Low-end products - hardware industry hard to resist risk

In 2011, it was a year of hardship and danger for Chinese hardware companies. It also caused many small and medium-sized hardware companies to fall into the “collapse” wave, high raw material prices, rising labor costs, and obvious changes in exchange rates. The profits are gradually being eroded.

The troubles of raising prices are the troubles encountered by leisure sports cars. The rising raw materials have a greater impact on the prices of export products. He said that due to the fact that raw material costs account for more than half of the company's overall cost, the impact of various material price increases on the company is greatest, and the decrease in European and American customers at the current Canton Fair has not been a strong demand for recreational sports cars, 'in this case If you raise the price further, the next order reduction may be a trend; if you do not increase prices, then the company will survive very difficult, and even accessories companies may stop supplying.

According to statistics released by the National Bureau of Statistics, consumer price index rose by 5.3% year-on-year in March, hitting a new high in 32 months, and the industrial production price index PPI rose 7.3% year-on-year, and has risen for the eighth consecutive month. Since 2011, the raw materials for the hardware industry have seen a significant rise or rise in expectations: Copper prices have soared since last year; long-term negotiations for iron ore are likely to lead to 'crazy stones', leading to steel prices. Soaring; aluminum, zinc and other non-ferrous metals have strong expectations of rising prices, oil and other fuel prices are also rising.

Although Ying Lei, like most of the exhibitors, has adopted a small price increase to cope with various cost increases, it is still unclear whether the orders can actually be put into production after the price increase. 'Foreign customers have expressed their desire to increase their prices, because the soaring prices of bulk raw materials are global and everyone is very transparent. The key is whether the degree of recovery in the European and American markets and the consumer's willingness to purchase will determine whether buyers will actually place orders. 'Ye Lei said.

The author learned from the foreign trade department of Yongwu Yusan that the three companies participating in the exhibition have indicated that they have raised their price intentions to the customers at this session of the Canton Fair, and the export prices of foreign products have generally increased by 5%-10%. However, whether the price increase can be accepted by the buyer, there is no bottom in mind. The foreign trade department stated that in the next step, they will continue to track the progress of orders from key companies.

The difficult and profitable calculations of the profit have been calculated. The profit rate of the company in the first four months was only about 3%. After attending the Canton Fair, Mr. Luo still did not believe the report submitted by the financial department. 'I had thought that there was 5% and the gap was too great. '

Mr. Luo's hand tools for gardening have been eroded by the rise in raw materials since last year, and the total monthly salary of more than 70 workers has increased by 50,000 yuan. He smiled and said: 'It seems that we have returned to the era of selling products rather than selling raw materials. '

The Ministry of Commerce previously publicly stated that the average profit rate of China's export enterprises in 2010 was 1.47%, and that from January to February of this year, the profit rate of export enterprises dropped to 1.44%. Zhang Yansheng, director of the Institute of Foreign Economic Research of the National Development and Reform Commission, once stated publicly that if the government appreciates quickly, 20% of SMEs may die, 20% of companies can basically achieve industrial upgrading through their efforts, and 60% of companies may be in transition. The edge of the ripples.

Despite this, the inventory turnover of the company is also slowing down. Mr. Luo said that it can be turned around once in the last 2-3 months. Now it takes more than four months to turn around once. 'This year, foreign trade is getting harder and harder, and it is difficult to survive in the cracks. '

Forced the enterprise to transform and upgrade price increase troubles and profitability. For hardware companies, this is not the first time. Some experts said that the long-term response strategy of hardware manufacturers is to seize opportunities in the current difficult times and promote transformation and upgrading.

'Mainly the products of China's hardware manufacturing companies are too low-end. 'China Hardware Alliance ** Yang Yingyuan said at the '2011 China Hardware Industry Matchmaking Terminal Summit' that although China currently has tens of thousands of hardware manufacturing companies, it is mainly small and medium-sized, and most of them are small workshop-type enterprises. Small, single style and many low-end products, and low-end products can not meet the needs of the end market, is the company's low profits, do not do, the main reason for weak resistance to risk.

Yang Yingyuan pointed out in an example that in 2010, China’s production of automobiles and ships ranked first in the world, making the demand for hardware tools in the automotive and marine terminal markets increase substantially. This has given development opportunities to hardware companies that have suffered from price wars and their profits have been increasingly compressed. However, tens of thousands of hardware manufacturers in China have not yet shared this feast.

Yongkang Tailong, Baoshi, Jinyun, a group of companies such as Jin Mason to seize the opportunity, or cooperation with the central enterprises, or with foreign industry giants into the automotive, shipbuilding, chemical, petroleum, high-speed rail and other terminal industries, has opened up for the enterprise A large market. A company certified by classification societies revealed that in recent years, the price of the company’s original main products has been declining, sales volume has also declined, and profits have been almost completely eroded. However, after entering the ship market in 2009, profits were three times higher than before.

Yang Xinfa, deputy secretary-general of the China Shipbuilding Industry Association, pointed out: 'Hardware companies should keep abreast of our demand information, and many times are caused by barriers to information asymmetry. Nowadays, many shipyards use tools that are very backward. However, shipyards do not need a single tool, but rather need matching tools. Therefore, if you want to enter the ship terminal market, you must have matching and quality tools. '

So how can a hardware manufacturer capture this market? The current consensus among industry experts is that the first is product upgrades and the second is the integration of industry resources.

Qian Zugen, deputy secretary-general of the Shanghai Automotive Industry Association, said that hardware manufacturers, especially the tool industry, need to adapt to the high thresholds of automobiles and ships, implement product upgrades, and come up with excellent products.