2014-08-08

Crisis for SMEs Worse Than in 2008; Many Shoe and Textile Bosses Have Fled Fujian

"Compared to the 2008 financial crisis, this round of SME crisis will be even more serious." Fujian Runfengtang IT Chairman Lu Yao told a 21st Century Business Herald reporter. "All the companies exposed are large companies that have impact, and nobody pays attention to the many small companies going bankrupt." He's referring to the cases of bosses fleeing their publicly listed companies in Hong Kong and Singapore. One case is Eratat Lifestyle (FO8.SI) hasn't paid its employees since the end of 2013, their factories have been shut for several months. Another is the more recent case of Fujian Nuoqi (1353.HK). An industry insider says, "Everyone is afraid their creditors will disappear." When one of the large companies goes down, a lot of small upstream suppliers go bust and take down even more companies in their wake.

Lu Yao goes on to say that these companies need to transform. Previously, they would expand into retail, open shops with their own brand and advertise, but this time is over. There are possibly hundreds of companies around ¥500 million yuan in size that could go bankrupt if they don't change.

福建多鞋服公司老板失联 若现倒闭潮上百家都有可能
Recently, following the Hong Kong listed company Knoch shares (01350.HK) escaped chairman Ding Hui is confirmed lost contact, Quanzhou enterprises exposed and then another several similar incidents. The same as the fast fashion brand Hope Royce (HOPERISE), Singapore-listed companies crocodile Wright (FO8.SG) were lost to outgoing boss, Wages news.

"2008 and the financial crisis than when the crisis this round of SMEs to be more serious cases. "August 7, Fujian Ruifeng Lu Yao, chairman of the Church of information technology for the 21st Century Business Herald reporter said. As has worked in a number of shoes and apparel companies, senior executives brand marketing people, land away to the crisis already hunch, "all have been exposed to some influential big business, and many small businesses bankrupt nobody concerned, too and more. "

The collapse of the traditional shoes enterprises in turn involves the whole industry chain, many small upstream suppliers will therefore bankruptcy, a chain reaction resulting in many small suppliers to quickly arrived to hear some news related to debt collection companies. "Now panic, afraid of his own creditors suddenly disappeared." An industry source said.

Knoch is not the case

July 25, Hong Kong-listed companies in Fujian Knoch Ltd (1353.HK) issued a notice saying, chairman Ding Hui lost contact, this time from the company for six months, but the listing.

Knoch clothing listed earlier this year when the industry was known as "put the satellite" because the case of the traditional garment industry downturn, Knoch can contrarian, gave a lot of the clothing business confidence. But such a company, the chairman but no sign "disappeared", many suppliers are still wages claims.

Ding Hui wound rumors debt due to poor management and escaped lost contact, but so far, lost to reason is not clear, but escaped and was able to confirm, and premeditated.

July 31, Knoch board of directors, said this year on January 27 and April 3, its wholly owned subsidiary in Hong Kong, the international fashion Knoch Bank [ 0.69% funding research report ] account is transferred to a total of 82.28 million yuan a British Virgin Islands company accounts; while 27 January and 31 March this year, Ding Hui has instructions Knoch fashion in Bank of Communications Hong Kong Branch bank accounts 1.6 million yuan and 250 million yuan was transferred to Knoch fashion Located in Xiamen International Bank bank account. This means that Ding Hui has four times from January to April transfer Knoch company funds accumulated 228 million yuan. Currently, Knoch had been reported, although said normal operations, but the store has clearance to return the funds in the state, and some suppliers have stopped supplying.

Ding Hui lost to the storm is not over, the same as another fast-fashion brand in Quanzhou area "HOPERISE (Hope Royce)," the boss also transferred lost contact last week. August 3, there is news Hope Royce boss Zhang Rui table lost contact, but could not get through the phone supplier Dunning. It is understood that the brand's business situation is not good, but there was cooperation with the firm over the bank's lending has terminated its relationship. The news from Dongnanzaobao said, though the company lost contact with the owner, but the company is still in operation.

