Casual Wear Industry Survey: Why "Outlanders" Go Bankrupt

In the past year, many companies reached the crossroads of development. On December 31, 2011, the day before New Year's Day, Dongguan Wild Garment Co., Ltd. informed all employees that they had started a collective holiday on New Year's Day, and the company seemed to be doing as usual.

However, on January 2, just after entering the New Year, the company's employees suddenly discovered that the company's Second People's Court sealed the company's door, and the company's "bankruptcy notice" and a "solicitation of all employees." The company executives are collectively missing and unable to contact.

The posted "Complaint to All Employees Book" briefly reviewed the reasons for the bankruptcy of the company and the difficult process of the boss to save the company. It also explained how the salary was issued in the near future and hoped to get employees' understanding.

Dozens of material suppliers and processors caught by surprise caught the Humen town government in an instant and asked the government to solve the problem. The police deployed a large number of people to maintain order. According to incomplete statistics, Chen Churong, the owner of the wilderness company, owed more than 20 million yuan of raw materials and processing funds.

There was a "premeditated" bankruptcy on January 2 at 7:00 am this unusual phenomenon, which opened the wilderness bankruptcy company's prelude.

“In the morning, after the company settled the salaries of all the people, it wasn’t long before the court sealed the seals.” Zhou Xiaogong is the outgoing manager of the Wilderness company, but like other mid-level and grass-roots colleagues, he did not receive it in advance. Any notice.

"Bankruptcy came too suddenly." Zhou Xiaogong said that just 40 days ago, the company also participated in an industry-renowned trade fair held in Humen. For the two days of December 30 and December 31, 2011, the company still went to work as usual, and requested all suppliers and processing companies to desperately rush shipments. The total amount of orders for the company’s inbound and outbound purchases over the two days amounted to several tens of millions.

According to the staff Song **, on the eve of the New Year holiday, the company is still operating as usual. But when she returned from a business trip, she found that the company had gone to the building.

“My order signed on the 26th was closed down after a few days. It was far too ridiculous.” Mr. Shen, who was making fabrics, was the first time to cooperate with the company. He did not expect to encounter such a result.

Like Mr. Shen, dozens of franchisees and suppliers have the same experience, and some processors are owed processing costs up to 2 million yuan.

After the bankruptcy, statistics show that as many as hundreds of suppliers are owed the same amount of money as Wang Chuanbao, "more than 100 foundry companies, dozens of raw material suppliers, were owed 7 million yuan and 13 million, respectively, if plus The franchisee’s deposit and payment, the company owed more than 20 million yuan."

In fact, in 2011, the Humen court of the Dongguan Second People’s Court accepted eight cases of suing the wilderness company, and the total bid was more than 2.66 million yuan.

In the course of cleaning up the wild company’s fixed assets, the sealed seals were removed. It was discovered by the suppliers and the company’s employees that the company’s door seal on the gate was on December 30, 2011, but the seal was on the morning of January 2, 2012. Only posted at five or six, which is quite embarrassing.

At the gate of the Wilderness company, Wang Chuanbao, who is the head of the foundry company who has owed nearly one million yuan, said that “it is estimated that on the day of closure, all valuable fixed assets and inventory have been removed.”

In this regard, the Dongguan City Second People's Court Humen court found that the company’s chairman Chen Churong decided to close the company due to the company’s debt indebtedness. However, he was concerned that the supplier had robbed the goods and had consulted with his attorney on whether they could "shift" the previous seal of the court and sealed the company's entrance. Although the lawyers cautioned him that his actions were illegal, he still disqualified them. On the morning of January 2, Chen Churong personally posted the six seals posted by the Second People’s Court of Dongguan City on December 30th to all entrances of the company, hoping to avoid looting.

The "statement statement" issued by the company also stated that due to poor management and lawsuits, the company had actually been in a semi-discontinued state in November 2011. The only reason for the existence of the company is to raise funds to pay employees.

Regarding the transfer of court seals, the statement stated that due to the fact that the company still owed employees nearly 2 months of wages as of December 30, 2011, “the company’s management is afraid that employees will see unnecessary fluctuations after seeing the seals of the court, causing the company to From the perspective of 'maintaining stability', it was decided to remove the seal after the judge left, and at the same time closed the finished product shop on the third floor, in order to protect the company's property from being completely transferred to the court for processing.

As for the reason for the disappearance of senior executives on January 2 in the same day, the "statement statement" also explained. Wilderness Company stated that on January 2nd, the company commissioned a certain media to publish the disperse announcement that “the company’s shareholders and management can imagine the violent reaction that the company’s creditors may have after seeing the announcement” and decided to “temporarily avoid” to avoid "Unnecessary incidents occur."

For some creditors suspecting that the company had transferred the assets sealed up by the court, Wilderness promised to all creditors in the “Situation Statement”: “If anyone in the company, including nearly 200 employees, has transferred company assets that have been sealed up by the court or not sealed up by the court The behavior, legal representative of the company and directly responsible person are willing to assume all legal responsibilities. At the same time, he hopes that the people's court will verify the list of sealed assets against December 30th, 2011 and confirm whether the company has transferred the sealed property.”

The “situation statement” concluded that the company admitted that its “transfer of court seals” and “temporary evasion” were “extremely inappropriate” and may even be suspected of violating the law, but in such special circumstances, the company’s actions are also “to protect the whole The frustration of the creditor's interests."

