Since the second half of 2011, the winter of China’s hardware industry has finally arrived. In 2012, small and medium-sized hardware companies were suffering in an ice cellar. The three shortages and two highs left them with nowhere to escape. Bankruptcies, bosses running away, etc. came one after another, leaving them with no way to raise financing and no way to get loans. Finally, the government began to step in to rescue the market, and the banking industry began to relax restrictions on small and medium-sized enterprises. Based on the analysis of the current domestic macroeconomic situation and the international economic situation, this cold winter will last about a year and a half, and recovery may occur in the spring of 2013. So, can small and medium-sized hardware companies break out in 2012, break through the ice and usher in the warm spring of the industry?

The external environment with a wave of bankruptcies

The current main problem of the Pearl River Delta hardware industry is the severe decline in export sales. At the Guangzhou Spring Fair held not long ago, many exhibiting hardware companies faced The situation is: transactions in European and American markets have dropped sharply, while emerging markets are relatively active. There was an increase in the number of buyers from Europe and the United States attending the conference, but most of them were waiting and making inquiries. The actual transactions dropped by 19 and 24 respectively. Demand was released after the earthquake in Japan, and the number of buyers attending the conference and the number of transactions increased by 29 and 28 respectively. The turnover of emerging economies such as India, Russia, and Brazil increased by 9%, and the turnover of potential markets such as Africa, Asia, and Latin America increased by 39%.

The European and American markets where hardware companies traditionally export have experienced a serious decline, and due to the substantial increase in the cost of domestic production factors and the expectation of RMB appreciation, hardware companies are afraid to accept long-term orders. The rise of emerging markets such as Africa, Asia, and Latin America also requires a process of adaptation, and it is difficult to make up for the gap in declining sales in European and American markets. Therefore, due to the severe shrinkage of the traditional export markets in Europe and the United States, which account for the largest proportion, it is even worse for hardware companies that rely heavily on exports. Due to the sharp rise in labor costs this year and the continuous appreciation of the RMB, the profits of hardware companies have continued to decline, reaching the point of meager profits, and there has been a wave of bankruptcies.

Intrinsic reasons for the wave of bankruptcies

Due to geographical advantages, most small and medium-sized hardware companies in the Pearl River Delta region are export-oriented processing companies, relying on cheap labor to provide subsidies to foreign businessmen. Brand-name hardware products are produced with no brand, no innovation, no bargaining power, and only earn meager processing fees. Generally, they can only earn 5% profit. Now due to the sharp increase in labor costs and the continuous appreciation of the RMB, the profit is only 2%.

With the accumulation of China's national wealth and the prosperity of people's lives, the cost of living has continued to rise, and the demographic dividend has gradually disappeared. Nowadays, most young people in the 1980s and 1990s are no longer willing to work in the hardware industry, which is a hard and painful job. A tiring, low-paying job. When wages and benefits are low, no one is willing to work, and when wages and benefits are high, they are unaffordable, resulting in a serious shortage of workers for many hardware companies. Various internal reasons make it difficult for small and medium-sized hardware companies in my country to survive. Survival of the fittest, those who cannot adapt will be eliminated.

Experts and industry insiders said that they should transform and not change careers

The deterioration of the external environment and the troubles of internal problems have made the survival and development of domestic hardware and other small and medium-sized enterprises extremely difficult. Taking into account the difficulties of the real economy and the crisis of small and medium-sized enterprises, the state has made adjustments in financial policies, tax policies and other aspects to support small and medium-sized enterprises to tide over the difficulties.

1. The country’s two-pronged policy to warm the market

On October 12, 2011, the State Council provided policy support in response to the current plight of small and medium-sized enterprises and determined that through finance and taxation Two strong measures are taken to save small and medium-sized enterprises. So, with almost all sectors collapsing, can financial and fiscal support really prevent the industry from declining? Can small and medium-sized hardware companies take advantage of this trend to seize the opportunity, break through the tight encirclement, and win vitality? If these policies can really melt the ice of industry development and break out, it is something worth looking forward to. Spring may be not far away.

2. Small and medium-sized hardware companies may be able to break through the ice through group financing. On August 17, 2011, the Ministry of Commerce and the China Banking Regulatory Commission jointly issued the "Guiding Opinions on Supporting the Development of Joint Financing in Business Districts", aiming to encourage Small and medium-sized enterprises form a group to obtain financing from banks or guarantee institutions.

