Dongguan tool distribution difficulties and solutions

One afternoon in mid-September, Dongguan said that the most exclusive Changrong International Hardware Mould Square of the tool dealers was particularly deserted. On several long streets, you could not see a figure for a long time. With the investigation, the six hardware mold markets that have been visited have been the same. Feel free to walk into a shop and ask, "How is the recent business?" 90% of the results obtained are "not very good." The inquiry revealed that the market situation was good in the first half of this year, and it has gradually entered this status since June. By mid-September, in most of the three or four months, most of the business in the market is more difficult than before. Some companies can almost use the "dismal" to describe each hardware market has appeared about 10% - 20% of tool companies closed down. In Fenggang Hardware City, the reporters even saw the shopkeepers who gathered and played cards because of the coldness in front of the door. Why is the market for the “cutter-distribution city” that has been so busy now so deserted? After interviewing dozens of shops, the author divided the difficulties encountered by Dongguan's tool companies into the following categories: First, downstream orders decreased and the market shrank. Ye Minjie, general manager of Jiezhida CNC Tool Co., told reporters confusedly that there are many direct users of their knives, but in the second half of this year, many enterprises, including old customers, received very few goods, and some did not even start construction. This is a trading company, the main customer target is small and medium-sized enterprises, with annual sales of about 1 million. This year's sales target has been less than 60% so far. This is a problem that is generally not understood by enterprises. New customers cannot develop, orders from old customers are gradually reduced, and industry associations and media have occasionally issued the voice of rapid economic growth. Manager Chen of Hengda Tools Factory, which specializes in diamond tools, also clearly felt the shrinking of the market. The company's diamond tools are mainly used in the production of cottage phones in Guangdong. Manager Chen told reporters that the sales of mobile phones in the Guangdong area have recently fallen, so the orders of their old customers have also affected. According to the survey, Shenzhen Huaqiang North, which has been hailed as the global mobile phone procurement center and China's largest mobile phone distribution center, has experienced a large number of mobile phone business evacuation since the beginning of this year. Until July of this year, in addition to Mingtong Digital City, there are still some businesses sticking to it, Yuanwang Digital City, Zhenhua Mobile City, Longsheng Mobile City, Gaokede Communication City, etc., most of them are people going to the building, vacancy rate Nearly 70%. Second, the price of the tool has risen too high. The rising price of tool cutters is also a knot that many dealers can't help. Since the end of last year, the price of domestic cemented carbide materials has soared. It has risen 3-4 times in half a year, and the increase rate is between 10% and 20%. By the beginning of June this year, the total domestic raw materials rose by about 40%. 60%. The sharp increase in the price of raw materials has made it impossible for domestic tool manufacturers that have low-value-added products to be profitable and sold, and they have to raise prices after they have exhausted their stocks. Many dealers have reported that domestic tool prices have risen by about 20%-30% this year. In this regard, some Dongguan dealers and agents who also lived with low profits, quickly lost customers because they could not maintain the original price advantage. In addition to the rising prices of raw materials, the vicious competition between dealers is even more crucial. Some distributors who sell the same domestic brand seem to have only realized the advantage of price in this respect, so that the price of your competition has brought the whole industry into a vicious circle. During the investigation, the reporter also interviewed some mass-selling enterprises that were not well-managed. Most of them were purchased directly from the production plants in Jiangsu or Guangdong. Manufacturers without brands were really suffering from “small profits”. These direct-selling companies affiliated with manufacturers can only barely make a living. Changzhou International's Changzhou tool company is an example. It mainly deals in the wholesale of tools. By mid-September, the annual sales target is only about 50%.   Third, corporate financing difficulties. Financing is not only a problem encountered by Dongguan tool companies, but also a common problem for many small and medium-sized enterprises in China. Especially in the economic crisis, most of China's small and medium-sized enterprises are in trouble because of financing difficulties, and even some enterprises have to declare bankruptcy because of the break of the capital chain. Some dealers have reported that dozens of small and medium-sized tool companies in Guangdong have closed down. Now, in order to curb inflation, the country is tightening, and it is even more difficult for SMEs to borrow from banks. At present, the financing status of SMEs is mainly reflected in two aspects: 1. Internal financing. The funds needed for enterprise development are mainly solved internally, and the process of converting their savings (retained earnings and depreciation) into investment. SMEs were unable to afford high debts at the beginning of their creation, and they could only rely on their own capital accumulation to expand their scale. 