[International Footwear Network News] In early June this year, news of the collapse of well-known local enterprises in Wenzhou exploded one after another, and rumors of "a large number of small and medium-sized enterprises in Wenzhou closed down" spread like wildfire. Following the "wave of bankruptcy" in the Pearl River Delta in 2008, three years later, the Yangtze River Delta was shocked by the "wave of bankruptcy" saying that "one stone stirred up a thousand waves". When the news came out, the local government department immediately hit back at the rumors. Yesterday, "People's Daily" also joined the counterattack camp, writing an article to retort that the prosperity index of Zhejiang's private economy is still running at a high level, 64% of enterprises want to invest in emerging industries, and small and medium-sized enterprises have not "closed down".

 

The renewed trend of bankruptcy is clearly closely related to the economic situation. The trend of bankruptcy three years ago was concentrated in the Pearl River Delta, and the target of this rumor was the Yangtze River Delta. In addition, the reason for the previous trend of bankruptcy was the impact of the financial crisis and the sharp contraction of the export market. The reason for this trend of bankruptcy is the tight monetary policy, which has led to the tightening of the capital chain of small and medium-sized enterprises. In fact, the impact of austerity on the capital chain of small and medium-sized enterprises has attracted high-level attention. On July 2, Vice Premier Wang Qishan of the State Council emphasized that it is necessary to accelerate the transformation of the financial industry development mode from a strategic and overall perspective, and promote structural adjustment and reform and innovation., Comprehensively improve the level of financial services for SMEs, and take measures to alleviate the financing problems of SMEs.

 

Some economists said in an interview with Nanfang Daily yesterday that the rumors "hit" the Yangtze River Delta rather than the Pearl River Delta, which also reflects that the structure and economic cycle of China's economy are different from those in 2008. "On the one hand, policies have changed from lenient to tight; on the other hand, exports have rebounded, and insufficient domestic demand has become a key factor hindering economic development." Rumor has it that the "wave of bankruptcy" has swept across the Yangtze River Delta Three Banners Group, Jiangnan Leather and Zhejiang Tianshi Electronics. Yan Qin, owner of the restaurant chain Portmansi Restaurant, has "gone abroad" for his couple. The educational institution Sicily Education Service Co., Ltd. has suddenly closed down......

 

For a time, there were rumors that small and medium-sized enterprises in Wenzhou and even Jiangsu and Zhejiang suffered a "wave of bankruptcy", which was somewhat incompatible with the reality that Jiangsu and Zhejiang have always been the most active areas of China's private economy. Although there is no official data showing how many small and medium-sized enterprises in Wenzhou or Jiangsu and Zhejiang have closed down or are on the verge of closing down, under the double squeeze of domestic macro tightening and the downturn in the external market, many small and medium-sized enterprises have "serious operating difficulties." It is an indisputable fact. A number of official surveys in Wenzhou show that in the first quarter of this year, the profits of 35 major enterprises engaged in the export of glasses, lighters, pens and locks in Wenzhou fell by about 30% compared with the same period last year, accounting for more than a quarter of the losses. By June, a sample survey of enterprises in Wenzhou showed that 42.9 per cent of enterprises thought they were short of funds. It is understood that small and medium-sized enterprises in Jiangsu and Zhejiang are facing many survival pressures. Among them, credit shortage, difficulty in recruiting workers, RMB appreciation, salary increase tide, energy conservation, emission reduction and structural adjustment are prominent problems. Among the 2600 private enterprises tracked and monitored by the Zhejiang Provincial Administration for Industry and Commerce, 69.65 per cent said that the purchase price of raw materials had risen significantly compared with the same period last year, and 31 per cent believed that the current financing costs were too high. Some entrepreneurs and officials in Wenzhou lament that the difficulties of enterprises are far greater than those of the 2008 financial crisis. Liu Qiutong, a leather manufacturer in Longwan District of Wenzhou, described it as "everyone is very nervous, struggling and clenching their teeth."

 

