Annual loss of 90 million! Dongguan factory announces 3-month holiday

Since the beginning of the year, most cross-border sellers have been full of confidence and ready to go all out. However, some sellers have found that the number of orders has been decreasing every day since February.

The seller's order volume is actually most directly reflected on the factory side.

Well-known Dongguan factory suddenly announced a 3-month holiday

Recently, it was reported online that Jierong Technology, a well-known large factory in Dongguan, suddenly announced a three-month holiday, which caused heated discussions in the industry.

The document shows that due to the impact of the overall environment, the company's order volume has dropped sharply, and the company needs to integrate its production and human resources. Combined with the company's current actual production situation, it has decided to arrange a part of the staff to take a holiday.

The holiday time is from February 21 to May 20, 2023. If the holiday still needs to be extended in the future, we will notify you separately.

During the holiday, wages (including performance and related subsidies) will be paid according to normal working hours in the first month, and living expenses will be paid at 80% of the basic wage standard agreed in the Labor Contract from the second month until the end of the holiday.

In response to the holiday news, a staff member of Jierong Technology's Securities Department said that the company has made relevant adjustments to some production lines and some employees have indeed started taking holidays. The main reason for the holiday is that the company's order volume in the first two months has dropped significantly compared with the same period in previous years, and the first quarter is generally a low season, so the overall order volume is on a downward trend.

According to employees of Jierong Technology, although employees of some production lines have started to take holidays, other production lines are still in normal production. For production lines with staff shortages, the company will also make relevant personnel adjustments and let employees of other production lines provide reinforcements.

The continued decline in orders has also caused concern among Jierong Technology's employees. Some employees said that the company is now basically processing last year's orders, and once these orders are completed, it may really be necessary to stop production.

However, after the holiday notice was issued, some netizens discovered that Jierong Technology's factory was still recruiting general workers, and there were many applicants filling out recruitment information forms at the factory gate.

In response to this, the staff responsible for recruitment at Jierong Technology said that the company’s holiday was only for some employees in other affairs departments of the factory, and it would not affect the recruitment of general workers.

In response to the news that some employees will be on vacation for three months, Jierong Technology also stated that the company has only adjusted some production lines and is also recruiting for new production lines as usual.

Jierong Technology, whose full name is Dongguan Jierong Technology Co., Ltd., was established in September 2007 and is one of the largest mold factories in Dongguan.

Jierong Technology's main business is the research and development, production, and sales of precision structural parts and mold design and manufacturing. It has manufacturing workshops such as stamping and stretching, injection molding, CNC machining, surface treatment, and assembly components. It mainly provides mold development and precision structural parts for mobile phones, tablet computers, wearable products, medical equipment components, etc.

According to the information on Jierong Technology's official website, the company's business has gradually expanded from the initial precision molds and plastic precision structural parts to a set of precision molds, plastics, metals, glass, sapphire, ceramics, integrated, modular precision structural parts technology solutions. The company has an annual production capacity of 2,000 sets of precision molds, 130 million sets of mobile phone plastic/metal precision structural parts, and 24 million pieces of glass. The company has successively established branches in Shenzhen, Beijing, Hong Kong, Chongqing, Jiangsu, South Korea, Vietnam and other places. At present, Jierong Technology has about 9,000 employees and its business is spread all over the world.

It is worth mentioning that Jierong Technology has been successfully listed on the Shenzhen Stock Exchange on March 21, 2017. It is a well-known large manufacturer in Dongguan. Its products are mainly used in smart phones, smart watches, VR/AR, tablets/PCs, smart speakers, smart homes and other fields. It is a core supplier of companies such as Samsung, Huawei, and TCL.

Jierong Technology 's total revenue in 2021 reached 3.092 billion yuan, while the revenue from overseas business reached 1.004 billion yuan.

However, by 2022, Jierong Technology's revenue had declined and its net profit had also suffered a loss.

According to the 2022 performance forecast recently released by Jierong Technology , the company's operating income in 2022 is expected to be 2.6-2.8 billion yuan, and the net profit attributable to shareholders of the listed company is expected to be a loss of 65-90 million yuan.

Jierong Technology stated that there are three main reasons for the simultaneous decline in the company's revenue and net profit in 2022:

First of all, due to the impact of the epidemic and the global economic environment, the demand in the consumer electronics market has declined, resulting in a decrease in shipments of products such as smartphones. The prices of products have therefore been affected, causing the company's revenue to decline.

The second reason is that the ongoing epidemic has affected the company's normal production operations, and the company's labor costs and logistics costs have also increased accordingly, while the costs of tariffs are also rising.

The third reason is that in order to cope with changes in the market environment, the company began to adjust its business strategy and optimize its personnel structure, which required it to pay a large amount of compensation, which also had a certain impact on the company's performance.

Serious losses! Many cross-border manufacturers announced suspension of operations

Since last year, the cross-border e-commerce market has continued to be turbulent, with many large companies suffering heavy losses and even many cross-border factories announcing shutdowns.

At that time, two cross-border factories in Dongguan successively issued notices of suspension of work and production, and all employees were directly given unpaid leave for 5 months. The main reason for the suspension of work and production was that the global economic situation had a direct impact on international trade, and the order volume dropped sharply.

Industry insiders revealed that the main reason why so many cross-border factories have forced their employees to take leave is that there is a certain conflict between the decline in orders and maintaining production capacity. Affected by the decline in orders, factories can only reduce spending on non-essential positions in order to maintain normal operations and reduce losses.

Before the Chinese New Year this year, more than half of the foreign trade factories in Jiangsu, Zhejiang, Guangdong and other regions issued early Spring Festival holiday notices. Even a foreign trade factory in Guangzhou directly asked its employees to stop work and take a 450-day holiday without pay.

In the past, this period of time was often the busiest time for foreign trade factories, and they would even have to work until New Year’s Eve before they could take a holiday.

The continued decline in foreign trade orders has led to the shutdown and holidays of foreign trade factories, which also reflects the current difficulties faced by my country's manufacturing industry.

According to CNBC’s latest supply chain heat map data, U.S. manufacturing orders in China have fallen 40%.

More and more leading companies have begun to move their manufacturing plants out of China and start building factories in Southeast Asian countries such as Vietnam and Laos.

According to the Wall Street Journal, Apple has asked its mid- and low-end production lines to accelerate their withdrawal from China and plans to build factories in Southeast Asia.

With the decline in order volume, foreign trade factories are facing a difficult dilemma. In such a market environment, there are actually both dangers and opportunities. For foreign trade factories, industrial transformation is imperative, and only by accelerating industrial upgrading can they gain a competitive advantage.

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