Under the influence of the global economic downturn, every day brings new challenges to business owners and employees. Just after the middle of this year, someone summed up the keyword “just stay alive”. People around us are constantly being “optimized”, and many small and medium-sized enterprises are overwhelmed and declare bankruptcy.
The dilemma of small and medium-sized enterprise owners: equipment that cannot be stopped and orders that cannot be found
Lao Wu is the owner of a factory. He said bluntly that small and medium-sized enterprise owners have provided a large number of jobs for the society, but they cannot rely on capital operations to make money. All their wealth has been invested in factory decoration and machinery, and there are not many orders now. It is difficult to get the money back, but if you don’t work, the machine will be sold as scrap metal and you will lose all your money. If you continue to work, there will be at least a glimmer of hope, hoping that things will get better tomorrow.
We have all felt the various pressures brought about by the economic downturn. Data shows that 3.49 million businesses were canceled in 2021 alone. This year’s situation does not look much better than last year.
Owners of small and medium-sized enterprises are suffering, especially physical enterprises, which are struggling. Currently, there are at least two major problems facing them:
1. Difficulty in employment
Nowadays, young people are reluctant to enter factories. They prefer industries with large profit margins such as the Internet and finance, and pay little attention to manufacturing. Among them, companies with a little bit of money can only sit idle if they want to install automated equipment. Why? Because workers in these equipment factories don’t know how to operate them, they can’t learn them or remember them. Therefore, even if some bosses have money, they cannot carry out industrial upgrades, and production efficiency remains at the original state.
2. Low profit
The scale of small and medium-sized enterprises is small, capital accumulation is difficult to achieve, and they cannot match large enterprises. Moreover, this factor is difficult to eliminate, which leads to relatively low production efficiency. However, the input production costs are too high and they cannot maintain competition in the market. Advantage. Most factories only do some assembly business, with high product duplication, low added value, and small profit margins. Faced with the rising costs of labor, raw materials, rent, etc., some companies are simply overwhelmed, and the shrinking industry orders have become overwhelming for some small businesses. The last straw for micro-enterprises.
Lao Wu said that taking his own factory as an example, he used to maintain orders from old customers and go to exhibitions to expand new customers. However, since this year, many old customers have not renewed their contracts and exhibitions have been frequently postponed. He made a calculation: For a company with 50 employees, if there is no work for a month, the company owner has to prepare a cash flow of 1.5 to 2 million yuan.
Regardless of domestic trade or foreign trade, the slowdown in demand has become the biggest challenge
Since March, the domestic epidemic has spread in many places, and “foreign trade centers” such as Shenzhen and Shanghai have been affected to varying degrees; blockages and breakpoints in the global industrial and supply chains still exist, and the prices of energy and some raw materials continue to run at high levels; the United States and Europe and other global Inflationary pressure in major economies has intensified, further compressing demand. In addition, factors such as the changing international situation and increasing exchange rate fluctuations have also brought risks and challenges to foreign trade exports.
“There is a big gap between the performance in the first half of this year and the same period last year and the year before last. The reason is that the non-woven fabrics we export are mainly used in the manufacturing of anti-epidemic medical products. Since the beginning of this year, the foreign demand for anti-epidemic medical products has decreased, which has caused our exports to be affected. It has a relatively large impact.” Wu Hai, the person in charge of Wuhan Haizhiyin Trading Co., Ltd. told reporters.
The impact of the domestic epidemic on Wu Hai Company is also obvious. Due to epidemic prevention and control factors, their key cooperative factories in the Yangtze River Delta have experienced major problems in production and shipment, and their efficiency has dropped significantly compared with previous years. This is to a large extent. This also affected the overall performance in the first half of the year.
“In the future, the market demand for categories such as non-woven fabrics will definitely not be as big as it was in the past two years. We are also actively changing our business development ideas and exploring other categories. During the working day, team members work against the time difference and run the supply chain during the day. , communicating with foreign customers in the evening, hoping to find new growth points.” Wu Hai said optimistically.
It is now mid-to-late August, and the market conditions are still bleak. The price of raw materials changes every day. It is difficult to receive orders. Either the raw materials cannot be bought back, or the products cannot be shipped. However, various expenses such as equipment maintenance, water and electricity consumption are still high. With such a large expense, life is difficult for any company, and the owners of small and medium-sized enterprises can only persevere in the “loss-making business”.
The external environment cannot control us, so we live a tight life but also look forward to good times. Gold 9 and Silver 10 are slowly approaching, hoping to bring good news to the market.