Reflections on the Dilemma of China's Dongguan Manufacturing Industry

Wed Jun 08 17:09:03 CST 2022

Reflections on the Dilemma of China's Dongguan Manufacturing Industry

1.Not long ago, Premier Li Keqiang conducted special investigations on the traditional manufacturing industries in Dongguan and Shenzhen. It was found that the traditional manufacturing industries in the two places generally had great difficulties, especially the export-oriented OEM manufacturing industry in Dongguan suffered a greater impact. Its status as a "world factory" has been shaken; to make matters worse, as domestic labor and other production costs continue to rise, a large number of large-scale foundries have been transferred, reduced in scale, or even closed.

mation and upgrading.

For example, a shoe company opened factories in Cambodia in Southeast Asia to recruit workers. The 8-hour, six-day work system, plus overtime and other allowances, is about US$200-250, which is less than half of the shoe-making workers in Dongguan, making Dongguan completely lost. Labor cost advantage.

For example, shoe products exported from China to Europe are subject to a tariff of 15% to 20%, and the export tariff of Vietnam’s footwear to Europe is less than 10%. In particular, many traditional manufacturing industries in Dongguan have been transformed and upgraded, replacing labor with machines. Cost reduction can increase, but the lack of sufficient funds is in vain.

Facing the difficulties of Dongguan's traditional manufacturing industry and the reasons leading to the difficulties, our government and relevant departments have to think about three issues:

On the one hand, how to solve the labor problem of traditional manufacturing power? It's time to take it seriously. In the face of the inflection point of our labor force and the emergence of high costs, it is unrealistic to only expect companies to continuously increase wages to retain workers, because the traditional manufacturing industry’s ability to bear labor costs is also at its limit. For example, a $15 shoe in Dongguan makes less than 1 Yuan Renminbi is the best illustration.

In addition, enterprises cannot rely solely on enterprises to solve the problem of labor shortage. The government should bear certain responsibilities. For example, the number of jobs has been sharply reduced due to family planning, the state has not paid enough attention to labor skills training, and insufficient investment has led to a lack of vocational skills schools and enrollment. Wait.

Therefore, from now on, the government should bear certain responsibilities, and enterprises and the government can work together to solve the "labor shortage" problem, put forward labor demand according to the production scale and development plan of the enterprise, and then the government will guide higher education institutions or vocational technical colleges to implement orientation Cultivate and transfer to enterprises after graduation; at the same time, transform a certain number of ordinary colleges and universities in our country into vocational and technical colleges, vigorously cultivate vocational skill talents, and cultivate a steady stream of qualified talents for the traditional manufacturing industry.

In addition, the government should strengthen the construction of a social security system in cities where traditional manufacturing industries are concentrated, and provide migrant workers and mid- and high-level skilled personnel with institutional arrangements such as medical care, pensions, housing, unemployment, and children’s education, so that they can enjoy equal treatment with local residents. And status, solve the worries of enterprise employees, use the social security system to retain the technical workers needed by the enterprise, and avoid more traditional manufacturing enterprises from relocating to Southeast Asia and Africa.

On the other hand, how can the traditional manufacturing tariff issue be further reduced? The time has come without delay. The traditional manufacturing industry, especially the foundry manufacturing industry, survives in the cracks and has low profits. Although my country has implemented a series of preferential tariffs and other preferential policies for the traditional manufacturing industry, it seems that import and export tariffs have not yet been fully reduced. The burden is still heavy.

For example, for a pair of women's shoes in Dongguan, even if the price is 9 US dollars as the Cambodian price, the customer will still choose to place the order in Cambodia. This is mainly because of the high tariffs in China. The shoe products exported from China to Europe will cost about 15%~20%. The tariff is twice that of Southeast Asian countries, and Cambodia’s exports to Europe enjoy tariff-free preferences. Under such a tariff system, China's traditional manufacturing industry cannot be competitive; moreover, if the reform of import and export tariffs is not increased in time and tariffs are lowered, the traditional industry cannot be competitive in the future, and there is only a dead end.

In this regard, the central government should implement a system of differential tariff rates on import and export tariffs, and create a tax environment for traditional manufacturing industries to “release water to raise fish”, that is, to divide tariffs into traditional manufacturing, emerging manufacturing, and information industries. The industry should implement the lowest import and export tariffs as much as possible, and implement export-free or tax rebate systems for difficult traditional manufacturing industries to boost traditional manufacturing.

At the same time, it will further streamline the administrative examination and approval items of traditional manufacturing, reduce its additional economic burden, let traditional manufacturing go lightly, and moisturize traditional manufacturing with loose tariffs and low administrative fees, so that it can recuperate.

On the other hand, where should the capital for the transformation and upgrading of traditional manufacturing come from? It's time for everyone to gather firewood.

In addition to the high labor cost, difficulty in recruiting and heavy tariff burden, the traditional manufacturing industry represented by Dongguan is another important reason for the lack of its own reputable product brand and sufficient capital for transformation and upgrading. Brand is the foundation of corporate competitiveness and transformation Upgrading is where the vitality of corporate competition lies. If these two problems are not resolved, not only will it be difficult to revitalize the traditional manufacturing industry, but there will also be no chance of survival. Therefore, in order to make China's traditional manufacturing industry re-emerge on the road of revival, the government and relevant departments need to work together, so that enterprises can effectively climb the "slope" and lie down the "hurdles."

Specifically, the bank provides credit support for the current projects implemented by enterprises to replace labor with machines, reduce finished products, and improve production efficiency. The government has set up a risk guarantee fund specifically to provide credit guarantees for enterprises’ "machines instead of labor" transformation projects. Allow banks to make loans with confidence; at the same time, banks should also work with traditional manufacturing industries to eliminate profit-seeking awareness, reduce loan interest rates to a minimum, waive all intermediate business charges, and allow traditional manufacturing industries to truly share the "sunshine and rain" of preferential financial policies.

In addition, the government encourages traditional manufacturing innovation and product upgrades, strengthens intellectual property protection, and cooperates with relevant international property rights agencies to effectively protect China’s traditional manufacturing industries to form internationally competitive competitive products, and to achieve the results of transformation and upgrading. Obviously, enterprises with fast product innovation and replacement will provide financial rewards to promote the overall transformation and upgrading of traditional manufacturing industries and get out of the current operating swamp.