2. External financing. Mainly to point to bank lending. In order to protect their own interests and reduce the risk of loans, general banks are mainly targeted at state-owned enterprises and large-scale enterprises. SMEs have many business variables and high risks. In particular, the chances of private small enterprises using their reputation and credit to bank loans are negligible. . For a long time, asset mortgage is one of the bottlenecks restricting the financing of SMEs. Coupled with the state's macro-control and fiscal austerity policies, SMEs generally feel that financing is difficult. Once bank loans have nowhere to go, many SMEs turn to higher-cost private financing. As a result, it is difficult to bear the large loan interest rate, which has led to the phenomenon of “warm running”. Zhao Linhua, manager of Dongguan Lianghua Precision CNC Tool Co., Ltd., said that the first difficulty for enterprises is financing difficulties. In the face of low-profit distribution, he always hopes to create his own brand and enter the high-end tool market, and believes that this is a trend in the industry. However, the implementation of this series of behaviors must be based on various costs and expenses such as equipment and talents. When the market is sluggish and internal financing is impossible, dealers without asset collaterals also eat the bank’s closed doors, and the financing is fruitless. Let the ambitious man wait for his dreams. In the process of investigating the difficulties faced by the Dongguan tool companies, the press delegation made a relevant understanding of the business conditions and business ideas of these enterprises from the side, and analyzed the general problems existing in the enterprises that were trapped. 1. The added value of the product is low. Most of the trapped enterprises mainly sell low-value-added general-purpose tools without brand. In the first half of the year, the price of raw materials rose sharply, and the unfavorable price advantage was broken. The old customers did not hesitate to leave. At the same time, the tools of many foreign brands are also lacking in application technology knowledge. 2. The quality is unstable. It is understood that in recent years, although the quality of domestically produced tool products has improved, the stability is still a major headache for dealers. The same product produced in batches may have many different angles and different materials. This irresponsible business attitude has been ridiculously called "a very clever way to make money." Obviously, a production company or dealer that lacks integrity is not welcomed by the market. 3. The customer base is narrow. The customers of the trapped enterprises are mostly low-end SMEs. Due to the macro-control of national policies, the manufacturing industry is in the stage of transformation and upgrading. The SMEs under these low-end industrial chains have also suffered from the impact of the market economy, and the order volume has decreased, which has further led to the decline in orders for tool companies. 4. The above three points directly show the appearance of enterprises with low quality and low credit. Such companies have poor earnings and poor repayment ability, which directly increases the risk of financial institutions providing financing to enterprises. This has entered a vicious circle. Enterprises have no funds, and the weaker their profitability, the more financial institutions are afraid to provide financing services. The harder it is for corporate financing, the greater the funding gap. In the face of many difficulties, most companies are not optimistic about the market in the second half of the year, and some enterprises believe that June-September is the off-season of the market. After October, the business will improve. After analyzing the positioning of the trapped enterprises, the author concludes that if the policy environment remains unchanged, the market situation of these enterprises will not improve.   In the face of difficulties, 90% of Dongguan's tool companies are in trouble. Shen Zhuangxing, honorary chairman of the China Machine Tool Association Tool Branch, pointed out that “the survival of the fittest is the fundamental law in today's market economy, and our tool industry needs to advocate this law. "The means of defeating competitors by relying on low cost advantages is no longer the mainstream of survival and development." Since June of this year, 90% of the tool companies in China's distribution city Dongguan have been in trouble due to a series of factors such as market shrinkage, price increase and financing. However, during the investigation, we found that some enterprises still have little influence, and even the business is exceptionally good. This is like the decline of a hundred flowers in the garden, but there is a unique phenomenon. This strange phenomenon attracts us to find the truth and visit the original reason. Case 1: Among the traders, Hong Kong Fuming Hardware Machinery Trading Co., Ltd. is one of several shops with good business. Fuming Hardware mainly acts as a foreign popular tool brand, such as Japan's Mitsubishi, Hitachi, Toshiba, Kyocera, South Korea's Tegu Ke, Germany's Walter and so on. Huang Jianqing, the general manager, enthusiastically introduced, “The foreign brand tungsten steel milling cutters represented this year are particularly well sold.” When asked why, he said, “Because foreign tungsten steel has not risen so much this year, mainland tungsten steel has soared. Now, the price of the (agent product) is already close to the price of the mainland. Then, who is close to the mainland, who is still using the domestic?" This rhetorical question makes us understand the gap between domestic and foreign. He also reluctantly said, "The quality of foreign tools is good. It is not that we want to take foreign things. We don't want to. There is really no way. The mainland is not so good."
