Changeable market demand and soaring factory rent: dissolution of another large manufacturing factory in Shenzhen

 Changeable market demand and soaring factory rent: dissolution of another large manufacturing factory in Shenzhen

According to the open data of Tianyan app, the number of endowment insurance payers of Shenglong technology in 2018 was 1337, and that of unemployment insurance and medical insurance was 1468 (not disclosed in 2019). Shenglong technology employee Shen Ling (pseudonym) told the first finance and economics reporter that Shenglong technology does not recruit temporary staff, the number has been maintained at around 1500, since this year, the company will no longer recruit outside.

Why close Shenglong technology? Murata said the company decided to stop production and shut down the company because of the sharp decline in demand for its products and fierce price competition.

The amount of compensation for 12 years of work is over 140000

Shen Ling is an ordinary employee in the Shenglong science and technology factory. She told the first finance and economics reporter that the company issued the factory dissolution notice on November 9, and everyone suspended work from that day on. On the same day, all employees of Shenglong technology received the compensation scheme for employees who have negotiated to terminate the labor contract (case a) and the compensation scheme for early dissolution of employees according to law (case B) issued by the company.

In the Shenglong science and technology factory area, many walls have posted the compensation plan and the dissolution notice as well as the reply to some related questions. The first financial reporter noted that the negotiation compensation scheme a proposes that if the employee negotiates with the company to terminate the labor contract before 17:00 p.m. on November 20, 2020, and signs an agreement on the termination of the labor contract, the salary shall be settled to the date of termination of the labor contract. In addition to the legal economic compensation, the company will pay additional economic compensation for two months wages.

Under the promotion of the differential compensation scheme, most employees in the factory signed the labor contract termination agreement with the company before 17:00 p.m. on the 20th. Under the compensation scheme, an employee who has worked for five years will be compensated by multiplying his average salary of the previous 12 months by 7.

Changeable market demand and soaring factory rent

In recent years, the demand of smart phone market and other major markets has been diversified, the development cycle has been shortened, and the competition with overseas manufacturers has intensified, resulting in a very severe business environment. In the notice, Murata once again stressed the impact of market changes on the companys operation, which directly led to the closure of the large factory of Shenglong technology with 1500 employees.

It is understood that Shenglong Dongguang mainly produces coils, semiconductors, electronic ceramics and module products, which are mainly used in mobile phones, notebook computers, sound systems and vehicle electronic equipment. Murata said, the closure of the production subsidiary has a slight impact on the companys performance this year, and the company will strive to establish a stronger overall production and operation system.

One month before Shenglong technology announced its closure, Stanley Baide precision manufacturing (Shenzhen) Co., Ltd. announced that with the change of the overall market environment and the intensification of competition in the industry, the group had to restructure its business resources to enhance its market competitiveness based on strategic development needs. Since October 26, 2020, it will stop production and operation activities and dissolve Stanley Black & Decker in advance.

The changeable market demand constantly urges the upgrading of manufacturing products.

At the other end, rising factory rents and labor costs are also straining the traditional manufacturing industry. For the closure of the factory, the internal staff of Shenglong technology and the surrounding recruitment agencies also agreed that it was directly related to the rise of factory rent and high labor costs.

The first financial reporter visited several surrounding factories and found that the rent of the factory buildings in Baolong Industrial Park, Longgang District, Shenzhen city is about 24 yuan / m2 / month. However, for the enterprises that need to renew the lease when the lease is due, the factory rent may be a big increase once again. Mr. Zhang, an intermediary of factory building leasing, told reporters that now the factory leasing generally signs a lease contract of 3-5 years. After the lease expires, the landlord will make a small adjustment to the rent according to the market situation.

The small adjustment in the intermediary mouth has become the last straw to Mr. Yang, the boss of a mould factory in Shenzhen. Mr. Yang told the first finance reporter that his company had planned to move from Shenzhen to Heyuan City in Guangdong Province.

According to Mr. Yang, he started to set up a mold factory in 2009. The factory is located near Songgang, Baoan District, Shenzhen City, with a total area of 17000 square meters. The rent was 12 yuan / square meter / month at that time, and the lease term was 10 years. In 2014, the second landlord requested to increase the rent to 25 yuan / m2 / month. At that time, the profit of the factory was fairly good. In addition, we were working with heavy machinery, which was not convenient for frequent relocation, so we agreed. Mr. Yang said.

In 2019, Mr. Yangs ten-year lease of the factory expired, and the second landlord informed him that it could only be signed once every two years, and the rent was increased to 48 yuan / square meter / month. In this regard, Mr. Yang told the first finance and economics reporter, in this way, the companys profits are not enough to pay the rent.

Relatively speaking, the rent of the surrounding factories is less than 30 yuan / square meter / month.

In recent years, it has become more and more common for Shenzhens labor-intensive manufacturing factories to move away or announce closure. Employees of several labor dispatch companies told reporters of first finance and economics that it is more and more difficult to recruit workers for factories in Shenzhen, and the relocation of large factories has taken away Shenzhens labor force.

According to Tianyan data, from 2015, the annual number of registered enterprises in Shenzhen manufacturing industry has decreased year by year. From 2015 to 2019, the number of registered enterprises was 34034, 30970, 23540, 20107 and 13536 respectively. As of November 27, there were 10696 registered in 2020. The number of manufacturing registrations in 2020 is only about one-third of that in 2015.

On the one hand, the number of registered enterprises has decreased significantly, while on the other hand, the number of cancellation of original manufacturing enterprises is increasing rapidly.

According to Tianyan data, from 2015 to 2020, there were 1345, 1715, 1731, 2616 and 6282 of Shenzhens manufacturing enterprises, respectively. As of November 27, the number of cancellation in 2020 was 4634. Among them, the cancellation of manufacturing enterprises in Shenzhen in 2019 increased by about 240% compared with that in 2018, and the withdrawal of manufacturing enterprises accelerated.

According to Chen Wang, now he can only recruit about 15 workers a month. According to the standard of intermediary fee: 2 yuan / hour / person, assuming that each worker works 10 hours a day and takes four days off a month, Chen Wang can earn about 8000 yuan a month. Three or four years ago, on average, I could recruit 100 people a month, especially during the winter and summer holidays and the peak period at the beginning of the year. I could recruit more than 200 people a day. Chen Wang said that at that time, he could achieve a monthly income of 100000.

With the relocation of large factories, migrant workers no longer only focus on Shenzhen, and Chen Wangs business is not as good as before. Chen Wang laughs, now there are more intermediaries than workers.