[Comprehensive] 90% of China's private enterprises will collapse, and a destructive chain reaction is in sight!

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

With the increasing pressure of economic downturn, coupled with the re-invasion of the real estate industry in the housing market, China began to experience the collapse of the private sector, and 90% of private enterprises failed to be alarmist!

The private companies discussed here are not new entrepreneurial and innovative companies that have grown up, but the private companies that have grown up since the 1980s.

This batch of private enterprises in China has a kind of original sin. Most of these private business owners are 60 and 70 backdoors. They often do not have higher education, and they use “low buy, sell high,” “information is not correct,” “imitation, copycat,” Low prices "to seize the market. Even accustomed to bribery of power, drilling system and policy loopholes and other means to accumulate wealth. They do not understand theory, and they do not want to learn. They only want to make money and make more money.

Nowadays, in the face of more and more meager profits and more and more competition, the market space that has become narrower and narrower, private companies are not choosing to create or update models, but are trying to struggle in a worse and worse environment. That is, "One Road Goes Black". This is the original sin they were born with. Now, they are being liquidated...

At this rate, by the second half of 2016, there will be very few Chinese private companies that can survive. In the more than one year in the future, private companies will begin to understand what is the real “economy” as the concentrated embodiment of the Chinese “having money for life”. “Real” means that the business failure has become more than just a problem of making money or losing money, but also means that you have lost the value of existence. Many private business owners will even have to plunge into the original accumulation and how to eat it will spit. come out.

Traditional private companies, mostly dependent on the era of survival, are often crude, fickle, and non-principled. Once the economic trend has dissipated, this traditionally backward private enterprise will lose its living space. From this point of view, more than 95% of China's private companies may disappear in five years. From the perspective of time, it is expected that by the middle of 2018, this forecast goal will basically become a reality.

In 2016, it was the period of private bankruptcy and it will trigger a corresponding chain reaction. Of course, a new batch of private enterprises will be born, and a new business logic will be established to reconstruct the Chinese business civilization system.

In Europe and the United States, the owner of a private company is the most innovative and managerial group in the entire society, which is the “elite class” in the entire society. Externally, these people take the initiative to establish a business, have a strong spirit of progress, continue to compete and take risks; and inwardly, these people are more concerned with safety, more emphasis on risk prevention, and take strong risk prevention measures.

In general, the start-up and development of Chinese private business owners is completely different from that of Western private business owners. Because of the different environments, Chinese business owners are often “forced” to go to the sea and find their own company inexplicably.

From the very beginning, the bosses of Chinese private companies were mainly divided into three categories of “Chinese characteristics”:

The first type is that the owners of these private companies cannot enter the institutional economy such as state-owned enterprises, so they make a living by doing small businesses. The result did not expect the business to grow bigger and bigger and eventually become a private company. Many of these companies are service companies, including restaurants and entertainment companies.

The second type is that some private business owners see China's establishment of “sweatshops” and export products to make money, so they follow “sweatshops”. From the perspective of the international market, the essence of these "sweatshops" is "international migrant workers," and these bosses are only "contractors." In the first decade of the 21st century, these "sweatshops" for export processing developed rapidly and products were sold to the world as the "backbone" of the private economy.

The third category is the production of counterfeit and counterfeit products, also known as "shanzhai." "Shanzhai" products are mainly based on two points. First, the use of China's "sweatshop" environment, and the second is the use of China's lack of protection of intellectual property rights and consumer protection, giving these bosses a living space.

Of course, on the basis of these private economies, some private employers have also begun to “introduce” western concepts and management models. However, only a very small number of business owners in China have attempted to develop through research and innovation. Because of the lack of intellectual property protection, even if some private companies spend money on research and development, the result is that they are stolen or imitated. These companies quickly went out of business after the research and development funds were overdone.

After China's lack of an environment dominated by innovation and research and development, Chinese private companies are even more reluctant to forge ahead. Lack of innovation results in insufficient competitiveness and subsequent development. The current economic depression in China is the reason for this.

In addition, the development of private companies is also "short of food and clothing." This includes several aspects: First, in terms of finance, banks have extremely stringent lending conditions for private companies, and they have to tighten their loans to private companies at any time. At the end of 2008, the balance of China’s monetary aggregate M2 was 47.5 trillion yuan, and by the end of November 2013, the M2 balance was nearly 108 trillion yuan, which was more than 60 trillion yuan, and the actual value of private enterprise funds had depreciated to the original value of 40 yuan. %More. Another result of banknote printing is that people’s living expenses have more than doubled, which means that the cost of private enterprise labor has more than doubled.

