Making the shoe fit

Workers assemble shoes in a shoe factory in Wenzhou. Provided to CHina Daily

According to statistics provided by the Wenzhou Shoe and Leather Industry Association, over 800 of 2,761 shoe manufacturers in the city either shut down or stopped production in the past nine months, owing to a lack of orders.

"Most of those companies got into trouble because of lack of orders, almost zero profit because of the appreciation of renminbi (RMB)," said Xie Rongfang, secretary-general of the Wenzhou Shoe and Leather Industry Association.

Xie added that the profit margin for local SMEs is getting smaller, while the expenses for labor and materials kept growing, and the appreciation of RMB brought more and more impact.

In addition, experts suggested that SMEs need to focus more on the quality of their products at the moment.

"Applying the machine to replace workers or moving certain production lines overseas to save on labor costs, as a long-term plan is also a good option for the potential medium-sized enterprises," said Rui Meng, a professor of finance and accounting, at the China Europe International Business School in Shanghai.

From a long-term perspective, Rui advised that the SMEs had better enhance the quality of their products with more innovative techniques in order to stand out from tough competition with unique branded products.

SMEs in Wenzhou have already caught on that it is the time to solve the quality problems and deal with the high costs of labor by moving away from the traditional manufacturing style.

"Some of the SMEs in the association have bought machines from Italy, to replace hundreds of workers with 10 to 20 university graduates, to save the labor costs and manufacture high-end products with higher quality and price," said Xie from the Wenzhou Shoe and Leather Industry Association.

Xie added that mechanical shoe manufacturing with high standard items for famous brands, is the only solution for the shoemakers if they want to expand their profit margin and jump out of the traditional shoemaking industry.