90% of China’s private enterprises will close down, and a destructive chain reaction is just around the corner!

A friend who opened a factory in Suzhou told me that his factory has not received an order this year….

with the increasing downward pressure of the economy and the real estate market’s encroachment on the real industry again, China has begun to see a wave of private enterprise closures. 90% of private enterprise closures are not alarmist

the private enterprises discussed here are not the newly growing entrepreneurial and innovative enterprises, but the private enterprises that have sprung up since the 1980s

this group of private enterprises in China has an original sin. Most of these private enterprise owners are post-60s and Post-70s. They often do not receive higher education and seize the market by “buying low and selling high”, “unequal information”, “imitation, imitation and low price”. Even used to bribery power, drilling system and policy loopholes and other means to accumulate wealth. They don’t understand theory, and they don’t want to study. They just want to make more money

nowadays, in the face of more and more meager profits, more and more competition, and more and more narrow market space, private enterprises do not choose to create or update models, but try to struggle in a worse and worse environment, that is, “one way to black”. This is their inherent sin. Now, they are undergoing liquidation…

at this rate, few Chinese private enterprises will survive in the second half of 2016. 1n the next year or so, private enterprises will begin to understand what the real “economy” is, as a concentrated embodiment of Chinese people’s “want money but not life”” “Real” means that business failure is not only a matter of making money or losing money, but also means that they have lost the value of existence. Many private business owners even have to take in the original accumulation, and they will spit out what they eat

most of the traditional private enterprises are dependent on the general trend of the times. They are often rough, changeable and unprincipled. Once the economic situation is dispersed, the traditional backward private enterprises will lose their living space. From this point of view, more than 95% of China’s private enterprises may disappear in five years. From the perspective of time, it is expected that by the middle of 2018, this forecast target will basically become a reality

and 2016 is a period of concentrated bankruptcy of private enterprises, which will trigger a corresponding chain reaction. Of course, a number of new private enterprises will be born, and a new business logic will be set up to reconstruct China’s business civilization system

in European and American countries, private enterprise owners are the most innovative and managerial people in the whole society, that is, the “elite class” in the whole society. Externally, these people take the initiative to establish enterprises, have a strong enterprising spirit, and continue to compete and take risks; But inside, these people pay more attention to safety and risk prevention, and take strong risk prevention measures

generally speaking, the start-up and development of private enterprise owners in China are totally different from those in the West. Because of the different environment, Chinese business owners are often “forced” to go into the sea and somehow get their own business

from the beginning, Chinese private enterprise owners are mainly divided into three categories with “Chinese characteristics”:

the first category is that these private enterprise owners are unable to enter the system economy such as state-owned enterprises, so they make a living by doing small businesses. As a result, 1 didn’t expect that the business grew bigger and bigger, and finally became a private enterprise. Many of these enterprises are service enterprises, including catering, entertainment and other enterprises

the second type is that some private enterprise owners see that China can make money by opening “sweatshops” and making export products, so they follow suit. From the perspective of the international market, the essence of these “sweatshops” is “international migrant workers”, while these bosses are only “contractors”. 1n the first ten years of the 21st century, these export processing “sweatshops” developed rapidly, and their products were sold all over the world, becoming the “backbone” of the private economy

the third category is the production of counterfeit and shoddy products, also known as “Shanzhai”” Shanzhai products are mainly based on two aspects: one is to take advantage of China’s “sweatshop” environment; the other is to give these bosses living space by taking advantage of China’s lack of intellectual property protection and consumer protection

of course, on the basis of these private economies, some owners of private enterprises have begun to “introduce” Western concepts and management models, but only a very small number of business owners in China are trying to get development through R & D and innovation. Because of the lack of intellectual property protection, even if some private enterprises spend money on R & D, the result will be stolen or imitated. These enterprises soon closed down after the R & D funds were wasted

when China lacks an innovation and R & D oriented environment, Chinese private enterprises are even less willing to forge ahead and make money faster. Why not? The lack of innovation leads to the lack of competitiveness and the subsequent development. This is the reason why China’s economy is now in recession

in addition, the development of private enterprises is “short of food and clothing”. This includes several aspects: first, in finance, banks are extremely strict in terms of loan conditions for private enterprises, and they can tighten the loan for private enterprises at any time. At the end of 2008, the balance of China’s total M2 was 47.5 trillion yuan. By the end of November 2013, the balance of M2 was nearly 108 trillion yuan, that is, the amount of money printed exceeded 60 trillion yuan. The real value of private enterprise funds had depreciated to more than 40% of the original value. Another result of money printing is that people’s living expenses have more than doubled, which means that the labor cost of private enterprises has more than doubled

in addition, the exchange rate of US dollar to RMB was 1: 6.84 in 2009, and RMB appreciated to 6.05 by the end of 2013, with RMB appreciation reaching 13%, which means that the income of private enterprises engaged in export processing decreased by 13%. Money printing and RMB appreciation mean that the daily operating costs of private enterprises linked to RMB increase by more than 120%, and produce the same products, resulting in a 13% reduction in total revenue (more than the profit margin of most export “sweatshops”)