In addition, the exchange rate of the US dollar against the RMB in 2009 was 1:6.84. By the end of 2013, the RMB had appreciated to 6.05, and the appreciation of the RMB had reached 13%, which meant that the private company's income from export processing decreased by 13%. The implication of printing money and appreciation of the renminbi is that the daily operating costs linked to RMB in private companies have increased by more than 120%, and the same products have been produced. As a result, the total revenue has decreased by 13% (more than the profit rate of most export “sweatshops”).

At the same time, traditional private companies do not have preferential policies for state-owned enterprises and foreign companies in terms of taxation, and they must also bear various kinds of extra-tax charges. Of course, in recent years, the state has given many innovative, entrepreneurial, and small and micro enterprises a lot of care policies, such as rent-free, tax-free, etc., especially the slogan of "mass entrepreneurship, innovation," which has made many young people go to forge ahead. This is very A good situation, but these private companies are not traditional private companies. We are talking about the traditional private enterprises. That is, the private companies that have grown up since the 1980s.

Thirdly, in terms of land and other expenses, since both state-owned enterprises and foreign companies can obtain a large amount of land provided by local governments in a preferential manner, private companies are hard to get preferential land and must pay a high price for purchasing land. However, private companies see the prosperity of real estate and they desperately Going to earn money naturally reduces costs by “stealing work and cutting materials,” and slows down the high cost burden of system crushing. Then he rushed into the real estate industry. This led to the disruption of China's industrial structure. So there was a time when we found that many private enterprises became real estate companies after they became big, including clothing and energy. This led to the hollowing out of China's manufacturing industry.

As China's "demographic dividend" is about to disappear, it is that there are fewer and fewer sweat workers. This phenomenon is superimposed on the inflation caused by banknote printing, and the cost of labor for private companies continues to increase. It has nearly doubled in four years or so. The increase in labor costs and the appreciation of the renminbi have caused the prices of export products to increase substantially, further reducing the world's purchases from China and switching to other countries for procurement.

Coupled with the decline of the world economy, the demand for Chinese products will continue to decrease. However, due to the lack of forward-looking and neglecting the world economic trends, private companies feel "unprepared" for the reduction of international demand. The export of private enterprises has accelerated. In order to lower the cost of export products, Chinese private exporters began to further reduce the quality of export products, resulting in a decline in the quality of exported goods and further weakening the international competitiveness of Chinese products. This is a vicious cycle!

The development of private companies can ultimately be attributed to "cash flow". The Chinese are generally "small-scale farmers" and private companies are even worse. That is to say, only considering the present, just looking at the "point thinking", and combining the "linear thinking" that is only thinking of the future will become better.

In 2009-2010, a large number of private employers responded to “national policy orientation” and began large-scale borrowing to “invest”. Private companies began to expand production after borrowing money; others expanded for “diversification” and others borrowed. The money comes into real estate, ready to enjoy the benefits of price appreciation. When the private economy borrowed money on a large scale, it opened up the "prosperous" situation of the usury industry. This led to the rapid prosperity of "private lending" in some places. Then it ended in running and bursting the bubble. How many people complained about having nowhere in Wenzhou in 2011, Ordos in 2012, and Shaanxi Shenmu in 2013? How many relatives have turned into enemies? How much of a family’s wealth is lost?

Of course, the imperfections in the Chinese financial market have also accelerated the destruction of many private companies. In the capital market, banks basically stop lending to private companies, and mainly lend to central and local institutional units. In addition, many banks require private companies to return their previous loans, and then commit themselves to lending. However, when the private company borrowed the private loan shark to return to the bank, the bank immediately turned its back and said that there was no quota and no more lending to private companies.

Since 2011, private companies have begun to feel more and more pressure; in 2012, private companies began to feel more and more difficult, and many companies have been difficult to maintain; in 2013, the vast majority of private companies have barely supported, only I hope "a miracle arises" to allow my business to take a turn for the better. In 2014, under the pressure from various industries, private companies faced a desperate overall situation in 2015.

As a result, the “clustering effect” of private companies due to capital-strand breaks has become increasingly widespread. On the one hand, some companies have been dragged from other companies after a large number of borrowings, or have been bankrupt because of their inability to repay, or have run directly, causing related companies to be dragged. Into the "quagmire"; on the other hand, "associated guarantee" loans, represented by Fujian steel trade circle and Wenzhou enterprise circle, one or several companies dragged down other affiliates because they could not return bank loans, and dragged on more. Upstream and downstream companies.

Moreover, as the capital chain breaks down to the “avalanche” situation, credit sales between companies and companies have become extremely cautious . More importantly, many companies are not able to close their doors when they are unable to support them. Instead, they first step up the procurement of bulk goods, that is, borrow more money. When it is no longer possible to borrow money, these companies will directly close their doors and leave the losses to enterprises that have relatively low integrity and risk prevention awareness.