"Indecent people" inventory information shows that Dongguan City Wild Clothing Co., Ltd. was founded in June 1999 in Humen Town, is a professional R & D, production and sales of large-scale well-known apparel companies. The company has more than 20,000 square meters of design, research and development, production base, more than 8,000 square meters of high-grade office buildings, more than 1,000 employees. The company has three well-known clothing brands, namely, "Outlanders", "Easto", and "Aotu". The "alien people" have successively obtained titles such as "China exempt product" and "Guangdong famous brand". There are more than 20 distributors and more than 400 specialty stores in the country.

According to Zhou Xiaogong, in recent years, the scale of the company is gradually shrinking. Its brand has gradually shrunk from three to only one brand of “alien people”. In July 2011, the company began to try to operate the company and removed the factory. At present, there are only 200 employees. In the domestic casual wear market, the wilderness company's share is not low, especially in the northern market, and the company has more than 400 stores in China through direct sales and franchise channels.

Wilderness company accountant 冼 ** entered the wilderness company in 2003. She told the reporter: “The development of the company has been booming all the time.” Hey said, but in 2010 many of the company’s apparel sales did not go out, causing a lot of inventory, and capital flows began to break.

Zhou Xiaogong also frankly stated that from 2009 onwards, the capital chain of the company could be felt to be tense. At that time, the speed of getting goods from the company was significantly slower. For instance, some foundry goods that needed to be settled by cash had to be taken by the company for a long time. However, the company's order volume is relatively stable. Before the bankruptcy, even if there was no stocking, the company's summer orders in 2012 were as high as more than 300,000, compared with the same period in 2011, this data also rose slightly.

At the same time, due to the fierce competition in the casual wear industry, the brand recognition of “foreigners” has been declining year after year at retail terminals. A franchisee of the Wilderness company in Fujian told the reporter that “The products of the “Xinxiangren” are not too innovative, compared with other casual wear brands, they are very different from the needs of the development of the times. Therefore, the average monthly sales of the shop is from 20 Million yuan was reduced to 5,000 yuan, and many franchisees also withdrew from joining the brand."

The consequence of the inability of orders and markets to hedge is that the company’s inventory has increased significantly. Zhou Xiaogong revealed that before December 2011, the company’s 4,000-square-meter warehouse was completely filled, and it was estimated that there were several hundred thousand inventories. If the product backlog is in the warehouse, it cannot be converted into actual sales. As long as there is a backlog of clothing in the warehouse, it will consume the profits of the company selling 2-3 pieces of clothing.

By 2011, the company's business continued to deteriorate, so that suppliers have been reluctant to adopt the "after-sale settlement" approach to the field, and demanded "cash settlement", the company's capital chain instantly broken.

Although owner Chen Churong had mortgaged all his private property, he used 8.5 million yuan from the bank. However, the company was still under tight funding and failed to pay processing fees and payment on time, resulting in the prosecution of dozens of processing plants and suppliers. The company decided to go bankrupt.

This is only the beginning of "the increase in raw materials and labor costs last year, resulting in an increase in corporate spending by about 30%, which is too much pressure on the company." Said Li Shengzhi, executive director of Guangzhou Crawford Company Limited, when talking about this wave of closures.

At present, the appreciation of the renminbi, the increase in costs, and the reduction in the demographic dividend have affected bottlenecks in the manufacturing industry. Take Wilderness as an example, labor costs have doubled. In the past, a launderer had a monthly salary of more than 1,000 yuan, but now the monthly salary of 3,000 yuan is still unable to recruit people. In 2007 and 2008, the company purchased cotton, yarn, chemical fiber and other raw materials for about 40-50 yuan per kilogram, but rose to 60-80 yuan by 2010. The manager of the company's Purchasing Department revealed that with the cost of rent, utilities, etc., the cost of a down coat and windbreaker product rose by at least 15-20 yuan.

"By tightening the banking system, it has a fatal impact on the development of apparel companies." Some scholars said.

Obviously, for many companies, banks suddenly tightened and became the last straw to overwhelm many companies.

Indeed, in the past year, many companies have come to the crossroads of development.

At present, the tide of closure of the garment enterprises in the Pearl River Delta has not yet appeared, but the capital chain is very tight, and many companies have already appeared in arrears.

Wang Chuanbao also revealed that among the clients he had contacted, other companies had officially notified that they would close. There are also garment companies that are significantly reducing their production scale. A person in charge of a clothing company admits that he once had three processing plants and has closed two at present. There are not a few companies that have reduced the size of their businesses by nearly 50%.

Similarly, in Shaxi Town, Zhongshan City, where leisure clothing is used as a business card, there are thousands of large and small clothing companies gathered in this small town. However, since 2011, thousands of garment enterprises in the town have suffered unprecedented difficulties due to rising raw material prices, rising labor costs, and reduced international orders. According to statistics from relevant departments in Zhongshan City, more and more small and medium-sized garment enterprises may face suspension of production or closure due to their inability to withstand the pressure of production costs.

A survey also showed that the cost of small and medium-sized garment enterprises is difficult, and the promotion channels for preferential support policies are narrow, and taxes, manpower costs, electricity shortages, and poor implementation of general policies are still common problems faced by companies.

To be sure, if the comprehensive living environment of SMEs is not significantly improved, then bankruptcy will definitely be more than just a “homeless person”.