Shocker! World's Second-Largest Shoe Maker Macrofoam To Lay Off 30,000

Date：2020-05-14 13:34:08

 king Of Shoes Hongfu To Lay Off 30,000 People

May 13, Taiwan media "CTWANT" reported: this year, the footwear industry is affected by the new crown epidemic, brand manufacturers cut more than 80% of  order, the footwear industry leader Bao Cheng has also been rumored to put unpaid leave.In addition, Hong Fook Industries, led by Zhang Cong Yuan, known as the "mysterious shoe king", has rumored that the Vietnamese factory will lay off 30,000 employees.

It is the second largest shoe manufacturer in the world, and the first largest shoe manufacturer of sulphurized shoes (shoes with "sulphurized steam technology" to improve the firmness, such as canvas shoes), including many companies such as Kinetixie, Liangxing and Dexie, with 150,000 employees worldwide. It is understood that the footwear giant Baocheng last year produced more than 300 million pairs of shoes, Fengtai last year also more than 100 million pairs, while the Hongfu Group for 160 million pairs. Say second place, it doesn't seem like much of a problem.
In the 1980s, Taiwan made a name for itself with an annual production of 800 million pairs of shoes, including Hongfu, Baocheng, Fengtai, Yuqi, Longdian, Qinglu, Kainan, Jiuxing, etc., all of which were internationally renowned OEM footwear factories, almost all of which started in central counties such as Changhua, Yunlin, etc. In the 1990s, these OEM footwear factories moved to the mainland and cooperated with each other from material supply, machinery and equipment to manufacturing.The top ten famous footwear brands in the world are customers of the Taiwanese footwear industry.

Cookler Makes Shoes "Iphoneize"

According to a shoe manufacturer, the current gross profit of shoe manufacturing is only about 8%, the number one threat facing Taiwan's shoe industry, in addition to the epidemic, another secret that can not be told is "NIKE production iphoneize, iphone CEO Cook was promoted to NIKE chief independent director in 2016, in recent years, threw out shocking news in the meeting, questioning "why mobile phone foundry manufacturing gross margin can be pressed to less than 3%, but shoe foundry manufacturing 8%?" This has become a major challenge for the shoe industry. "Now NIKE a bunch of executives from Microsoft and iphone are following the trend of bringing the business model of the tech industry into the shoe industry. However,shoes of many sizes, different sizes have to be adjusted for the module, the industry environment is different can not be compared, so the industry will still fight according to reason, try to maintain the gross profit." The shoe maker explained.

The footwear industry lamented that the 1, 2 years of the footwear industry has changed dramatically, in addition to the collective worry about NIKE production iphoneize, there are more and more brands directly to the supplier to call material, and then to the shoe factory production,under the strict supervision of brand owners, the cost is completely transparent, only processing fees are left to be earned, without the possibility of high gross profit.

Overseas Shoe Makers Fear 20% Shutdown

A Taiwanese shoe manufacturer in Vietnam said, "In early April, 30,000 Vietnamese factories applied to cease operation, but the Vietnamese government rejected the application and demanded that factories must be paid a basic salary in accordance with the law if they take unpaid leave.Many bosses are unhappy with the fact that they have to pay a base salary without an order, and think that they are less injured if they choose to redundant employees.”

A second generation of the footwear industry more revealed that the current footwear industry not only withstand the pressure of brand manufacturers, the industry in order to grab a single, more suppressed gross profit to the amount of price, we were pressed into no profit margin, but also to provide a cost analysis table so that the brand manufacturers kill prices, so that the gross margin is now less than 10%, the glorious period of making money has passed.

However, amidst the plight of order-cutting, high labour costs and depressed gross margins, the shoe industry, which mocks itself as a "wandering gypsy", But not looking forward to a government bailout.

"Previously, accounts receivable bills had a maturity of one to two months, now it has been stretched to half a year, and we have reflected to the Ministry of Economic Affairs and the HKMA that the application for bailout is only a deferred loan, not a loan, yet the government wants to pass on the consolidated statements of listed counter companies from SMEs." One shoe manufacturer, who did not want to be named, said, "Many shoe factories have long wanted to be listed, but they are stuck in the merger statement, and now they are applying for bailout, so they have to come up with the merger statement overnight, and no one can get it out. ”The industry lamented that June and July will be the most severe, with about 20% of factories shutting down, layoffs and unemployment will be even higher!

Although Taiwan's footwear industry is large, it is not without potential competitors. In addition to the threat of the establishment of Lu Gan, the more worrying is the rise of the Korean footwear industry in recent years, the rapid expansion of 200 factories in Indonesia, making the industry panic. The industry revealed that the Korean footwear industry has government support, there is also Samsung technology backing, in intelligent manufacturing far ahead of Taiwan, Taiwan's footwear industry if not step up, will be overtaken. In the future, intelligent manufacturing may replace a lot of manpower, and there is no need to relocate the factory to a more distant third world, but a slight mistake in the transformation process may also make the global market overturn.