Many companies are in trouble because of the running of upstream and downstream companies. However, companies that cannot sustain themselves cannot find the next family to take over. These companies can only sell their own machinery and equipment, office furniture, etc. Since in the entire market, there are too many people selling equipment and few people expand production, the equipment is sold at almost scrap prices. After the collapse of private companies is the tide of running, this situation we are extremely reluctant to see, but inevitable.

In addition, with the reduction of U.S. QE printing money, the inflow of foreign capital into China has become increasingly limited, which has exacerbated China’s capital shortage. At the same time, as the general public put cash into real estate, wealth management products, usury and other fields, the funds in the hands of the public are extremely limited. In 2016, there will be large-scale defaults on wealth management products and usury, leaving countless people “losing everything”. At the same time, the result of the fracture of the capital chain is to make the lives of the vast majority of people more difficult. And the purchasing power of the people will basically disappear. Or, in 2016, the entire domestic demand market will shrink dramatically, which is very unfavorable to the Chinese economy!

The collapse of private enterprises in 2014 has already begun. The situation is intensifying in 2015 and will reach its worst deterioration in 2016. This means that the vast majority of traditional private companies disappear. The tide of private enterprise closures is a "chain reaction." From the perspective of the entire economy, private companies’ contribution to China’s economy is extremely significant, especially for the entire society’s employment. When the wave of closures of private companies began, the direct effect was that many people were unemployed because private companies collapsed. Among them, migrant workers from rural areas to cities, because of their low salaries, rarely buy houses in big cities, so they often return to their rural homes because they have no income.

However, in private companies, there are still a large number of people who are called "white collars". They are people who can earn enough money to buy a house. Once these people lose their sources of income because they are unemployed, they directly face two consequences: First, they cannot afford to sell their houses; the second is to immediately stop all consumption other than eating and drinking. Once the wave of closures of private companies has emerged and these people begin to sell their homes on a large scale, no matter how the media cheeks over the “rising house prices”, they cannot stop these people from selling.

At this time, the "just-in-time buying" of real estate will directly turn into "just selling", which means selling the house for food and drink. Once the boom of real estate sales begins, there will be no one to buy a house, and it will directly lead to large-scale uncompleted buildings, which will lead to a serious decline in the demand for construction materials and related industries. In addition, when people stop spending everything except food and drink, the demand for various home appliances, electronics, textile and footwear, restaurants, etc., is severely reduced.

In addition, after a large number of private companies collapsed, private cars and private cars also stopped a large number of cars, people began to sell cars, car sales plummeted, and related industries such as automobile production and maintenance also suffered a serious contraction. The severe shrinking of these industries further led to a new round of private-sector bankruptcy, which in turn led to a new round of staff unemployment and a cycle of “failed-unemployed-cessation of consumption-more failures”. Once this cycle begins, it will be difficult to stop, that is, through the “chain reaction”, the situation in which most private enterprises collapse will be formed.

Do not say that China's private enterprises, even if such as IBM, GE, General Motors and Kodak once once world-class OSM companies, once technological innovation can not keep up, will still be eliminated. If any business model is separated from integrity and morality, bankruptcy is an inevitable result.

It is said that Buffett’s refusal to invest in China concept stocks listed on US stocks is due to the following three reasons:

1 The moral hazard of a traditional company is too serious. It will only follow, copy, copy, and even steal. It is profit-making and has little innovation. 2 Traditional businesses have neither social responsibility nor the purchasing power of major consumers. 3

The rapid advancement of science and technology has weakened the channel and model barriers of traditional enterprises.

Even if Chinese traditional companies meet the above three conditions, Buffett will not necessarily invest in US stocks and Chinese concept stocks because there are major flaws in the core values ​​of Chinese companies: utilitarianism, money worship, fraud, and selling fake goods... And Buffett’s demand for “inaction, selflessness, and selflessness” from management is too great.

According to statistics, in August 2011, the number of loss-making entrepreneurs in China was 41,000. By August 2012, it had suddenly risen to 53,000, which was already a startling loss. That is, starting from 2012, the Chinese economy has entered a downward track. In 2013, the number of loss-making households remained at 54,000. It seems that those two years can barely survive. However, by 2015, the number of loss homes soared to 59,000!

Comment: The way out for private companies is to hold the determination of a severed man and to recognize that this era has given a new historical mission. In the future, the development logic of a company is only one: how much value you can create and how much wealth you can acquire. Private companies must embark on the journey again with a zeroing mentality and awaken as soon as possible. If the more struggling and persisting companies, the result will be more miserable.

The so-called non-breaking will not stand, the old ones will not go, and the new ones will not come. For the economic environment in China, these big polluters should surrender their guns and surrender. We hope that this generation of Chinese 90 generations can inherit and carry forward the commercial civilization of the new era, continuous innovation and entrepreneurship, and improve the genes of Chinese private companies! In order to create a more fair business atmosphere, at the same time, wishing China to realize the early realization!