at the same time, traditional private enterprises have no preferential policies for state-owned enterprises and foreign enterprises in terms of tax revenue, and they have to bear all kinds of extra tax fees. Of course, in recent years, the state has given a lot of preferential policies to many innovative, entrepreneurial enterprises and small and micro enterprises, such as rent-free and tax-free policies. 1n particular, the slogan of “mass entrepreneurship and innovation” has made many young people work hard. This is a very good situation. But these private enterprises are not traditional private enterprises. We are talking about the traditional private enterprises. That is, the group of private enterprises that have sprung up since the 1980s

thirdly, in terms of land and other expenses, both state-owned enterprises and foreign enterprises can obtain a large amount of land provided by the local government in a preferential way, while private enterprises are difficult to obtain preferential land, so they have to pay a high price to buy land. However, when private enterprises see the prosperity of real estate, they try their best to earn money and naturally reduce costs by “cutting corners”, Reduce the high cost burden of institutional squeeze. And then desperate to invest in the real estate industry. This has led to the disorder of China’s industrial structure. For a while, we found that many private enterprises have become real estate enterprises, including clothing enterprises and energy enterprises. This has led to the hollowing out of China’s manufacturing industry

as China’s “demographic dividend” is about to disappear, there are fewer and fewer hard-earned slave workers. This phenomenon is superimposed with the inflation brought by money printing, and the labor cost of private enterprises continues to increase, nearly doubling in about four years. The increase of labor cost and the appreciation of RMB cause the price of export products to rise sharply, which further leads to the decrease of the world’s procurement from China and the shift to other countries

coupled with the decline of the world economy, the demand for Chinese products will continue to decrease. However, due to the lack of foresight and ignoring the general trend of the world economy, private enterprises feel “unprepared” for the reduction of international demand. The export of private enterprises decreased rapidly. At this time, in order to reduce the cost of export products, China’s private export enterprises began to further reduce the quality of export products, resulting in the decline of the quality of export goods and further weakening the international competitiveness of Chinese products. This is a vicious circle

the development of private enterprises can ultimately be attributed to “cash cut-off”. Chinese people are generally “small-scale peasant thinking”, especially private enterprises. That is, the combination of “point thinking” which only considers the present and the present, and “linear thinking” which only thinks that the future will be better and better

in 2009-2010, a large number of private enterprise owners responded to the “national policy guidance” and began to borrow money on a large scale for “investment”. After borrowing money, private enterprises began to expand production; Some of them expand by “diversification”, while others put borrowed money into real estate to enjoy the benefits of house price appreciation. When the private economy borrowed money on a large scale, the usury industry began to flourish. This led to the rapid boom of private lending in some places, and then ended with run away and bubble burst. How many people complained about the 2011 Wenzhou, Erdos and Shaanxi Shenmu in 2013? How many relatives turn against each other? How many families have lost all their wealth< Of course, the imperfection of China's financial market has accelerated the destruction of many private enterprises. 1n the capital market, banks have basically stopped lending to private enterprises, mainly to the central and local institutions. 1n addition, many banks require private enterprises to repay their previous loans, and then promise to give loans to foreign banks. However, when the private enterprise returned the private usury to the bank, the bank immediately turned over and said that there was no amount of money and that it would no longer lend to the private enterprise from 2011, private enterprises began to feel more and more pressure; 1n 2012, private enterprises began to feel more and more difficult, many enterprises have been difficult to maintain; 1n 2013, the vast majority of private enterprises have been reluctantly supporting, just hoping for “miracles” to turn their business around. 1n 2014, under the pressure of many aspects, private enterprises are almost in a desperate situation in 2015 as a result, the scope of “cluster effect” of private enterprises due to the rupture of capital chain is becoming larger and larger: on the one hand, some enterprises borrow a lot from other enterprises, or go bankrupt because they can’t repay, or directly run away, which leads to the relevant enterprises being dragged into the “quagmire”; on the other hand, some enterprises are also dragged into the “quagmire”; On the other hand, there are “related guarantee” loans, represented by Fujian steel trade circle and Wenzhou enterprise circle. Because one or several enterprises are unable to repay the bank loans, other related enterprises are dragged down, and then more upstream and downstream enterprises are dragged down moreover, with the capital chain breaking to the “avalanche” situation, credit sales between enterprises have become extremely cautious. What’s more, when many enterprises can’t support themselves, they don’t close down by themselves. 1nstead, they increase the purchase on credit, that is, they borrow more money. When they can no longer borrow money, these enterprises directly close down and run away, leaving the loss to those enterprises with relatively good faith and low awareness of risk prevention many enterprises are in trouble because of the running of upstream and downstream enterprises. And the enterprises that can’t survive can’t find the next one to take over. And these companies can only

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