Illegal and illegal charges still exist. For example, some places use arbitrary charges to alleviate financial difficulties, some departments use their power to charge fees to seek departmental interests, and some grassroots law enforcement officers charge illegal fees to seek personal interests.

In order to consolidate the effectiveness of responding to the financial crisis, the third is since last year. China implements a prudent monetary policy and has raised bank deposit reserve ratios 12 times in a row. This year it has lowered bank interest rates twice in a row. The reduction in credit scale has further increased the difficulty of financing for small and medium-sized enterprises, especially small and micro enterprises. According to statistics, bank credit basically covers large enterprises and 80% of medium-sized enterprises, while 80% of small enterprises below the scale have no access to bank credit. A large number of small and medium-sized enterprises have solved their urgent needs through private borrowing. The borrowing interest rate has reached as high as 50%-100%, and the financing interest remains high. At present, my country's current financial system cannot solve the "bottleneck" problems of small enterprises such as few financing channels, small scale, and high interest rates.

Technological innovation capabilities are weak and production and operations are extensive. Fourth, most small and medium-sized enterprises are at the low end of the radical industrial value chain. The level of equipment is low, there is a shortage of professional talents, and there is a lack of independent intellectual property rights and brands. They mainly rely on "low cost, low price, and low profit" to compete. It is difficult to digest the factors of rising operating interest in a timely manner and adapt to the realistic requirements of changing development methods and adjusting and optimizing the economic structure. . At the same time, relevant departments have also taken active and effective measures to increase support for small and medium-sized enterprises.

Reduce the burden on enterprises. In 2012, the central government will allocate a total of 12.35 billion yuan in various special funds to increase fiscal and taxation support. A year-on-year increase of 13.4%. Focus on supporting technological progress, technological transformation, energy conservation and emission reduction, financing guarantees, etc. for small and medium-sized enterprises, as well as providing public service projects for small and medium-sized enterprises. Small and low-profit enterprises with annual taxable income of 30,000 yuan or less will be levied a half reduction in corporate income tax. The "five deferrals, four reductions, and three subsidies" policies for supporting enterprises and stabilizing employees' social security payments for enterprises in difficulty will be implemented. In 2012, this will reduce the burden on enterprises and increase subsidies by approximately 33 billion yuan.

Ease financing difficulties for small and medium-sized enterprises. In the financial sector, under the environment of prudent monetary policy, the second is to improve financial services. We have increased financial services for small and medium-sized enterprises, implemented differentiated supervision on financial services for small and medium-sized enterprises, relaxed the conditions for writing off bad and bad debts for small and medium-sized enterprises, and allowed financial institutions to withdraw loan loss reserves for small and medium-sized enterprises and pre-tax deductions for loan losses. Credit is provided to small and medium-sized enterprises that comply with national industrial policies and environmental protection policies. Vigorously promote the development of small and medium-sized financial institutions such as rural banks and small loan companies, accelerate the cultivation of credit guarantee institutions, and increase policy support for financial subsidies and tax exemptions.

Improve the quality of enterprises. Promote the rapid development of institutions that provide vocational training, management consulting, credit evaluation, entrepreneurial guidance, quality testing, innovative technology research and development and other services for small and medium-sized enterprises. Implement the National Galaxy Training Project for Small and Medium Enterprises and the Blue Certificate Training Project for Township Enterprises. The third is to improve the service system. In 2010, more than 20 million workers participated in various types of government-subsidized vocational training.

Accelerate structural adjustment and industrial upgrading. Vigorously implement the small and medium-sized enterprise informatization promotion project and the small and medium-sized enterprise intellectual property strategy promotion project. Among the special funds for the development of small and medium-sized enterprises, the special funds for technological transformation of small and medium-sized industrial enterprises, and the innovation fund for technological small and medium-sized enterprises, the fourth is to strengthen technological innovation. Support technological progress, technological transformation, technological innovation and other projects to promote industrial optimization and upgrading of small and medium-sized enterprises. With the support of policies such as international market development funds for small and medium-sized enterprises, import tax rebates, preferential import credit, and import credit safety, the scale and quality of foreign imports of small and medium-sized enterprises have also been steadily improved.