When talking about the issue of honesty, Huang Jianqing told the reporter very sincerely, "German Walter has 100 pieces of knives, then a box is one thousand. Walter knives produced by Wuxi, dealers take a piece of 40-50 yuan, if Mixing 3 pieces of Wuxi Walter's three knives into Walter, Germany, you can earn more than 100 pieces in one box. But what kind of goods we usually sell will not be adulterated. If adulterated, the customer will It is easy to lose.” Guaranteeing product quality is undoubtedly the basic requirement of consumers for businesses. It is the best way for enterprise managers to maintain customers and spread their reputation by restraining the temptation of immediate interests and maintaining their own reputation and image. Case 2: Dongguan Jingtian Precision Hardware Tools Co., Ltd. is a comprehensive enterprise that acts as both an agent and a manufacturer in Jinming Hardware City. By mid-September, it has completed 80% of the annual target. Jingtian Company mainly deals with thread cutting tools. At the same time as Taiwan's TOSG, Japan YAMAWA and OSG three well-known tap brands, there are also factories producing extrusion wire attack and various special non-standard wire attacks. The products are mainly used in the electronics industry. From a small business with a registered capital of only 500,000 in 2009, in just over two years, this year's turnover has reached more than 8 million yuan, which is a rapid development. Curious, we asked the secret recipe of Ida. Sales engineer Huang Yuewen told reporters, "Our products are more specific, and the main sales staff know more about the application technology of the products. The old customers are very happy that we help them solve some simple technical problems and introduce some new customers to us. After-sales service is the key to the customer's extra points. Selling knives must understand the knife. If you help the factory solve some tool application technical problems, they will trust you and bring you new customers. At the same time, the sales staff has mastered more application technologies in the service practice for customers. In the harsh market environment, companies that are still well-versed are often those with application technology. Large enterprises with a certain reputation have already established training mechanisms for relevant talents. Sumitomo and Yujie's first-level agents said that the head office will have 4-5 agent technical trainings per year; Taiwan's Zhengheyuan, which sells 200 million yuan a year, also said that every employee of Zhengheyuan has systematic technology before taking up the post. Training. Case 3: Wenxiang CNC Tool Company is one of the well-known dealer brands in Dongguan. It mainly deals with domestic and foreign brands such as AIA, MJ, GDK, STK, Sumitomo and Swiss “Linina”. Wenxiang, who has always been "the best tool supplier in China", has a good reputation in the industry. In addition, Wenxiang is also investing in the Dongguan area, and is working hard to own the brand. General Manager Zeng Yusheng told reporters that the company's annual sales last year was 28 million yuan, and this year's sales target was 46 million. By the middle of September, it had completed 36 million, accounting for 80% of the annual target. In addition to Wenxiang, other well-known dealer brands in Dongguan, Shangjia, Guangfu, Guanglong, etc., also received good returns due to their own brand effects. In retrospect, the longest remaining in the market is always a branded company, not an anonymous manufacturing company. Even with the same quality and the same price, customers are more willing to choose a branded company. In the eyes of customers, the brand is a guarantee of quality and a symbol of high added value. However, behind the achievement of the brand, these companies have also worked hard. When talking with Zeng Zong, the reporter learned that Wenxiang’s corporate culture, management mechanism, employee training, and even dozens of direct-operated stores are not testing the wisdom and persistence of corporate managers.   The above-mentioned successful distribution cases have given constructive experience in three aspects of quality, application technology and brand building, respectively, compared with the dilemma of the distribution companies mentioned above. However, the fundamental problem of dealers in Dongguan still exists. Why are foreign brand tools more popular? Why is the sales of domestic products blocked? As a window of the tool industry, Dongguan dealers have responded to the market with many problems in Chinese tool manufacturers. In order to explore the essence of this phenomenon, the reporter interviewed Shen Zhuangxing, honorary chairman of the Tool Tool Branch of China Machine Tool Association. During the interview, we learned an equally astonishing fact. The member companies of the China Machine Tool & Tool Industry Association Tool Branch have a clear overall situation this year, with orders increasing by about 25% year-on-year. According to Shen Lao, most of the member companies here are domestic large-scale tool enterprises, such as Zhun Drilling, Shanggong, Haliang, Chengliang, Arnold, Shaanxi