How difficult is the enterprise

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How to correctly view the current difficulties faced by enterprises? Dialectical view, transformation and upgrading is not a "chicken and egg", survival of the fittest, "there are dead and alive" is the market economy; objective view, the main body of the enterprise is not a sad, differentiation and adjustment, "there are good and bad" is the market status quo; long-term view, the main body of the enterprise is not a piece of mourning, differentiation and adjustment, "there are good and bad "is the status quo of the market; in the long run, as long as adhere to the transformation and upgrading, the difficulties encountered by the enterprise is only temporary, while the market opportunities are huge

Sheep year opening, fire and ice.

On the one hand, the PPI (Industrial Producer Price Index) fell for 37 consecutive months, industrial electricity consumption continues to grow negatively, on the one hand, the value-added growth rate of high-tech industries is higher than the average industrial growth rate of 5 percentage points; on the one hand, the paper enterprises are struggling, real estate enterprises, the risk of capital chain of the tide, on the one hand, the newly registered enterprises increased by 38.4% year-on-year, and the public entrepreneurship in full swing!

What's going on?

Which side is the real status quo of Chinese enterprises?

Three phases have made life difficult for traditional enterprises

The steel production capacity of one city, Tangshan, is higher than that of the whole of Europe, and overcapacity has become the most centralized manifestation of the distortion of the economic structure

The previous order amounted to several hundred million dollars, but now it is only tens of millions of dollars per order. -Shenyang, Liaoning, spring came later than in previous years, large state-owned enterprises in the north of the heavy industry is still struggling in the winter of overcapacity.

"In the first quarter of this year, the steel industry situation is not optimistic, to February, large and medium-sized iron and steel enterprises loss has been close to 50%, is still insufficient orders, inventory increase." Liu Zhenjiang, secretary-general of the China Iron and Steel Association, said.

The predicament suffered by the heavy machinery and steel industries is a microcosm of the current slowdown in the growth of traditional enterprises. National Bureau of Statistics data show that in the first quarter above-scale industrial added value increased by 6.4% year-on-year, the growth rate fell by 2.3 percentage points year-on-year, and total profits realized by industrial enterprises above the size of 2.7% year-on-year decline. And looking back at last year, the profits of industrial enterprises above designated size increased by only 3.3% year-on-year, less than 1/3 of the growth rate in 2013.

While the benefits are declining, the high indebtedness is also making some enterprises complain. It is usually considered more appropriate to keep the gearing ratio of ordinary enterprises below 60 percent. However, in 2014, the average gearing ratio of member enterprises of the China Steel Association rose to 72 percent from 69.4 percent the previous year; in the third quarter of last year, the average gearing ratio of 45 listed real estate enterprises was 74.6 percent, all of which exceeded the 70 percent warning line, and they are under greater pressure to repay capital and interest.

The traditional manufacturing industry is having a hard time because of the law of growth rate shift.

The new normal, the economic growth rate shift down, coupled with increased resource and environmental constraints, labor and other factors such as rising costs, the traditional comparative advantage of the manufacturing industry is declining. High input, high consumption, favoring the old way of quantitative expansion, not only go fast, and can not go.

The traditional manufacturing industry is difficult days due to the pain of structural adjustment.

"The most concentrated manifestation of China's structural distortion in the economy is overcapacity," said Li Yang, vice president of the Chinese Academy of Social Sciences. The report, "Outlook on the Development Situation of Chinese Enterprises in 2015," concluded that in 2014, China's industrial capacity utilization rate was estimated to be around 78 percent, still operating below the critical point of overcapacity; and that 21 of the country's 24 major industrial categories had serious overcapacity problems. The serious imbalance between supply and demand has led to a predicament for enterprises: to get rid of inventory, they have to fight a price war, and the thinner the profit the less innovation is invested, and the sustained competitiveness is getting worse and worse.

For example, the steel production capacity of a Tangshan city is higher than that of the whole of Europe. Do not say that ordinary crude steel sold at a price of cabbage, such as oriented silicon steel in 2012 can sell 35,000 yuan per ton of high-quality steel, and now only sell 16,000 yuan per ton.

In the view of Yu Bin, director of the macroeconomic research department of the Development Research Center of the State Council, overcapacity has led to a slide in corporate profits and an increase in the debt burden, and through the occupation of funds, forcing high lending rates and other channels rippled through the normal development of other non-overcapacity industries.

The traditional manufacturing industry is also the "aftermath" of the previous stimulus policy.

Since the international financial crisis, China's broad money M2 balance of 47.5 trillion yuan in 2008 grew substantially to the end of February this year's 125.74 trillion yuan, but many enterprises reflect the "financing difficult, expensive financing. "When the stimulus was introduced, the bank forced the enterprise loans, the project on too fast, exacerbating overcapacity, and even a large amount of money to the property market. Now the enterprise has been invested in the early capital, but the capital is tight, many enterprises can only give the bank 'work'." Shao Qixing, chairman of Conch Group, said that now bank loan interest often floats 40%, small and micro-enterprises from small loans and other channels of financing costs are higher, the monthly interest rate can be as high as 2.5%.

Correctly view the difficulties faced by enterprises

Some early transformation of manufacturing enterprises have been improving quality and efficiency, and some innovative enterprises have jumped onto the tide of the times

How to correctly view the difficulties faced by enterprises at present?

--Dialectical view, transformation and upgrading is not a "Once in a blue moon", the survival of the fittest, "there are dead and alive" is the market economy.

"Comrades in coal enterprises, often like to go on new projects, engage in new mines." Bu Changsen, chairman of Shandong Energy Group, appealed, "Whoever can make inefficient and ineffective enterprises with no hope of reversing losses go bankrupt is also a great thing!"

