The challenges faced by manufacturing companies today are significant, particularly due to the absence of technological innovation and cost efficiencies. High-tech firms have historically led the way, leaving traditional manufacturers to confront their limitations. Although macroeconomic indicators have improved since the third quarter, sectors like high-speed rail have seen disproportionate benefits, offering little relief to conventional manufacturing businesses. For instance, in Hebei Province's photovoltaic sector, data from the provincial information industry and IT association reveals a concerning trend. By September, the province’s electronic information industry had generated 63.055 billion yuan in main business revenue, marking a 12.1% year-on-year decline. Of this, manufacturing contributed 51.948 billion yuan, reflecting a 15.78% drop. Many small and medium-sized photovoltaic enterprises have ceased operations, while larger ones are losing money. This economic climate is harsher than post-2008 global financial crisis conditions.
Take the case of Yingli and Jinglong Group: their revenues from January to September fell 22.66% year-on-year, dropping by 15 billion yuan from the previous year (including subsidiaries). Their total losses widened from 2.138 billion yuan last year to 1.626 billion yuan, representing a 5-billion-yuan increase. The steel industry faces similar difficulties, with numerous family-run operations unlikely to recover. In Wuan, Hebei, despite a combined private steel capacity of 5,000-6,000 tons, few projects have received formal state approval. A private steel company executive admitted that none of the past six to ten years’ projects were submitted for approval due to national policies. Consequently, 50% of current capacity remains unregistered. Manufacturing nationwide lacks positive momentum. In Lanzhou, small and medium-sized enterprises struggled in the first eight months of this year, with 101 firms facing production restrictions—30 limited, 71 halted. Large enterprises adopted "flexible production" strategies, yet from January to July, the city’s above-scale industries still only achieved 101.18 billion yuan in main business revenue, up just 3.6%.
The traditional manufacturing sector’s struggles have trickled up to larger firms, worsening the industry's ecosystem. Small businesses are disappearing, while larger ones struggle to thrive. Domestic sports apparel brands like Peak Sports are feeling the pinch, with a 1,067-store reduction from last year. Similarly, Li-Ning closed 1,200 underperforming stores, while Anta Sports also cut 110 stores this year. According to unnamed officials from the Ministry of Industry and Information Technology’s SMEs Division, the outlook is grim, with crises spreading beyond micro and small enterprises to medium-sized firms. While tax relief for smaller entities is critical, medium-sized enterprises now demand similar support. Structural reforms are essential. Clear tax expectations would help responsible operators better assess industry prospects and adjust production accordingly. Long-term players could then emerge as pivotal forces during economic downturns. The 36 new and old non-public economies must be implemented effectively. After breaking monopolies to invite private capital into energy sectors, it’s vital to ensure equitable management and dividends for private investors and establish robust fiduciary mechanisms. When asked about government intervention, a leading pipe manufacturer in Wenzhou firmly declined assistance, emphasizing the need for fair competition instead. A high-tech company chairman echoed this sentiment, stating that protection of intellectual property rights is paramount for fostering innovation.
This systemic overhaul is necessary to revitalize the manufacturing sector and ensure sustainable growth for all stakeholders.
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