Willima factory gate
Recently, a notice issued by Willima Electric Manufacturing (Shenzhen) Co., Ltd. (hereinafter referred to as “Willima”) was posted on the Internet. The notice stated that the company has no new orders and the business is in a state of suspension. Taking into account the current situation of the company, the company’s shareholders plan to dissolve the company in advance on August 31, 2022 (the specific time is subject to the official shareholder resolution).
On August 31, Willima’s employees confirmed to reporters that the company had indeed issued this notice, and the employees are discussing specific compensation plans with the company these days.
Coincidentally, on August 30, Aigo Electric (Dongguan) Co., Ltd. (hereinafter referred to as “Aigo Electric”) also issued a “Notice of Closing Business”, saying that in recent years, the company has invested heavily in transforming new products, and it is just right. Since the outbreak of the new crown epidemic, it has had a great impact on export-oriented companies. The company has suffered serious losses for many years, and it is difficult and unsustainable. Although the company’s management has tried every means to seek support, it has been struggling for several months, but it is still unable to reverse the decline. The company is in a state of complete shutdown.
Chen Chenxiang, who has been recruiting and dispatching employees for Aigo Electric since 2017, said that he learned about the closure notice from industry insiders, “The announcement is true, and I am only 2 kilometers away from Aigo Electric. In fact, the Aigo Electric Factory has been closed since a while ago.”
On August 31, the reporter visited the Willima Shenzhen factory and saw at the scene that many workers were negotiating compensation agreements. When asked about their plans after receiving the compensation, most of the employees said they would continue to work in the factory.
And this Mr. Jiang, who heard the news of “collapse”, is also recommending his factory to these “laid-off” employees with relish.
Other electronics factories at the gate of the Willima factory are recruiting “laid-off” workers
How many years and how many months of compensation
Industry and commerce information shows that Shenzhen Wilima was established in 1989 as a wholly-owned enterprise by Hong Kong businessmen, and the current number of insured persons is 302. As a 33-year-old electronics factory, the company used to have 6 factories in Bao’an, Shenzhen, with a maximum number of more than 2,000 employees.
Previously, Shenzhen Welima mainly produced electric irons, hair dryers,Micro-wave ovenand other small household appliances, most of the products are exported and sold in more than 50 countries and regions around the world, with an annual turnover of 80 million US dollars.
On the afternoon of August 31, it was a thunderstorm in Bao’an District, Shenzhen, and the entrance of the Willima factory was still wet. After the heavy rain, there were more workers on both sides of the road. Looking inside from the gate of the Willima factory, you can also see that many employees are gathering in the hall to discuss the situation. According to the introduction of the on-site employees, in the past few days, the employees are signing compensation agreements with the factory, and the employees are queuing up to go through the formalities.
Inside the Willima factory
“When I first entered the factory, there were more than 1,000 people in the factory, and the people behind slowly left, and they no longer recruited regular workers.” Mr. Chen, a general worker who has worked in the Willima factory for more than ten years, told reporters, “The most obvious thing is that in the past five or six years, there are only going out but not going in, and only temporary workers are recruited when there is a shortage of manpower on the line. Especially in the past two or three years, in order to reduce expenses, the factory prefers to hire temporary workers instead of regular workers. Overtime (regular workers are more expensive than temporary workers), my average monthly salary in the last year is only three or four thousand yuan.”
“As many years as you work, you will be compensated for as many months, and there will be no ‘n+1’ months.” Mr. Chen said that according to the current compensation plan, he can get almost 40,000 yuan in compensation.
At the scene, the reporter saw that there was a general worker with 17 years of service, whose average monthly salary in the last year was about 4,000 yuan, and finally received about 70,000 yuan in compensation. When asked about his future whereabouts, Mr. Li, who is close to retirement age, told reporters that he did not retire so soon, and he continued to find work.
Mr. Li added that the factory only started paying social insurance in 2008, and now he has only paid social insurance for 14 and a half years, and he is still half a year away from getting his pension.
As for the notice sent online, Mr. Chen said that it was indeed sent by the factory. “There are still several errors in the notice you saw. The company also issued a notice on August 30. The basic compensation plan is to be implemented in accordance with the previous notice,” said Mr. Chen.
The reporter found that in the notice issued by Willima on August 29, firstly, “2022” was mistakenly written as “2020”; secondly, it said that employees who joined before 2008 had no financial compensation according to the law, and the employee representative Compensation plans and opinions are proposed, and the company’s management will report to shareholders.
The notice issued by Willima on August 29 Source: Photo courtesy of the interviewee
In the new notice issued on August 30, it only stated that the monthly salary payment standard for employees is the average salary of the previous twelve months, and employees who signed an agreement with the company on that day can still receive a cash reward of 800 yuan.
New notice issued by Willima on August 30 Source: Photo courtesy of respondents
Mr. Chen said that he is not in a hurry now and will negotiate slowly. Everyone should not leave so soon. After signing the agreement, they will wait until the compensation is received before moving out.
Year after year losses
According to the data, Aiko Electric (Dongguan) Co., Ltd. is affiliated to Aiko Group. The group company was established in 1968 and was listed on the main board of the Hong Kong Stock Exchange in 1992. It is mainly engaged in its own brand (AVITA) notebook computers and audio and video and other other Manufacturing and sales of consumer electronics.
Aiko Group officially entered Dongguan in 1986 and is the first Hong Kong audio product manufacturer to produce in mainland China. In 2004, Aigo Group’s total production lines in China increased to 46, with more than 10,000 employees. By 2013, Aigo Group concentrated all production resources in a factory building covering an area of about 300 acres in Houjie Town, Dongguan City. Aiko Electric (Dongguan) Co., Ltd. was also registered and established in this year.