Cai Fang, vice president of the Chinese Academy of Social Sciences (CASS), bluntly stated that innovation is the process of "creative destruction" and that only by letting enterprises with low competitiveness exit the market and allowing enterprises with better productivity performance to develop and grow, can the overall economy become total factor productivity-driven.

"We should not be afraid of business closures, and industrial upgrading is only possible if 'you die and I live'." Cai Fang explained that U.S. studies have shown that resource reallocation within the manufacturing industry, manifested in the entry, exit, expansion and contraction of enterprises, and the resulting survival of the fittest, contributes as much as 1/3-1/2 to productivity gains. "The government has to make a positive contribution to productivity improvement by creating a favorable 'creative destruction ' environment so that inefficient firms die out and efficient firms survive and thrive."

-Objectively, the main body of the enterprise is not a woe, differentiation and adjustment, "there are good and bad" is the status quo of the market.

When some companies are entangled in the "transition to find death, not transition, etc." when another number of early transformation of manufacturing enterprises have been in the quality and efficiency. Right now, some southeastern coastal cities are staged in the factory "machine for man" boom. In Dongguan, into the Shifeng knitting factory as early as 2007 to embark on a "machine for man": the original "one person, one machine", now a person to control the 8 automatic computerized machines, efficiency has increased by more than ten times, the quality and reliability of the rate is also improving.

While some traditional enterprises are "shutting down and dying", some innovative enterprises have jumped onto the tide of the times. 2014, China has 100 enterprises among the world's top 500 companies, second only to the United States, with 128. China's high-speed rail manufacturing and construction companies, Alibaba and Jingdong have been listed on the stock exchange, making people impressed by "China's creativity".

--In the long run, as long as we insist on transformation and upgrading, the difficulties encountered by enterprises are only temporary, while the market opportunities are huge.

China has the largest market in the world, and is in the midst of industrialization, urbanization, informatization, and agricultural modernization, and the new growth points in the economy are constantly emerging, providing enterprises with a broad space and considerable potential.

"Enterprises have great potential for transformation and upgrading, and there are many opportunities on the way to the middle and high-end levels." Liu Shijin, deputy director of the Development Research Center of the State Council, said for example that if more than half of China's enterprises reach the average level of the industry, and 10-20 percent of enterprises can be closer to the international benchmark enterprises, then Chinese people do not have to go to Japan to buy toilet seats and rice cookers.

"Only under heavy pressure can there be new and big actions. Only with a big shuffle can there be a big outbreak, a big surprise." From only eight people and an annual output value of less than 10,000 yuan 30 years ago to today's nearly 30,000 employees, total assets of 34 billion yuan and annual sales of more than 30 billion yuan, Nan Cunhui, chairman of Chint Group Co. admitted that it is only by struggling to climb that it is possible to have a glimpse of the mountains. "When the wind comes, a good enterprise is not to avoid the wind, but to stand on the wind."

The situation is improving, and the difficulties are easing

The government should, on the one hand, put away its "misplaced hand" and, on the other hand, "take action when it is time to take action" in reforming the country

To solve the problem of some enterprises' operating difficulties, in addition to the enterprises' own efforts, the government should create a favorable environment for the enterprises to operate. In addition to the enterprise's own efforts, the government to create a market environment conducive to innovation, protection and fairness is particularly important.

On the one hand, we must respect the laws of the market, put away the "wrong hand", and change the "rescue enterprises" to "rescue people".

"Under the new normal, the frequency of enterprise elimination accelerated, the government should not protect the backward production capacity to create jobs, but should protect the workers. It must improve the social security system and do a good job of training and re-employment for the temporarily unemployed." Ma Jun, director of the Enterprise Institute of the Development Research Center of the State Council, said.

On the other hand, it is also necessary to speed up the pace of reform "when it is time to strike."

-Breaking down the "glass door" and "spring door" to make private capital more active.

In late April, the State Council executive meeting passed the "Infrastructure and Utilities Franchise Management Measures", proposing to carry out franchising in the fields of energy, transportation, water conservancy, environmental protection, municipal and other infrastructure and utilities. "The central and local governments are vigorously promoting the opening of infrastructure and public ****services to private capital, which will provide new opportunities for the development of private enterprises." Li Wei, director of the Development Research Center of the State Council, said.

-To cope with the declining demographic dividend and make the supply of talents more adequate.

"In the past, we relied on cheap labor to become a manufacturing power, and a junior high school student was enough to take on the low-end manufacturing industry undertaken by the coastal areas, but if we press the 'Made in China 2025' goal, a junior college student won't be able to do the job anymore." Lin Zuoming, chairman of AVIC, said.

"Even if the machines are replaced, they still need people to manipulate and program them." Ma Jun suggested better providing talents for the transformation and upgrading of enterprises by speeding up vocational education reform and other initiatives.

--Creating an atmosphere of mass entrepreneurship to make market players more diversified.

Ma Jun believes that the government does not have the ability to judge which enterprises can succeed in the market, but it can encourage mass entrepreneurship and innovation to enlarge the base of market players and improve the overall level of enterprises.

--Build a joint innovation platform to make the transformation of enterprises smoother.

"Based on experience, small and micro enterprises do not have the ability or need to engage in technological research and development (R&D), which should be carried out exclusively by technology incubation consortia." In the view of Liu Yingqiu, director of the Private Economy Research Center of the Chinese Academy of Social Sciences, China should strive to realize the transformation of monolithic innovation to joint innovation, "the future production and processing enterprises need to buy technology mainly from the technology incubation consortium, specializing in production and processing themselves."