China'S Low-End Manufacturing Such As Shoes And Clothing Has Been Slowly Strangled.

In the cigarette lighter factory of Wenzhou Xing Feng smoking set manufacturing Co., Ltd. (Winfire), Hannah Sun, the manager of foreign trade department, does not need to look at the economic data and knows that China's manufacturing industry is in a difficult position at present.

Earlier this year, a major foreign customer ignored the uncertainty of the global economy and no longer made new orders to the company, forcing the lighter factory with more than 100 employees to lay off 40 people.

Hannah Sun said: "shoe factories are in a worse position.

This is usually a very busy season for them in previous years, but this year many shoe factories simply stop production, and many migrant workers are dismissed and can only go home.

Hundreds of thousands of factories like Xinfeng smoking gear are being squeezed by factors such as rising costs, labor shortages, declining profit margins and sharp decline in overseas orders.

Because of the policies implemented by the government and some of the demographic and economic factors that are difficult to change, it has become increasingly difficult for China's low-end production to maintain. Many small manufacturing enterprises have been unable to operate.

China's official purchasing managers index (PMI) in November shows that this trend is nationwide: manufacturing industry, which accounts for about 50% of gross domestic product (GDP), has contracted for the first time in nearly three years.

Thursday's November PMI dropped from 51.4 in October to 49, falling below the 50 line of expansion and contraction.

The new orders and the new export orders index indicate that the situation will deteriorate. Factories are already losing staff, reducing raw materials and reducing production.

Wang Zhihao Stephen Green, director of research at Standard Chartered, said that "China's purchasing managers' index clearly conveyed the message that China's manufacturing industry experienced an overall, deepening contraction."

The first and most obvious reason for the slide in manufacturing is the decline in global demand, especially in the troubled European economies.

Liu Daosong, general manager of Dongguan Luca Angelo Leather Product, said that in the past two months, Anji's export to Europe has dropped by 40%, while in the domestic market, the cost has been rising despite the fact that the order has been kept well.

"Suppliers demand immediate payment, which adds to our financial costs," Liu Daosong said.

"Banks are strictly controlling lending to SMEs. Many of my friends are considering production cuts."

Liu Daosong's remarks show that many low tech products manufacturing enterprises are facing a series of long-term challenges in China's coastal manufacturing industry known as the "world factory".

As orders continue to decrease, many companies also face problems such as rising prices of raw materials, difficult loans, environmental compliance costs and rising labor costs.

For many years, the Chinese government has been implementing a policy aimed at promoting the manufacturing industry to climb along the value chain. It has strongly prevented the state-owned banking system from lending to the small and low technology producers of Xing Feng smoking set.

However, the vast majority of manufacturing enterprises in China are still in low-end industries such as textile industry. The rise in costs and difficulties in loans result in the fact that many manufacturing enterprises are slowly being smothered rather than climbing along the technological ladder.