Another Dongguan electronics giant, Aigo Dongguan company, closed down

Source: Huaqiang Microelectronics

    Introduction: today, bad news came one after another. Another old electronic factory in Dongguan issued a closure notice. The news spread quickly. Many colleagues in the industry had received the news before and expressed their worries about the future. In fact, the recent collapse of electronic factories is not new. It has occurred one after another, not only in Chinese Mainland, but also in Taiwan, China.

    On August 31, 2022, the announcement of AGCO electric (Dongguan) Co., Ltd. (hereinafter referred to as AGCO Dongguan company), an old electronic manufacturer in Dongguan City, which has operated for 36 years, pointed out that AGCO Dongguan company has invested a lot in transformation of new products in recent years, and coincided with the outbreak of the COVID-19 epidemic so far, which has a great impact on export-oriented companies. The company has suffered serious losses for many years in a row, and it is difficult to continue. Although the management of the company tried to seek support from all sides and struggled for several months, it was still unable to reverse the trend of decline. The company has been completely shut down. After careful consideration by the company‘s management, it was decided that AGCO Dongguan company would officially close down on Friday, August 31, 2022 (there was a clerical error here).

    According to public information, AGCO Dongguan is a large Hong Kong funded listed company, AGCO group, which can be called an internationally famous consumer electronics manufacturer. As an important production plant of the group, AGCO Dongguan company built a plant near the sign of Houjie Town in Dongguan in 1986 and put it into production. The whole plant covers an area of nearly 120000 square meters. In August 2013, it moved to its own industrial park in Houjie high tech industrial city. The park covers an area of 380 mu, with a total construction area of 200000 square meters and a total investment of 300 million yuan.

    It is reported that since its establishment in 1968, the group started with atomic particle radio, and has gone through many product iterations and upgrades. It has developed and produced intelligent products, thin notebook computers, and the world‘s first superimposed intelligent commercial mobile phone. It has a number of registered patents and has R & D centers in Hong Kong and Shenzhen. Not only that, its sales outlets are all over the world, and it has been found in cities in the United States, Canada and Europe, and it has also been famous in the industry for a while. It‘s really a pity that the company is unable to recover and has announced its closure.

    In fact, speaking of Aigo group, many friends in the industry are very familiar with it. In the early days, AGCO group mainly made radio equipment, which was basically OEM for enterprises in Europe and the United States. In 1996, the group also established AGCO digital to make DVDs. As the domestic economy enters the stage of rapid development, Aigo group naturally also enjoys the dividend of the mainland population, and the factory scale continues to expand. By 2004, there were 46 production lines under AGCO. In 2009, the revenue of Aigo group reached 6 billion yuan. However, with the rise of smart phones, Aigo failed to seize this wave, and its performance began to decline.

    It is not difficult to find that since 2020, affected by many factors such as the epidemic, the lack of cores, and the price rise of components, Aigo‘s business has become increasingly difficult. According to the data, by 2020, Aigo group‘s revenue had dropped to 960 million yuan, with a loss of 360 million Hong Kong dollars, which had been a loss for four consecutive years. In 2021, although the revenue of AGCO group rebounded to HK $1.279 billion, the net profit loss expanded again to HK $595 million. At the end of 2021, Liang Weicheng, chairman of Aigo group, jumped to his death because of the company‘s poor management and debt.

    In particular, this year, global inflation has intensified, the domestic epidemic has been strictly controlled, and the demand for consumer electronics has plummeted. Against this background, AGCO group has decided to close the Dongguan AGCO factory.

    Not only in Dongguan, but also in neighboring Shenzhen. On August 29, wellima electric appliance manufacturing (Shenzhen) Co., Ltd. (hereinafter referred to as Shenzhen wellima) and Fulong electric appliance manufacturing (Shenzhen) Co., Ltd. announced their early dissolution.

    Data show that the company is an old household appliance brand with a history of 40 years. The company has a total area of more than 600000 square feet, about 2000 employees, and more than 30 years of experience in producing and manufacturing electrical appliances. It started with an electric iron and an electric blower, and has developed to small household appliances such as steam dry cleaning brushes, electric cake pans, barbecue ovens, electric kettles, and electric fans. The products are exported to more than 50 countries in the world, such as the United States, Germany, the United Kingdom, Canada, Japan and South Korea, and the strength can not be underestimated. But even so, in the face of the bad environment, they can not survive, which is inevitably sad.

