare expenditure, the cost also needs to float 40% to 50%.

The average wage of Vietnam's manufacturing sector is about 1000 yuan per month, and India is about 600 yuan, while the eastern coast of China is about 2500 yuan to 3000 yuan.

The high cost of products and the recession of the global economy have greatly weakened the competitiveness of China's footwear industry in the international market.

At present, the embarrassing situation faced by China's manufacturing industry is: low price - pressure price competition - trade friction - export restriction - capital shortage - upgrading product structure is limited, this is a strange circle that can not go around.

More importantly, compared with the US, Japan and the European footwear industry, China's footwear industry is still lagging behind in the important factors of science and technology, quality control, management, professional technology and other high-end manufacturing industries.

For more than 20 years, the lack of core technology has been regarded as a curse that shrouded in the destiny of "made in China".

After the reform and opening up, Nike shifted the production base to China, but what China still cannot replace is the "head" of these brand holders.

This "brain", for industrial products, includes at least two things: one is technology, the other two is brand.

In the past more than 10 years, China has established a "empire" which can be regarded as a "cheap" factory in the world. Despite its abundant resources and manpower, China still lacks a globally recognized brand.

For a long time, China's export oriented economy is inseparable from the strategy of attracting foreign investment. It is the use of cheap Chinese production factors to enable China to enter the ranks of globalization, making China a truly "world processing plant".

For China's manufacturing industry, only satisfying the "win by quantity" and "OEM" in the world can only struggle at the bottom end of the value chain and are controlled by people everywhere.

Perhaps China is still locked in huge population resources and is addicted to the "world factory" assembly workshop.

But with the rise of labor costs, China's "demographic dividend" is gradually disappearing.

In the context of economic globalization, an important determinant of where to build factories is where to achieve higher profits.

Transferring factories to lower cost countries and regions does not mean abandoning the Chinese market. On the contrary, it is more likely to create higher value.

Back to the beginning, the bubble of China's footwear industry is more threatening to China's economy than the real estate bubble.

China's real estate is a bubble, but this bubble can not be punctured.

On the one hand, because of the lucrative profits of development companies, they have a strong ability to resist risks. On the other hand, although the state has issued drastic regulatory policies and "restriction orders", the market still has strong purchasing power.

Of course, it is still a difficult problem to predict how big the bubble of China's footwear industry will be.

But one thing is for sure, the surplus production capacity of China's footwear industry is growing, and will soon impact the market.

China's footwear industry seems to be dependent on an unbalanced economic development mode: the result of increasing investment is to increase excess capacity in 2013 and 2014.