Zhou Dewen, president of the Wenzhou Association for the Promotion of small and medium-sized Enterprises, said that if monetary policy continues to tighten and private lending interest rates continue to rise, more Wenzhou small and medium-sized enterprises will fall into the capital chain in the second half of the year. More reports pointed out that if the external environment and domestic economic policy direction remain unchanged in the second half of this year, 40% of Wenzhou's small and medium-sized enterprises will be in a semi-shutdown state by the end of this year. There was no data to support the response. After the rumors were issued, there was an echo soon. In early June, officials from the local banking regulatory bureau in Wenzhou said that an investigation team formed by the China Banking Regulatory Commission and the Zhejiang Provincial Bureau of small and medium-sized Enterprises initially believed that the "wave of closure" of small and medium-sized enterprises was "untenable". A person in charge of the Wenzhou Development and Reform Commission said that although there are currently some small and medium-sized enterprises closing down, compared with the 200000 huge base of Wenzhou private enterprises, the failure of a small number of enterprises to break the chain of funds is within the normal range. There is no evidence yet that small and medium-sized enterprises are in a wave of collective failures. Li Xunlei, chief economist of Guotai Junan, said in an interview with Nanfang Daily, "As far as I know, it is a reality that some companies are having a hard time, but there are no large-scale failures. And it is necessary to separate medium-sized enterprises from small enterprises, which are less likely to fail than small enterprises." After the Zhejiang Provincial Administration for Industry and Commerce issued the "Second Quarter Report on the Prosperity Index of Private Enterprises in the Province" to fight back the "wave of closures", the "People's Daily" yesterday also denied the relevant rumors with the topic "Zhejiang's private economy has not yet appeared. The report of the Zhejiang Provincial Administration for Industry and Commerce pointed out that in the second quarter of this year, the prosperity index of private enterprises in Zhejiang was 110.22, and it remained in a healthy high operating range above 110 for seven quarters, which was much higher than the lowest value of 89.46 during the 2008 financial crisis. The reporter found from the official website of the Wenzhou Municipal Government that the overall economy of Wenzhou remained stable in the first half of this year. From January to May, the city's total industrial output value and sales value above designated size increased by 17.7 and 18.2 respectively year-on-year, and the production and sales rate of industrial products above designated size was 97.11, a slight increase over the first quarter.

 

In addition, from January to May, Wenzhou's port foreign trade cargo throughput also increased by 242.87. Although there is no exact data on the closure of enterprises, Wang Tao, chief economist of UBS, also doubts the rumors of "closure" of small and medium-sized enterprises in Jiangsu and Zhejiang. "If there is indeed a more severe bankruptcy situation than before, then there will be a large number of unemployed workers, but the current reflection is the difficulty of employment." Wang Tao said to reporters analysis. Analysis of insufficient domestic demand or the root cause of the rumors It is worth noting that, unlike the Pearl River Delta that first exposed the "wave of bankruptcy" during the financial crisis three years ago, this time, the rumors chose the Yangtze River Delta. Lu Lei, a well-known scholar and vice president of Guangdong Institute of Finance, told reporters that this actually reflects the embodiment of different economic structures and economic cycles in the two places. "The global financial crisis in 2008 and 2009 caused external demand to fall sharply, and the Pearl River Delta, with an obvious export-oriented economy, was the first to bear the brunt; and although the external economy is still sluggish, the impact has been much weaker than during the financial crisis. The bigger problem in the macro economy is sluggish domestic demand. Rumors of a" wave of bankruptcy "in the Yangtze River Delta, where the inward-oriented economy is more obvious, reflect the potential problems in China's domestic demand." In Lu Lei's view, the PMI in June fell to 50.9 for the third consecutive month, a 28-month low, which illustrates this problem. "In addition, the country's large-scale projects are shrinking, and home appliances to the countryside and encourage car consumption and other stimulus policies have been withdrawn." Li Xunlei said that in addition to general production business, many enterprises in the Yangtze River Delta are also involved in the real estate market, and the successive regulation and control, including purchase restrictions, have made the capital chain of small and medium-sized enterprises very tight. "Although some cash can be recovered by selling the house, they are reluctant to sell it." "At the same time, the cost of raw materials in the upstream is rising, the supply in the downstream is oversupplied, and the terminal price is not going up, which makes the enterprises mainly doing domestic sales in the Yangtze River Delta feel trapped and unable to extricate themselves." Li Xunlei said. It is worth noting that under the continuous tightening of monetary policy, financing difficulties have also become the last straw to crush some small and medium-sized enterprises. A person in charge of the SME loan department of the Wenzhou branch of a large joint-stock bank said that currently only 10% of Wenzhou's SMEs have relationships with banks. Even if you can get a loan, the interest rate is very high. Shi Jinchuan, director of the Private Economic Research Center of Zhejiang University, said that the loan interest rate of private enterprises in Zhejiang has risen relatively fast, and the annual interest rate of more than 20% has become a common phenomenon, and the financing interest rate of some enterprises is even higher. In view of the phenomenon that some small and medium-sized enterprises have closed down, Li Xunlei and Lu Lei said that under the current economic background, it is normal for some small and medium-sized enterprises to close down, and they should survive the fittest rather than blindly regulate and control. "I don't think that the recent high-level emphasis on" taking more effective measures to effectively alleviate the financing difficulties of small enterprises "can alleviate the current predicament of small and medium-sized enterprises in Jiangsu and Zhejiang. Because banks are always "icing on the cake", not "sending charcoal in the snow"." Li Xunlei analyzed and said, "Of course, we should also reflect on whether the monetary policy is too tight, and analyze the reasons for the shutdown and closure of enterprises, so as to find a solution."