Shrinking profits force Chinese shoe-makers to quit

Tag : closed shoe
Shrinking profits force Chinese shoe-makers to quit Wednesday, July 02, 2008
BEIJING: Hundreds of shoe makers in southern China have closed downthis year as profits slumped due to the rising yuan, higher costsand a weakening demand overseas, industry insiders said on Tuesday.

Around 500 shoe factories, or 10 per cent, in Huidong county inGuangdong province have closed, Mingdanni Shoes Co owner Ye Huatold AFP. Huidong is on the Pearl River Delta, the worlds largestfootwear production centre, which lost a total 2,331 shoe firmsbetween January and May, the official Xinhua news agency reportedon Tuesday.

Customers from the United States and Europe have reduced sincelast year due to the appreciation of the yuan, Ye said.

We are under big pressure and it feels like its hard to breathe.The Chinese currency has appreciated about 20 per cent against thedollar in three years, making the countrys exports more expensive,and therefore less attractive, to foreign buyers.

What makes matters worse is costs are increasing dramatically. Someraw material prices have doubled while domestic inflation hasspiked and international oil prices have soared. Costs are rising... but the price of my shoes is lower than last year. All thesehave squeezed my profits, Ye said, adding the profit margin forhis shoes is 80 per cent less now than it was a year ago.