This year, some changes are taking place in the valve and valve industry of Zhejiang Yongjia.
The change stems from the international economy's “great climate†turning cold—a series of external factors such as skyrocketing prices of iron ore, continued appreciation of the renminbi, and continuous increase in labor costs, making the production costs of the pump and valve industry substantially increase.
While some business owners are frowning and secretly complaining, other companies are actively responding to the crisis as a rare "training" opportunity for enterprises to change their growth mode, adjust their product mix, and enhance their management level.
The profit space is tightly clamped
Since the second half of last year, with the continuous rise in the purchase price of international iron ore, the price of steel castings for pump and valve materials has soared from 7,000 yuan/ton at the end of last year to around 10,000 yuan/ton currently. Before that, steel castings rose from 5,000 yuan/ton in 2001 to 7,000 yuan/ton in 2007 and it took about 6 years.
Contrary to the increasing tide of rising prices of raw materials, the exchange rate fluctuations caused by the acceleration of the US dollar's acceleration have forced exporters of pump valves to spend more “mouthpieces†to persuade foreign merchants to accept their limited price increases. Businesses even want to preserve the international market that has already been developed. This makes the Yongjia valve industry, which was originally intended to have a bigger role in the international market this year, be frustrated.
One end is the price rise of upstream materials, and the other is the uncertainty of downstream sales links. It is like sandwich biscuits and it continuously squeezes the profit space of the valve manufacturer.
According to the survey results of the Yongjia County Pump Valve Industry Association, the total exports of the pump and valve in the county have increased by 25% in the first five months of this year, but they have fallen by 20 percentage points compared with the growth rate in the same period of last year.
From the inside out, the thermal energy is accumulated. "When the chilly climate accumulates, negative lamentation will not help. Companies should respond positively." Wang Hanzhou, chairman of Zhejiang Chaoda Valve Co., Ltd. believes that only strengthening internal strength will be needed until the economy picks up. It is only from the inside out that companies can take the lead.
As we all know, casting quality plays an important role in the quality of pump valve products. The weakness of Yongjia casting has become a bottleneck that hinders the development of the pump and valve industry.
At present, there are more than 100 foundry companies in Yongjia and the total annual production value is about 1 billion yuan. The total output value of the valve manufacturing industry is between 9 billion and 10 billion yuan. The existing foundry companies can only meet the total 1/1 of the total demand for valve castings. 4~1/3. With less quantity and less precision, high-end castings are in short supply.
Recently, Zhejiang Zhedong High-Pressure Valve Co., Ltd. has just been approved to become the only designated partner of GALL & CASSINA, the world's largest producer of plug valves. Chairman Pan Xiuren had a new calculation while he was excited – he himself invested in building a casting factory.
Chao Da company and Bethel company were aware of this earlier, and have invested in the establishment of upper grade cast steel companies. "Three years ago, our foreign trade list was still all-brand OEM production. It is now evenly divided between independent brands and OEMs. This is inseparable from our continuous supply of high-quality castings." Wang Hanzhou said: The brand is in control, which not only enhances profit margins, but also makes it easier to negotiate with foreign investors and naturally avoids many risks. In the first five months of this year, Chaoda’s exports steadily increased as the growth rate of foreign trade in the entire industry generally declined.
Although the rapid development in recent years has made the Yongjia Pump and Valve Industry well-known and won the reputation of “Hometown of Pump Valves in Chinaâ€, Ye Jixuan, President of the Yongjia County Pump Valve Industry Association, said: “Looking at the international market, Yongjia Pump Valve The level is only moderate enough."
How can we "power wrench" with global rivals? Recently, both the regular meeting of the association and the private leaders of the leading companies have all heatedly discussed this topic and reached a consensus that only by continuously building high ground can we gain control of the right to speak.
“Although the high-end sector only occupies a very limited share in the entire market segment, if it occupies it, it will undoubtedly accumulate enough 'energy' for the Yongjia Pump & Valve industry. It will not only allow Yongjia's valve and valve industry to withstand the cold weather of the market. Invasion can also provide a strong guarantee for its continued development.†Ye Jixuan said.
As a result, they have focused their attention on the high-end field of “nuclear power valve†that has long been dominated by foreign technology. Industry insiders predict that in the next 5 to 6 years, China will usher in the peak period of nuclear power construction. This year, the Yongjia County Pump and Valve Industry Association applied for the “National Nuclear Valve Project for China's Pump Valve†from the National Development and Reform Commission, the Major Equipment Office, and the General Machinery Industry Association. It intends to establish a national-level nuclear power valve research center in Yongjia North and plans to borrow it. This raises the overall strength and level of Yongjia Pumps.
In this regard, Global Valve Corporation and Luofu Group have taken the lead. Last year, the Luofu Group had already applied to the relevant state departments for the qualification of second-level access to nuclear power. Recently, it has made corresponding adjustments to the changes in the qualifications of some countries.
"Either 'apply' or 'adjustment' has forced us to carry out meticulous management process and production process reengineering," said Mr. Ge Chenxin, chairman of the company. Relative to the sluggish operation of many companies, Luofu Group has been relatively less affected by external influences this year. Ge Chenxin believes that this is precisely because the company has an energy "reservoir" and its spillover effect has already emerged.
Considering risk as a test, whether Luofu Group applied for the national “secondary nuclear power production†production permit or whether the association took the lead in the national nuclear power valve major project, or whether Chaoda’s self-built high-grade steel casting company is a Yongjia pump. Valve companies respond to the crisis.
In fact, many SMEs have foresee the advent of risks more or less. When faced with real problems, many companies can also take a positive attitude and respond calmly. The chairman of Liangjing Group Valve Co., Ltd. regards the current difficult period as a rational adjustment period: “Changing the extensive growth in the past in a timely manner is actually more conducive to the long-term development of the company.â€
Fang Cunzheng, chairman of Zhejiang Fangzheng Valve Manufacturing Co., Ltd., reflected on his own, and he completely rejected the past blind development methods of overdraft labor, overdrawn resources, and overdrawn environment. He paid a high salary to hire Japanese experts to give advice to companies, to listen to opinions with an open mind, and to keep a clear head.
The Volkswagen Valve Group regards the difficulties at hand as a test of the fine management of companies for many years. The results are gratifying. In the first five months of this year, Volkswagen achieved 20 million yuan in export volume last year.
Industry experts pointed out that the macro environment is like the global climate. When the climate changes, what companies can do is to monitor them in time, prevent them early, improve their internal strength, and accumulate energy instead of merely complaining, otherwise they will become more passive.
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