The announcement of this closure can be seen from the annual report of Aigo Group, the parent company of Aigo Electric. Aigo Group’s 2022 annual report shows that since 2018, the group company has been losing money for five consecutive years. As of March 31, 2022, the group’s annual turnover decreased by 54% from HK$1.279 billion (2021) to HK$591 million, and the net loss attributable to shareholders increased by 65% from HK$360 million (2021) to HK$595 million.
Aigo Group stated in its annual report that the group’s strategy in the past few years has been to focus on developing its own brand notebook business, rather than the traditional audio-visual product OEM/ODM business. Although the OEM/ODM business can provide greater revenue, it also requires More working capital to trade. With more resources being invested in its own-brand notebook business, the group is giving up orders from large retailers, especially the US market.
Chen Chen said: “Before the epidemic, there were rumors that Aigo Electric had operating problems, and there were not many orders, and it has been losing money. From the perspective of labor demand, especially last year and this year, the recruitment of general workers was relatively small.”
At the same time, many employees of Willima also told reporters that when there were many orders in the early years, the entire factory area was close to 2,000 people, and more than ten production lines were running at the same time. In the past year, only one production line was reserved for production. . At the same time, in order to save labor costs, even when it is necessary to rush work, only temporary workers are willing to be hired, and regular workers are no longer recruited, which will reduce the overtime of regular workers to a certain extent.
The “Closing Notice” issued by Aigo Electric Co., Ltd.
The notices issued by the two factories of Willima and Aigo Electric also mentioned words such as “the company has also been losing money in the past few years” and “the company has suffered serious losses for many consecutive years”.
Traditional manufacturing companies are facing difficulties in transformation
In recent years, news of the closure and evacuation of large traditional manufacturing plants has emerged one after another.
At the beginning of this year, Canon Zhuhai Co., Ltd. announced in an announcement that this thousand-person factory eventually stopped production due to the sharp shrinking of the global camera market and the superimposed new crown pneumonia epidemic. Prior to this, the reporter also reported the evacuation of major manufacturing factories, such as the announcement of the cessation of production activities by the Shiyan factory of Stanley Black & Decker, a large factory with thousands of people, and the announcement of the dissolution of Shenglong Technology.
Qu Jian, vice president of the China (Shenzhen) Comprehensive Development Research Institute, said in an interview that from the perspective of the general industrial development law, the processing and assembly industry has moved once every 20 to 30 years since 1945. Originally moved from Europe and the United States to Japan, moved to the Four Asian Tigers in the 1970s, and later moved to the Pearl River Delta region centered on Shenzhen and the Yangtze River Delta region centered on Shanghai and Suzhou. manufacturing base.
“These two companies conform to such a law from the perspective of the overall industrial development trend.” Qu Jian believes that the products produced by these two companies are ordinary electronic consumer goods, and the main factors affecting the production location of such companies are: The three major factors of cost, market and international trade environment, from the current situation, China’s advantages in these aspects are not as obvious as initially.
Qu Jian added, first, the cost. China’s own labor wages, factory rent and other costs have risen significantly, and product profits have compressed; second, the market for such electrical products produced by the above-mentioned enterprises is not in the country. Under the profit compression, enterprises They will choose to close down or move to other places with lower production costs; third, the international trade environment is not good. In recent years, Sino-US trade frictions have continued, and there are certain tariff barriers for Chinese-made products to be sold to the United States.
At the same time, Qu Jian said that the recurrence of the epidemic has also had a relatively large impact on such manufacturing companies, but the impact of the epidemic on this type of industry is a temporary factor, and the above three reasons are long-term.
“Essentially, on the one hand, it is the result of the deterioration of the external business environment, but more importantly, there are problems in the business transformation of the enterprise itself.” Xiong Yigang, vice president and secretary general of the Shenzhen Institutional Reform Research Association, said in an interview with reporters that electrical and electronic Factory closures have been happening in recent years. In recent years, the impact of the epidemic on exports, setbacks in the iterative transformation of traditional home appliances, chip restrictions in the United States, and continued operating losses are the main reasons for the closure of these companies.
Xiong Yigang added that in the future, for my country’s home appliance industry, especially for traditional and export-oriented enterprises, there will be a group of enterprises with poor management and unsuccessful transformation that will be left behind and eliminated in this round of “tide fading”. From the perspective of trade statistics, China’s current export competitiveness mainly comes from two extremes, namely low-tech manufacturing and high-tech manufacturing. Most of these traditional home appliance exporters are low-tech and labor-intensive manufacturing industries. Our labor costs have quietly risen and we are facing the impact from India and Southeast Asian countries.
As for how traditional manufacturing enterprises should deal with this round of transformation and upgrading, Xiong Yigang believes that on the one hand, we urgently need to enhance our independent innovation capabilities and transformation and upgrading efforts, improve the technical quality of products, expand marketing channels, expand brand influence, and improve service capabilities. , and seize the opportunity of internal circulation to embed in the domestic market; on the other hand, we must also focus on the global market according to the country’s major diplomatic strategy, actively develop diversified markets, and focus on developing emerging economies such as Africa and Southeast Asia, especially the “Belt and Road”. Transsion Holdings is a very successful case in the markets of countries along the “One Road” route.
(Mr. Jiang, Mr. Chen, Mr. Li and Chen Chen are pseudonyms)