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Low-price competition is the lifeblood of Chinese manufacturing internationalization

Release time: 2015-09-23 16:24

Standard Group (Hong Kong) Co., Ltd. Textile Industry Information: Low-price competition is the lifeblood of Chinese manufacturing internationalization. "People who make low-priced orders are made!" Now it seems that what is more frightening than "closing tide" is "low-price competition".

Stealing others' own way for a while. More and more people in charge of textile companies have complained to reporters that low-price competition has disrupted the normal industry order. "No matter how low the price given by the customer, someone will always take the order. From a production point of view, such a price cannot guarantee a profit rate. If they can do it, it must be a cut-off in raw materials and processes. "In order to protect profits, companies that have refused to lower prices have nothing to do. Those who receive orders at extremely low prices but" saving money "by unconventional means are also discrediting the" Made in China "reputation. In the long run, the healthy development of the industry is bound to be threatened, and its own interests will also be affected.

Luo Xin, sales manager of Anhui Lu'an Ocean Feather Co., Ltd. once said that it is not a matter of nearly a year or two for textile export companies to enter into low-price competition. As early as the 2008 financial crisis, "low-price competition" had begun to emerge. He pointed out: "Some orders are too low and companies still have to lose money. In spite of this, there will still be companies in China to accept such orders, which gives customers room to lower prices. This momentum is now intensifying."

Yang Leying, manager of the import and export department of Shandong Hualong Textile Co., Ltd., said that the vicious competition is now too fierce, and the competitive pressure of large textile factories not only comes from peers, but also from trading companies. "The products we produce are mainly wide-width fine cotton bleached cloth. Foreign trade companies that compete with us for similar products have now significantly reduced the price of their products, which is about $ 1.45 / meter to $ 1.5 / meter, which is very difficult for our large enterprises. Do, because the profit is too low. But these foreign trade companies will find some small factories to fight for orders. In contrast, these small factories have small capacity and good product turnaround, so low-cost orders are still profitable for them . "

In the industry's opinion, companies that take orders at a low price only value the immediate interests, and individual choices that seem to be compelled to endanger the overall healthy development of the industry. "Accepting orders at a low price is actually a kind of speculation. Such a business model will not last long. In the process of industry transformation and upgrading, they also lost their ability to improve from product development and process innovation. Their development path is only You can get narrower and narrower, and in the end you will find that this is a dead end. "Some company executives said.

Forgoing long-term interests by abandoning "striving for price" According to industry sources, export companies are accustomed to "striving for price" also due to the initial ordering model of European and American merchants. "Foreign buyers are very savvy. When a well-known large-scale supermarket in the United States initially places an order in China, it will cooperate with a single factory. If the cooperation goes smoothly, they will continue to increase the order scale. As a production company, in order to retain Such a large customer, the company will continue to expand production capacity to meet its production needs. But the problem is that once the domestic production enterprises expand the scale to a certain extent and become highly dependent on large orders, buyers often ask for price reduction. At this time, if the price is not reduced, if such a large customer transfers orders to other factories, the expanded capacity for it will become a burden on the original ordering company. For this reason, if the production company cannot find in a short time New customers can only continue to cooperate with old customers on the basis of low-cost orders. To put it simply, if you do not make orders from foreign companies, then the production capacity can only be idle. Therefore, companies must either accept low-cost orders or shelve some Capacity. Choose between the two paths. "

Generally, international buyers will find suitable suppliers based on cost and quality planning. As China ’s demographic dividend has gradually disappeared and international sales have been sluggish in recent years, international buyers have become more stringent in controlling costs. Some Chinese producers receive price reduction indicators every year. At the same time, international buyers are increasingly demanding other suppliers, which must also adhere to business ethics, such as minimum wages, reduced environmental pollution, reasonable working hours and work injury insurance.

Ensuring employee benefits is the responsibility of the company, but should the company lower the price when buyers request low prices, and should the company compromise? A survey by the international consulting firm Mckinsey shows that analysis of 1,000 large companies in Standard and Pools in the United States has shown that each percentage point reduction in price caused the profit margin to fall between 7.1% and 8.1%. Therefore, unless a company's cost structure has a significant advantage over its competitors, price reductions are not a good way to reduce prices. Some experts point out that Chinese suppliers have a large group and do not cling to each other. In the price game with international buyers, they are easily broken and are always in a weak position. To this end, Chinese exporters should unite and take a longer-term view. The most important point is to improve the competitiveness of the enterprise itself, and to control the right to speak the price in its own hands, so as not to weaken the overall interests of the industry.

Relying on products to overcome the price war In fact, whether in traditional or emerging markets, although some orders are now transferred to Southeast Asia, the dependence of international buyers on the Chinese market has not changed. In the game of price war, Chinese export companies can fully tap their own advantages and gain more benefits by improving product research and development capabilities.

Jiangsu Hanlong Home Textile Co., Ltd. is one of the Chinese suppliers of IKEA in Sweden. In recent years, the company has also been under pressure from buyers to lower prices. In order to master the right to speak, the company continues to increase the proportion of new products. In addition to styles, it is also trying to innovate in terms of colors and materials. The research and development team's sofa cover made with dope-dyed polyester-dyed spinning technology is more durable and the process is simpler. The production process can save 80% of water. The person in charge of the company said that new products do not need to be lowered because the company can meet the annual price reduction requirements of buyers as long as it continues to innovate.

Despite the current sluggish textile export market, the profit margin of Jiangsu Wuxi Rihui Textile Technology Co., Ltd. can still be guaranteed at about 20%. The main reason is that its fashionable children's skirt products are well received by foreign investors. The complex manufacturing processes and efficient raw and auxiliary materials collection capabilities required by such products are not available in ordinary processing plants. At an international exhibition not long ago, the company's products had also been inquired by foreign investors at low prices. In response, the company's general manager Lu Qingjun would resolutely refuse. The unique products and stable production capacity made it worry-free. . He believes that as long as the product is good, Chinese manufacturers can escape the price of the Red Sea.