In the face of unscrupulous orders, Mr. Chen can still keep his brows in his hands. Mr. Chen said that the continuous increase in raw material prices is currently the biggest pressure on companies. For instance, a small piece of plush on the top of a high-top shoe is maintained at RMB 16/m in the first two months, but it can now be increased to RMB 62/m. Several times. Not only is the price of plush prices, crude oil prices and natural rubber prices have risen, and the cost of a pair of shoes has increased. Faced with the gradual increase in the price of raw materials, the pressure on the footwear industry is also increasing, making shoe-making business feel pressure.
Mr. Chen told the author that there are several specifications of shoes because the cost price exceeds the order price. In order to maintain customers, it is entirely at a loss. If this continues, companies will have to choose to close their doors and shut down in order to reduce economic losses.
Can’t make money, prefer to take orders less, and not even take long-term orders
Taizhou Tianyiqi Shoes Co., Ltd. is a shoe-making enterprise in Hengfeng Sub-district, which has the right to self-export and whose annual output value exceeds 100 million yuan. After decades of development, the company has grown and the development personality has tended to be stable. After each order signed with the company has undergone market analysis, the cost has been carefully and carefully calculated. "We locked in the net profit of each pair of shoes at around 20%," said Cai Yiqin, chairman of the company.
According to him, his company has two factory areas. The shoe market is on the edge of the old factory area. Although it is still in operation, neither the quality of the company's employees nor the overall image of the company is comparable to that of the new factory of Huichuan Wang. Some time ago, the new plant passed the acceptance test of “Laowai†and signed several production agreements. It can be said that orders were in hand at the beginning of the year.
Regarding the current rise in raw materials, Cai Yiqin analyzed that nearly two-thirds of the entire scale of Hengfeng’s enterprises will experience a “winter†in this wave of raw material prices. If the enterprise's economic strength is good and materials are fully prepared, the impact will be less; if it is frequently purchased, the impact will be even greater with the rapid rise in raw material prices.
He said that they locked in the profit goal of each pair of shoes at about 20%, and they did not make money. They would rather accept orders. Now companies are afraid to accept large orders and long orders, and most of them do not know how much to do. There were several "foreigner" orders that were pushed off by him.
Enterprises evade risks and take actions to reduce pressure
In the context of rising prices of raw materials, it may seem a bit difficult to increase sales. “Introducing refined management can save nearly 10% of the profits for the company,†said Wang Qizeng, chairman of Taizhou Qijiang Shoes Co., Ltd.
In front of the eyes, shoe-making enterprises that are in a state of “weak profit†can only introduce "fine management to profits," introduce fine management models, finely decompose each process on the assembly line, measure the process time, and rationally arrange personnel rationing to reduce Poor processes lead to the loss of raw materials.
Taizhou Tianyiqi Shoes Co., Ltd. also has a set of measures to avoid risks. “Our enterprises signed earlier orders. Although raw materials rose and the profit margin was almost zero, we targeted thousands of small businesses around Hengfeng, Muyu, and Chengbei. Because of their low management costs, we passed these orders through contracting. For them to do, but also to recover from each pair of shoes nearly 2 yuan of profit space, companies only need to send technical backbone to small business supervision on it.†Cai Yiqin said.
In addition, the company will try its best to convince its customers to strive to increase the prices outside the orders in order to reduce the impact of the current rise in raw materials, appreciation of the RMB exchange rate, and rising labor costs.
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