Market hands promote valve industry upgrade

This year, the macroeconomic environment has recovered from the previous year, but the degree is limited. It is expected that the economical operation speed of machinery, including the valve industry, is expected to increase in 2013. From the perspective of changes in growth rate, the recent increase has seen a rebound from the previous year, in which private enterprises have picked up. The largest contribution rate. From the profit point of view, the increase was significantly higher than the previous year, but mainly rely on the automotive industry. It is expected that the profits of the auto industry may not continue to increase rapidly in the future, but the profit growth of the machinery industries outside the auto industry is expected to rise moderately. What is worth paying attention to is that the profit rate of main business income has decreased compared with the previous year, which means that the increase in costs and the decline in product prices are still major contradictions, which will be detrimental to profit growth. From the perspective of fixed asset investment, the increase not only continues to drop sharply, but it is now lower than the entire society and the entire manufacturing industry in the same period; not only the increase has been very low, but also continues to decline. This not only shows that the heat of expansion of production capacity has been significantly reduced, but also reflects the lack of confidence of machinery companies in the future.

The increase in financial expenses and interest expenses in the financial sector has clearly declined. This shows that the corporate financing environment has improved, which is conducive to corporate control of financial costs. Although the increase in accounts receivable is still higher than the increase in sales during the same period, it has stabilized by stabilizing; it shows that although the recovery of payment is still difficult, the risk of excessive growth of accounts receivable is under control. The increase in inventory, especially the increase in finished goods, has dropped to a low level, indicating that "de-stocking" has achieved significant results. This creates conditions for the recovery of the economy in the future.

As competition has increased and benefits have declined, there have been several trends that warrant caution.

The first is excessive price competition. In order to reduce costs, he does not hesitate to use his brains in materials and processes, shoddy, and lacking in quality. He has implemented "marginal" policies on quality inspection standards, and even some well-known and foreign companies have ventured.

The second is to carry out irrational sales under the guidance of the idea of ​​“Ning Losing Profits without Losing the Market” and lose money and earn money. Not only is it upset in the country, but it also leads to vicious competition abroad. Not only does it not work well, but it also upsets the market order in the industry, leaving companies in the industry to lose their reasonable profits and develop their staying power.

Third, the energy of the company's leaders focused on running the market (valves, pumps), pressure costs, and inability to take into account quality management; product quality declines and brand reputation is compromised. Some high-end product manufacturing companies that have achieved independent innovation and have already achieved successful results have repeatedly experienced quality incidents when they once again received orders from customers and put them into production. This has made users shake their confidence in localization.

Fourth, unrealistically pushing down the supply price of supporting partners and partners, causing suppliers to lose reasonable profits, and also lose their enthusiasm for continuous improvement of supply quality, ultimately jeopardizing themselves.

Fifth, excessive layoffs. Not only has the layoffs of ordinary employees been eliminated, but also a few companies have been afflicted with technical backbones. The long-term development of the company’s long-term future is worrying. The above tendency is very dangerous. These short-sighted practices are very unfavorable to the future of the company, and run counter to the industry's efforts to "change from big to strong." Although this may be difficult to solve, it is extremely detrimental to long-term sustainable development, which will inevitably hurt the credibility of the company and its development potential, and worsen the development environment of the entire industry. In the end, the company itself and the entire industry can only get into greater difficulties.

From time to time, the forces of change from large to strong look from the surface, the machinery industry, including the valve industry in the past two years, the decline is due to lack of demand, excess capacity, but this is only the surface reasons; deeper, but also more essential reason is the stage of economic development in China Deep changes have taken place, but the industry has not changed along with it.

The market base that underpins the rapid development of the "10th Five-Year Plan" and "Eleventh Five-Year Plan" is mainly the large-scale demand for blow-outs during the period of high-speed industrialization. It is the excessive demand that has created a "shortage" in a specific period. In order to get the power generation equipment earlier, the Power Plant must take “work expenses” to condolence the employees of the power generation equipment company. Due to too many orders, valve companies delayed delivery for six months or even one year; high-end valve companies had to decide how many valves to produce according to how many key parts they could import.

In the seller's market, the main contradiction of the market is whether to solve the problem, whether the supplier of machinery has enough production and supply capacity of the product, and the demand side is often hungry, unable to calculate the product quality and performance of the supplier. .

Therefore, under the prevailing market environment, the top priority for machinery companies was not to increase production volume. The main consideration was how to obtain greater scale benefits. In that kind of atmosphere, the expansion of extensions, the continuous construction of new factories, the reproduction of production and assembly lines have become the common choice in the industry.

This mode of development has formed a huge inertia, which has buried the seeds of today's difficulties.

After entering the “Twelfth Five-Year Plan” period, on the one hand, China’s industrialization has entered the middle and late period, and the blowout-type demand situation has returned to normalization. On the other hand, under the increasingly acute constraints of resources and environmental pressure, the scientific development concept has become increasingly From the top to the bottom of recognition, from the pursuit of speed, scale to quality and efficiency.

In this context, the total demand growth has become more rational. At the same time, however, the capacity for ultra-high-speed expansion in the previous decade has reached its release period, and its capacity for supply has greatly increased. Between this increase and decrease, the shortage economy has rapidly transformed into an increasingly serious excess economy.

Under the surplus economic environment, the buyer's market will inevitably be formed. The dominant power and the right to speak will be transferred from the valve companies to the users. From the standpoint of self-interest, users must put forward increasingly stringent requirements in terms of product performance, quality, price, and the satisfaction of the special requirements for their own use, and the major aspects of the contradiction should be resolved from the solution of “presence” to “good or bad”.

Therefore, today's valve companies must study the requirements of users, shift their focus to efforts to solve the quality and variety of products, and shift from the "scale efficiency" of pursuing major road products to the "scarcity benefits" of pursuing individual quality products.

Now, both up and down are thinking about cracking the strategy of overcapacity. In this regard, I believe that it is not appropriate to overestimate the role of administrative measures and use the invisible hand of the market.

Difficulties in slowing demand and declining growth since 2011 have been more than two years. Despite this, we still do not want to introduce a short-term stimulus policy to strengthen the speed, because the "transition upgrade" will sooner or later. Although the short-term stimulus policy can be accelerated at a time, it only postponed the crisis. In order to solve the problem, we must rely on the market force mechanism under the fair competition order to stimulate the endogenous development vitality. Now that the push mechanism has begun to work, it should continue to push forward. As long as the market environment is well managed, there will be a group of outstanding Chinese companies, including valve companies, that will emerge from the market and lead the entire industry to upgrade.