Export and domestic sales are two extremes
"We started in the domestic market, but after seeing the popularity of the overseas market, we have been in the overseas market for a while. Now we have fully dedicated ourselves to the domestic market," said Hebei Tangshan Win-Win Co.'s sales director. , Ltd., Tangshan 80% of business survival is supported by exports. And Tangshan beneficial to all through the development of recent years, the domestic market has achieved the first results.
"Most exporters are OEMs and don't have their own brands. You may have them today, but not tomorrow. The risks are huge." Two years ago, Tangshan Win-Win no longer wanted to be someone else's "processing factory" . so he started with Take the brand route. “We are ahead of other ceramic companies. When they were still exporting, we have already started to strengthen the development of the internal market. The facts have shown that this is the right way ”.
However, export sales and domestic sales have two extremes: export sales are low-end products with low prices, while products in the domestic market have higher requirements and need branding. To build a brand, it is necessary to strengthen market promotion, develop the network, expand the workforce and improve process technology - a big investment in the early stage of export companies heading to the domestic market, and this cannot be offset by profits. "Our current investments are 20% of sales and the net profit is about 15%. In the first few years we will all work at a loss."
Take the differentiated route for "back to the rifle"
For Tangshan's export-oriented enterprises, the transition to the domestic market is not smooth. One of the important factors is the influence of the brand. It is understood that the exhibition is one of the most important channels for the development of the domestic Tangshan enterprise. Due to the lack of brand influence of Tangshan ceramic enterprises, leading to passive investment, the Shanghai annual exhibition has become the most important advertising window. Tangshan Win-Win reportedly invested more than 1 million yuan in the Shanghai exhibition in May this year and only when sales reach 10 million yuan can the cost be recovered.
But in the short term, that return is minimal.
Nowadays, the price war in the industry is fierce and it is very difficult for companies that are just starting out in the domestic market to attract investments in competition with well-known companies. In April 2009, Tangshan, the flagship brand of the winning Tangshan firm, launched a 3-liter water-saving toilet, which has become a new revolution in the ceramic industry. According to Tangshan officials, the product is currently a hit in the market and supply is scarce.
"The firing speed of ordinary ceramic products is 72-73%, but the product is technically difficult and the firing speed is low, so the performance cannot meet the sales needs." Industry experts said that ceramics in the domestic market are different. The chemical way is not based on price but on technical strength and this is the key to the success of ceramics.
"It is difficult for companies to do business now. Since last year, export orders have dropped dramatically and some companies as much as 50%." Jahr said most of Tangshan's pottery businesses fell into a collapse after a depression during the financial crisis: "There is a company with three factories, two of which were closed in early 2009 and have it only resumed slowly in the second half of this year. "
Severely traumatized Tangshan pottery companies have begun to turn their attention to the domestic market. However, the development of the domestic market also represents a great challenge for Tangshan companies, which have always been known for export. "To enter the domestic market, compared to export, the input cost is higher than the profit." The sales manager of Tangshan, Hebei said, win-win. Export sales will not wake up for a while and the development of domestic sales will be difficult ”. Fear is written on the Tangshan Ceramics manager's face. After all, there are very few companies like Win-Win that have successfully developed in the domestic market.
The development of freestyle leads to a weak branding
"Since local businesses did not have the right to import and export themselves at that time, all goods had to be purchased and exported by foreign trade firms in the country, province or region." According to the Tangshan locals, 1988 was an important step for Tangshan's foreign trade. "At that time, we could only accept orders from foreign trade companies and, after making the products, they were in charge of selling them. There were a lot of restricted areas and they were making little money." In the same year, the country fully implemented foreign trade contracts with the management accountability system, Tangshan only has a foreign trade company with import and export rights, and started to have foreign trade in the true sense of the word.
According to reports, in the 1980s a group of people in Tangshan recognized the potential benefits of overseas markets. Most of them used private or foreign funding to start their own small pottery workshops, "on fire, every house smokes", this unplanned freestyle development is one of the main reasons for the size of the Tangshan small business. and lack of brand awareness.
But around 1998, some people saw the market potential of ceramic products overseas and built a sanitary ware factory to sell the products overseas. "But it is this kind of free trade that makes Tangshan companies not aware of brand building."
OEM history is rewritten
In the current Tangshan ceramic tableware manufacturing enterprises, OEM manufacturers account for an important share, which is a well-known fact. In Tangshan, businesses with humble workshops question the competitiveness of Tangshan Ceramics in developing the domestic market.
"Many export companies do not have their own brands and rely on low prices and large volumes." Due to the low export prices, some consider the export of Tangshan ceramics as "a selling ground". However, most businesses would rather ask for money than a brand. At the same time, large foreign brand companies also liked Tangshan fatty meat and rushed to Tangshan to cooperate with local small businesses, start OEM production and sell their products overseas through Tangshan.
When our reporter recently visited the Tangshan ceramic tableware production area, he also learned that after the severe market test in 2008, some Tangshan manufacturers started to wake up, they abandoned the tradition of being a man of 'business in the past and have taken the initiative to conquer the market and continuously increase their competitiveness: the construction or conversion of factories, the acquisition of new production facilities, the creation of marketing teams, the construction of showrooms of new products or increased media presence, etc., all these packages of measures are intended to strengthen the market to dominate the future.
Reduced orders lead to excessive inventory
"2005 was Tangshan's peak export sales period. At the time, orders had to queue for more than a month and new factories kept springing up." It is understood that most of the export countries of Tangshan companies are concentrated in the Middle East, Central and South Asia due to the obstacles to export certification. Since 2008, however, company orders have declined at different rates: "In the past it was possible to ship several containers of goods in a month, but now sometimes only one container of goods can be shipped in two or three months."
The sharp decline in purchasing power and international orders has caused a significant contraction in Tangshan's ceramics exports and many companies are in a state of suspension or semi-closure. "Because business was doing so well before, the company didn't control production well, so orders suddenly dropped, causing a large backlog of product inventory."
In fact, this situation is not a manufacturing area in Tangshan. Tangshan Huida's orders are also believed to have dropped dramatically by around 20% year-on-year, while more than 60% of its products have been exported to Chongqing Siwei, a developed country in Europe and the United States, and its business principal suffered losses the situation is not optimistic. Since the main products of Shenzhen Chenglin Gaobao of Taiwan in the United States are positioned in the lower-middle range, consumers are currently choosing cheaper items, so the impact is not great, but there is also the risk of excessive concentration of the market. , the Company's performance is still down by 30-50% compared to the same period of the previous year.