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Home > About EVE > About the Chairman > News report > 2017

2017 Green Companies Summit: China's real economy struggles through transition

Published time:2017.04.27

As Chinese President Xi Jinping warned about the risks of anemic funding flowing into the real economy, many Chinese companies expressed concern with a sluggish real economy during this weekend's 2017 Green Companies Summit.
Chinese manufacturers are the main players in the real economy, and they have been battling for survival. The chairman of the Hina Group, a capital management company, admitted that capital is more in favor with new economic formats, such as e-commerce, the sharing economy, and the Internet-of-things.


2017 Green Companies Summit opens in Zhengzhou, Henan Province, on April 22, 2017. /VCG Photo

"In venture capital and the private equity investment area, more than half of the funds go to the new economy. It's in the nature of capital to chase higher expected returns than GDP growth," said Chen Hong, the chairman of the Hina Group.
Even though China saw its GDP rise 6.7 percent in 2016 to 74 trillion yuan (10.7 trillion US dollars), the expansion of China's real economy is still feeling the pinch. While the growth of some sectors of the new economy – such as the Internet and e-commerce, is at 20 to 30 percent, the growth of some manufacturing industries is lower than GDP growth, according to Chen.
Leading high-end clothing maker Eve Group is one of those industries, and its chairman Xia Hua considered this embarrassing situation a “certain test” for the real economy in China.
“In the past three years, I have seen with my own eyes that many good factories have gone out of business. In the garment industry, if we don't even have good factories, I don't think the industry can develop," Xia noted.
Xia also mentioned that to try and save those factories, it's crucial to build an industry eco-system that links factories, designers and buyers.
"I have spent so much effort to come up with a solution to save clothing factories. We are the receiver of orders. The simplest way is to make sure that these companies have stable orders. This has prompted us to turn from just a famous brand to collecting all kinds of orders in the market, and distribute to 300 to 400 factories that we've studied. This way we saved a lot of factories," Xia said.


Attendees discuss opportunities for the real economy at the 2017 Green Companies Summit in Zhengzhou, Henan Province, on April 22, 2017. /VCG Photo
 
But successful cases exist as well. Red Collar, which is China's first factory to create its own flexible manufacturing system, has succeeded in transitioning from a traditional manufacturing model. And its CEO Zhang Yunlan said that it is time for Chinese manufacturers to drop the old profit model with low-value added products, and catch up with the world.
"The cost benefit is becoming thinner, policy is getting tighter on environmental protection, and the days of profiting on low-value added products have gone. But now it's actually a great opportunity for China's manufacturing industry to catch up with the world. Because we are at the same starting point at using industrialized methods to make customized clothes," Zhang told CGTN.
Chinese entrepreneurs are actively searching for transformation, innovation and upgrades in an effort to try and keep up with the changing times. The results will determine whether they will ride the waves, or get caught in the tide.
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