Where is China's fastener "loose"?

In 2012, after China’s fasteners grew by double digits, there was a negative growth in exports. In the first quarter of this year, the export volume of Zhejiang Jiaxing, a key exporter of fasteners, fell by more than 20% year-on-year. What is the reason for the fastener industry to be trapped?

“This year, the export value of domestic fastener companies has generally declined.” Luo Ben, general manager of Zhejiang Weigao Standard Parts Co., Ltd. frankly stated.

China's fasteners experienced negative growth in exports after a double-digit growth, which fell by 1.5% year-on-year. Take Jiaxing, a key city in fasteners, as an example. According to the Jiaxing Fasteners Import & Export Association, in the first quarter of this year, fasteners exported to Jiaxing City were US$45 million, down by 22.94% year-on-year; exports to the EU were US$38 million. The year-on-year decrease was 11.82%.

The reason is mainly due to the irrational product structure of China's fastener industry, low grade, low added value, and difficult price increase. Coupled with the lack of demand in the international market, especially after China’s fasteners suffered continuous anti-dumping sanctions, the export volume declined.

At the same time, overseas multinational companies have entered the market, which has brought impact on the domestic fastener market.

In the face of internal and external problems, China's fasteners are still solid?

Skilled workers are in short supply to talk about the reasons why China's fasteners are not competitive. Luo Ben sighed: "Zhejiang has labor shortages and rising labor costs. Every year, the company raises the wages of its workers by more than 20% in order to ensure sufficient manpower. ”

The fasteners produced by Luo Ben are mainly made of high-grade parts and are mainly used in chemical and oil refining pipelines. The annual export value is about 2 million US dollars. The products are mainly exported to Europe and the United States, and the domestic sales amount is about 90 million yuan***. He told the International Business Daily that due to the rising costs and the strong appreciation of the ***, the traditional advantages of Chinese fasteners are becoming cheaper and cheaper.

What is even more troublesome for him is that the vast majority of the workers he recruits are purely “migrant workers” rather than “professional workers” and companies need to make great efforts to train these migrant workers. “The current vocational school system is too long and practical training is very poor. The graduates cannot come to the factory and can't get started. They also need to be taught by the factory master. The state should increase the effective investment in vocational education because the best machine is Man-made. To enhance competitiveness, talent is the most critical." Luo Ben said.

Inadequate supply chain As a leading fastener company in China, Ningbo Jinding Fastener Co., Ltd. has an annual production capacity of 120,000 tons, an output value of over 800 million yuan, and an annual export of 120 million US dollars. However, Xu Pengfei, the general manager, told this reporter that this year's company’s exports have also been hit, particularly in Southeast Asia, South America, and the Middle East, where the market’s demand for product quality is not high and prices are more concerned, while China’s Product prices rose.

Xu Pengfei also said that the more important issue is that the supply chain of China's fastener industry is not perfect. "The overall level of the supply chain is low, and it is difficult to meet the evolving needs in terms of materials, energy, molds, tools, and packaging. The formation of a vicious circle in the industry has forced fastener companies to make low-end products," he pointed out. In the high-end products, the supply of products by domestic companies can not meet the market demand, depending on the import situation.

Low-grade products flooded the dominant market, high-end parts still need to be imported, and the ratio of fastener import unit price to export unit price ratio is more than 6 times, apparently suffering from losses.

Duan Jiaxuan, researcher of China Investment Advisor Machinery Industry, pointed out that due to the large market gaps in the early days and the lack of relevant technologies in the country, a large number of domestic companies smelling business opportunities can only concentrate on low-end areas for OEM production. China's fastener industry has experienced severe structural overcapacity, low-end overcapacity and high-end capacity. The corresponding performance is due to lack of patented technology, poor product quality, and low scale effect.

The endless anti-dumping In 2011, Ningbo Jinding once singled out winning the anti-dumping sunset review of China's fastener products in South Africa, and became the only Chinese company that exported steel bolts from South Africa to enjoy zero tariffs. However, when it comes to anti-dumping strategies, Xu Pengfei bluntly said: “Either pull an foreigner to be a boss, or increase the level of technology and management, so that the international market can not be separated from your product.”

Recalling that Ningbo Jinding was preparing to respond in 2010, two investigators from Germany and the United Kingdom went to the factory to collect evidence and asked why the EU had to set off this anti-dumping case. The two foreigners told Xu Pengfei directly: “Because you are China people."

Duan Jiaxuan stated that in recent years, economies such as Europe and the United States have fallen into a quagmire, and in order to protect the country’s job market, it has set off a wave of anti-dumping against China’s low-end export products. Undoubtedly, the structural oversupplied fastener industry is also under attack.

He further pointed out that the current fundamental problem of the fastener industry lies in its own structural excess, insufficient domestic demand, and anti-dumping measures in Europe and the US are just catalysts. Therefore, if the fastener industry wants to improve its competitiveness and truly go out of the country, it needs to work hard in the structural transformation. However, under the influence of the market forcing mechanism, the M&A, reorganization, and in-depth development of the fastener industry will accelerate and eventually be resolved in the market.