How Can Chinese Manufacturers Escape The Red Sea Price?

In recent days, Jiangsu and Zhejiang provinces

The news of "closing down" and "shutting down" has shaken the hearts of the industry.

As the international consumer market is in a depressed situation, buyers from Europe and the United States keep lowering the purchasing cost in China. Some textile foreign trade enterprises in China can not do anything alone, or rely on low profit orders to maintain production.

In the long run, the sub healthy operation mode has become a fatal injury to the enterprises, and some SMEs are dragged out to the inevitable result.

However, in addition to the external environment, vicious competition is also engulfing the industry.

In order to maintain customers and guarantee the quantity of orders, some manufacturers are willing to take orders under the "capital preservation" attitude, so many export enterprises are plunged into the Red Sea price.

"Orders with low prices are all done by people!" now it seems that the more terrible thing is the "low price competition".

Robbing others and breaking their own way

In recent years, more and more textile enterprises have complained to reporters that low price competition has disrupted the normal order of the industry.

No matter how low the price given by a businessman, someone will take the order.

From a production point of view, such a price can not guarantee profit margins at all. If they can do that, it must be.

And craft.

Businesses that do not want to cut prices for Baolun will not be able to do so, but those who pay for them at a very low price will not be able to save money by unconventional means.

Over time, the healthy development of the industry is bound to be threatened and its own interests will also be affected.

Tong Xin, sales manager of Lu'an plumage Co., Ltd., Anhui Province, has said that textile export enterprises have not been involved in low price competition for nearly a year or two.

As early as the 2008 financial crisis, the "low price competition" had already begun to show signs.

He pointed out: "some orders are too low, and businesses will lose money if they do.

Nevertheless, there will still be such orders in the domestic market, which gives merchants the space to lower prices.

Now the momentum is getting stronger and stronger.

Yang Leying, manager of the import and Export Department of Shandong Hualong Textile Co., Ltd., said that the vicious competition is too great now.

The competitive pressure comes not only from peers but also from trading companies.

"The main products we produce are broad and fine cotton bleached cloth.

Foreign trade companies that compete with the same kind of commodities today are substantially reducing their prices, which are about 1.45 US dollars per meter ~1.5 US dollars per meter, which is very difficult for us large enterprises because profits are too low.

But these foreign trade companies will find some small factory lists.

In contrast, these small factories have small capacity and good product turn, so low price orders are still profitable for them.

In the view of the industry, enterprises with low price orders only value immediate interests, and seemingly forced choice of individuals is harming the healthy development of the industry as a whole.

"Buying orders at low prices is actually a speculation, and such a business model will not last long.

And in the process of industry pformation and upgrading, they have also lost the ability to upgrade from product development, technological innovation and so on. Their development path can only be narrower and narrower. In the end, it will be found that this is a dead end.

Someone in charge said so.

Abandon the "price list" and emphasize long-term interests.

According to industry sources, export enterprises are accustomed to "price list" and blame the European and American businessmen for their initial order.

"Foreign purchasers are very smart.

When a large well-known American businessman first orders in China, it will cooperate with a single factory. If the cooperation goes well, they will continue to increase the size of the order.

As a manufacturing enterprise, in order to retain such a large customer, enterprises will continue to expand production capacity to meet their production needs.

But the problem is that once the domestic production enterprises expand their scale to a certain extent and are highly dependent on large orders, buyers often ask for price reduction.

At this point, if the price is not reduced, if such a large customer pfers orders to other factories, the expanded capacity will become the burden of the initial order enterprises.

To this end, if the production enterprise can not find new customers in a short time, it can only continue to cooperate with the old customers on the basis of low price orders.

To put it simply, if you don't do the order from foreign investors, the capacity can only be idle.

Therefore, enterprises can either buy low orders or shelve part of their capacity.

The two way is your choice. "

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Usually, the international purchasing Institute looks for suitable suppliers according to cost and quality planning.

In recent years, China's demographic dividend has been gradually disappearing, and international sales have been sluggish, and international buyers have become increasingly stringent in terms of cost control. Some Chinese manufacturers receive price cuts every year.

At the same time, international buyers have more and more requirements for suppliers, and the latter must comply with business ethics, such as minimum wage, environmental pollution reduction, reasonable working hours and work-related injury insurance.

It is the responsibility of the enterprise to ensure employee benefits, but is the firm compromised in the face of low price orders from purchasers? A survey by Mckinsey, an international consultancy, showed that a percentage point of one percentage point reduced by one percentage point reduced to 7.1%~8.1% by an analysis of 1000 major StandardandPools companies.

Therefore, unless the cost structure of an enterprise has a significant advantage compared with its competitors, it is not a good way to reduce prices by lowering prices.

Some experts point out that Chinese suppliers are large and uncooperative. They are vulnerable to being defeated by each other in the price game with international buyers, and are always in a weak position.

For this reason, Chinese exporters should unite and take a long view.

The most important point is to enhance the competitiveness of enterprises and grasp the right to speak the price in their own hands, so as not to weaken the overall interests of the industry.

Let's talk about products and win the price war.

In fact, whether in traditional or emerging markets, although some orders are being pferred to Southeast Asia, the status of international buyers' dependence on the Chinese market has not changed.

In the game of price war, Chinese export enterprises can fully exploit their own advantages and gain more benefits by enhancing their R & D capabilities.

Jiangsu Hanlong Home Textile Co., Ltd. is one of the suppliers of IKEA home in Sweden. In recent years, the company has also been under pressure from buyers to reduce prices.

In order to master the right to speak, the company has constantly increased the proportion of new products. Apart from its style, it is also trying to innovate in terms of color and material.

Its R & D team made the sofa sleeve made of dyed polyester dyed yarn dyed by the raw liquid, which is more resistant to washing, the process is simpler, and the production process can save water 80%.

The company official said that the new product did not need to reduce prices, because the company as long as continuous innovation, it can meet the buyer's annual price cut requirements.

Despite the current downturn in the textile export market, the profitability of Jiangsu Wuxi Hui Hui Textile Technology Co., Ltd. is still guaranteed to be around 20%.

The main reason is that its fashionable children's skirt products are well received by foreign businessmen. The complex manufacturing processes and high quality raw material collection capabilities required by such products are not available in general processing plants.

At a recent international exhibition, the company's products had been questioned by foreign investors at low prices. Lv Qingjun, general manager of the company, would refuse to make sure that the products and stable production capacity made him worry about it.

He believes that as long as the products are excellent, Chinese manufacturers can escape the Red Sea price.