In fact, the boss has long been lost to the situation in Quanzhou clues, but because Notch is a listed company and has attracted media attention. Shoe listed in Singapore, Fujian Jinjiang crocodile Wright Group factories shut down for several months been discovered, from the beginning to the end Wages, and can not contact the person in charge.

Statistics show that crocodile Wright founded in 1983, formerly Tai Yang footwear factory, crocodile Wright declared himself done Jinjiang first pair of sports shoes. 2008, crocodile Wright listed in Singapore, the multi-brand operation, owns two menswear brands, five molding production lines, more than 2,000 employees.

But employees disclosed, the company from the end of 2013 before the holiday has been Wages, executives said normal operations after the holiday and then back pay. However, this trailer is six months, since the staff also did not get the wages owed. There are currently involved in rights crocodile Wright Group's crocodile Wright Development Co., Ltd. and its subsidiary Hemingway light footwear and other employees.

Employees to apply for arbitration in May, companies promised to reissue Wages in the end of July, however, is but an empty joy. According to 21st Century Business Herald reporter, currently still relevant employees rights, and the companies can not contact the person in charge.

Three factors overwhelmed SMEs

Before a sports brand executives 魏红涛 in an interview with 21st Century Business Herald said most of Quanzhou shoes enterprises are traditional enterprises, the majority of enterprises in the previous rapid expansion and upgrading and transformation no times, while is still the traditional mode of thinking during the operation.

"A lot of small brands or brands that do is shop is advertising, but that era has passed, the need for the retail market today, companies thinking seriously out of line with market demand."

Publicly available data show that as of November 2012, Fujian Jinjiang operating income reached 20 million yuan of the total number of industrial enterprises more than 5200, the cumulative value of more than billion enterprise reach 1580. In these companies, the traditional shoes enterprises occupy over half, someone joked that the CCTV sports channel as "Jinjiang channel", while celebrity endorsements are everywhere Quanzhou unknown brand, is evident.

Lu Yao said that before 2008, a large number of small brands through channel expansion and staking can earn part of the money, which some enterprises have been listed before the 2008 financial crisis, is now operating well; And then the second batch Having gone through the test of enterprise financial crisis has done to survive the market, based on better business fairly normal; recent years, the third installment of the enterprise has emerged, but these brands because of the impact the environment and the business model, in fact, the brand foundation is not compacted, reluctantly listing, financing and liabilities not, no way to use a lever to balance their operating capital.

Previously, there are rumors that Knoch chairman is listed before too much debt leads to lost contact.

In addition to the forms and business model, the impact from e-commerce is also 魏红涛 and land away frequently mentioned. 魏红涛 that many SMEs in the impact of the Internet did not make a change, still follow the traditional advertising model plus stores are doing, most of the funds are wasted in sight, and the target population does not receive a valid message. "The market product homogeneity serious, thought patterns and traditions, but also by the impact of the current e-commerce, the high cost."


And Lu Yao also said that at present a brand several hundred stores, or even thousands, of which there are seven, eight in a flat state business, and even some still losing money, through a simple off, stop, and, transfer does not solve the performance deterioration of the situation. "Last year, a 200 million-scale women's brands to find us doing brand consulting, the result of inventory has more than 100 million yuan, season clothing sold only 2 percent, many of these companies."

Traditional shoes and apparel companies operating in the traditional mode of thinking more difficult, stretched liquidity has become the norm. Quanzhou person on a 21st Century Business Herald reporter said that at present the traditional shoes enterprises usury has reached seven points, not who can borrow. The bank approved the loan for the traditional model has a lot of caution. "A lot of companies have to look for an intermediary to talk to the bank loan begged drag. Simply not on, and this year is not on, then how could the bank lending next year." Lu Yao said.

"The traditional shoes and apparel companies 500 million yuan scale transformation within if you do not have a risk, in fact, the business now has been very difficult. Event of closures, the number of one hundred are likely." He said.




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