Zhang Huarong: China's Largest Female Shoe Manufacturer To Welcome The "Second Spring"

The strength of shoe enterprises should go out to complete the global layout, including China's manufacturing industry, including the footwear industry, should extend the industrial chain, carry out industrial transformation and upgrading to meet the "second spring".

Huajian group, China's biggest female shoe maker, has finally made a successful road to its "going out" investment failure.

Zhang Huarong, chairman of Huajian group, said in an interview during the fifth world footwear development forum that after 2 years of hard work, the group has built 3000 shoemaking bases in Ethiopia. With the scale of production, the factory has begun to make profits.

　　 Go out again

Zhang Huarong said he is constantly exploring a route for Chinese footwear enterprises to go out and hopes to play an exemplary role in the future.

As early as more than 10 years ago, realizing that the cost of Dongguan would rise steadily, Zhang Huarong began to adjust the layout, while transferring some of the orders to Ganzhou, Jiangxi, he also went to Vietnam to set up factories. But in the past few years, Huajian's factory in Vietnam finally ended up closed. For the reasons for the failure, Zhang Huarong told reporters that Vietnam's shoe matching is not as good as the Pearl River Delta. Many raw materials need to be supplied from Guangdong, and the production efficiency is relatively slow. The comprehensive cost is not lower than that in the Pearl River Delta.

However, the failure in Vietnam did not stop the Huajian group's going out. In 2011, Huajian group became the first Chinese investment enterprise to invest in Africa, and was formally put into operation in January 2012.

Zhang Huarong believes that Ethiopia has certain advantages in developing shoemaking: on the one hand, Ethiopia's good grazing industry provides high-quality and cheap raw materials for factories; on the other hand, Ethiopia has sufficient labor resources, and half of the 100 million people are labor force. In addition, there is a very critical point. The country has obvious labor cost advantages. According to the data released by China's Ministry of Commerce in June last year, Ethiopia's "Oriental Industrial Park Investment Project" shows that the average monthly wage of Ethiopia shoemaker workers is only 800 Bill (about 262.8 yuan).

In the Huajian group's shoe making cost structure, raw material costs account for 50%, staff wages account for 30%, and factory buildings and other expenses account for 20%. Among them, labor costs have the greatest impact on shoe companies in different regions. At present, the workers in the Pearl River Delta have a monthly salary of 2400~3000 yuan, while the wages in Vietnam are only about half of that in the PRD, while those in Africa are even lower. According to Zhang Huarong's plan, Ethiopia invested 2 billion US dollars in the past ten years to build a strategic base to provide 100 thousand jobs for the local government.

　　 Shoe industry seeks second spring

The global footwear industry has been transferred many times, first in Europe, then transferred to the United States, in 1960s to Japan and South Korea transfer, in the 70 and 80s of last century, moved to Taiwan, China, to the mainland in the 90s of last century. Where will the future be transferred?

According to the statistics of the footwear association of Asia, at present, affected by labor costs, half of the world's most important shoe making bases in the Pearl River Delta region are transferred to the central and western parts of the country, and 1/3 of them are transferred to Southeast Asia.

However, some experts believe that the cost of Southeast Asia is also rising, and that the risk of transferring to Southeast Asia is increasing, while Africa has relatively more potential for development.

Yifu Lin, vice chairman of the National Federation of industry and Commerce and honorary president of the National Development Research Institute of Peking University, pointed out at the fifth world footwear development forum that from the perspective of cost accounting, Africa is the best choice and last stop for the transfer of labor-intensive industries, because at present, the young workforce in Africa is abundant and has cost advantages.

However, some people in the industry have reservations about this. Li Peng, secretary-general of the Asian Footwear Association, told reporters that the current situation in the Pearl River Delta shoe industry is very bad. About 1/3 of orders and millions of jobs have been transferred to Southeast Asia. It is inevitable for the labor-intensive footwear industry to shift along with the cost advantage. However, it is worth our vigilance that if we continue to develop according to the current trend, we may cause some domestic workers to lose their jobs.

Therefore, Li Peng's proposal is that powerful shoe enterprises should go out to complete the global production layout, and the government should give greater support to labor-intensive industries, and guide more shoe enterprises to move to the Midwest. In the above forum, most participants thought that the Chinese manufacturing industry, including the shoemaking industry, should extend the industrial chain and carry out industrial transformation and upgrading to meet the "second spring".

While going out, Zhang Huarong is also accelerating the development of Dongguan manufacturing base as a world shoe industry headquarters base integrating shoe research, trade, procurement, logistics and brand incubation. For the future success in Africa, he thinks there is still a question mark, because the promotion of Ethiopia project is not smooth sailing, which is closely related to local policies and other factors.

At present, Huajian group has 51 production lines in Guangdong Dongguan, Jiangxi Ganzhou and Ethiopia in Africa, with an annual output of more than 2000 pairs of women's shoes. Among them, Dongguan and Ganzhou two production bases have 42 production lines, 16 million pairs of high-end women's shoes annually.