Hard and other brand enterprises, as well as a small number of relatively small and medium-sized enterprises. Moreover, such large enterprises as Sandvik and Iskar have not felt the fluctuation of the market until now, and have not felt the order reduction. Faced with this phenomenon, Shen Lao stressed that “the survival of the fittest is the fundamental law in today's market economy, and our tool industry is in need of advocating this rule.” The means of defeating competitors with low cost advantage is no longer to survive. The mainstream of development. Tool companies that continue to take the low-end route often cannot withstand a big market shock. Under the market environment of rising raw materials prices, RMB appreciation, and credit crunch this year, these enterprises first became targets. To adapt to changes in market development and gain a foothold in the economic turmoil, these tool companies must learn to explore the market trends and new consumer demands. From the foreign tool sales, we seem to see a little bit of a sign. According to statistics, in the composition ratio of China's tool market, the share of high-end products has increased from about 10% a decade ago to about 40% at present, and the growth rate is very fast. As the development continues, high-end tools will soon Become the mainstream and new competition point of China's tool market. In this regard, Shen Lao repeatedly pointed out in the conversation that “the structural transformation of domestically produced tools is our most worrying issue.” It is worth pointing out that there are still a large number of tool companies in China that are slow to respond to changes in this market structure and are satisfied with the current situation. The domestic medium and low-end tools still have a certain market space, and have not taken necessary measures to adapt to the new situation of market development. The emergence of the difficulties in the distribution of Dongguan may make some enterprises wake up: the business strategy of restoring the status quo and stopping the production of low-end products will undoubtedly greatly increase the risk of enterprise development. How is the right strategic deployment of the market? 1. Domestic key tool enterprises and qualified tool enterprises should regard modern high-efficiency tools as the main direction of the “Twelfth Five-Year Plan” strategy, and catch up with the development needs. Otherwise, they will lose their dominance over the domestic tool market, and the consequences will be very serious. . Shen Lao said that at present, large state-owned enterprises are in the process of transformation. Due to various factors, transformation is a relatively slow process. The transformation is based on innovation. The research and development of advanced technologies and the cultivation of professional talents are worthy of serious attention from these tool companies. 2. By combining national conditions and comparative advantage analysis, the production of traditional general-purpose knives in China still has a large market share. However, there are many enterprises competing for this cake. Under the premise of strictly controlling the total amount, these enterprises can enrich their varieties and improve their products. Quality and intensified services make a fuss about it. In the process of production and application, we gradually move closer to modern and efficient tools. At the same time, we must also pay attention to the construction of the brand, establish market reputation, and enhance the corporate image. In this way, it can maintain the domestic market share, but also gradually enter the middle and high-end market. It is worth mentioning here that Dongguan Harmony Cutting Tools Co., Ltd. is a comprehensive trade and production compatible enterprise. The original wholesale distribution model can't make the company grow in the bad low-price competition market, but resolutely turn To do terminal, service, and plan. Harmony general manager Wen Jianmeng deeply felt, "If you want to be a brand, you still have to go to the terminal. The terminal is to use the customer, and his series of requirements for you will make your product better." 60% of Harmony's products are self-produced and are moving at a new product every year. In the past two months, some of Hamoni's old customers have reduced their demand. However, because of the wide range of markets, the impact is small. Looking forward to the tool market during the “Twelfth Five-Year Plan” period, the global trend is growing at a rate of 3%-5%, while China is expected to be faster and faster than the global average growth rate of three times (ie 10%-15%). development of. In the face of this rare and promising development opportunity, we must not look at foreign enterprises and large-scale enterprises. China's vast number of small and medium-sized enterprises should also take part in it and adopt various strategies to actively compete for this cake. I hope that in the near future, we can see the prosperity of Chinese tool companies, especially small and medium-sized enterprises, from the window of Dongguan.  

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