    According to the notice issued by Shenzhen wilima, due to the losses in the past few years and the fact that there are no new orders at present, the business is at a standstill, and it is decided to dissolve the company on August 31.

    Coincidentally, Zhonghua picture tube company (Huaying), a subsidiary of Datong group in Taiwan, China, issued an announcement on the 29th, saying that after the ruling of Taoyuan District Court, Zhonghua picture tube declared bankruptcy, with a total debt of NT $41.833.557 million (about RMB 9.5 billion). The first creditors‘ meeting will be held on October 28 this year.

    Data show that the full name of Zhonghua picture tube is "Zhonghua picture tube Co., Ltd." founded in May 1971, it is the world‘s most important display manufacturer and one of the "five tigers of panel" in the island. It is an important manufacturer in Taiwan, China who developed key components of video products in the early stage, and its display output was once the top three in the world. In1997, Huaying introduced Japanese technology, which opened the prelude to the flat display in Taiwan, China. Some media on the island even called it "the Huangpu Military Academy of monitors".

    Obviously, due to the subsequent slowdown in expansion, Chunghwa picture tube could not catch up with manufacturers such as AU Optronics and Chimei electronics, and had to bear the depreciation loss of the picture tube factory. As a result, its long-term performance was sluggish, its losses continued, and its stock price hovered at a low level for a long time. Subsequently, in 2019, Chunghwa image management reported delisting, mass dismissal and other incidents. In September of the same year, the Court seized land, plant, machinery and equipment assets, and finally applied for bankruptcy according to law.

    Another example, recently, a computer technology Co., Ltd. in Shenzhen announced that it would stop production from August 13, 2022, and its notice of closure also directly pointed to the bad situation of the semiconductor industry!

    Public information shows that the company was founded in June 2002 and has been operating for more than 20 years. It has been rated as "China‘s national high-tech enterprise" and "Shenzhen‘s high-tech enterprise". According to the official website, its main products include Mini host, cloud terminal NUC, motherboard, chassis power supply and other products, and provide personalized hardware customization services.

    On July 14, 2022, Shenzhen Tongda Electronics Co., Ltd. also issued a notice of work stoppage, shutdown and vacation. It is reported that due to the cancellation of the company‘s overseas new project development, the fierce competition in the domestic e-cigarette business, and the unpredictability of new projects, it was decided to arrange the overseas project development team to temporarily stop work for six months, pay the salary normally in the first month, and pay 80% of the local minimum wage in the next five months. Within six months, the company will continue to pay social security and provident fund. During this period, employees are not allowed to establish labor relations with other companies.

    Looking back on the past, since the beginning of this year, electronic enterprises in the Pearl River Delta have been reported to have stopped work, business and production. At the end of May, two major electronic factories in Dongguan announced that they had stopped work. In the second half of the year, the market has not improved. In mid July, the news of electronic enterprises ceasing production and closing down came from Dongguan again.

    It is not difficult to find that these enterprises mentioned "the impact of the epidemic", "the decline of orders", "the overstock of inventory" and "the weakness of the industry" in their announcements, which is also the objective situation faced by many electronic enterprises.

    Looking back at the several electronics factories that announced their closure in the first half of the year, it seems that the electronics manufacturing industry has entered a strange circle. Hard costs such as raw materials, rent, labor, water and electricity have been rising, but the demand for products has been plummeting, and how to destock has become a big problem. It is also a question whether to reduce the price of products or not.

    Some insiders said that the industry has gradually transitioned from product competition to capital competition, and the operating cost is too high. If the company was opened ten years ago, the manpower, material resources and rent were cheap, and it could be opened for tens of thousands of yuan. In addition, there was a lot of market demand, and there were business opportunities everywhere. It was very easy for an enterprise to grow. But now, all the lines are rolling, and what they are fighting for is the details and the capital chain. For enterprises, the basic operating cost of stores plus labor is more than one million per year. If they still need to advance capital and reduce inventory, the basic cost will be even higher.

    In general, "difficult operation" has become the norm of many electronic enterprises. With fewer orders and higher raw materials, no matter how large-scale enterprises are, they will face many difficulties. From another perspective, now is also the time for the major reshuffle of various industries. The enterprises that can stay now have proved their ability.

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