The current economic situation and corresponding countermeasures in Lishui bearing industry

Since June of this year, the uncertainty of the economic situation has generally stimulated the nerves of our Lishui Bearing Company. In a conversation with some business owners, they learned that on the one hand, they felt that the decreasing trend in order volume was gradually increasing. On the other hand, the pressure of increasing raw material costs, labor costs, and other cost prices was getting worse, allowing business owners to Similar to the 2008 global economic crisis concerns arise spontaneously.

In view of the international situation, although the overall trend of the world economy has been relatively stable since 2011, the situation in Central and Northeast Africa has been turbulent. The nuclear leakage caused by Japan’s earthquake and tsunami has not been properly resolved. The European debt crisis is looming and all are the world economy. Growth has brought uncertainty. The U.S. disregards the interests of most countries in the world and unilaterally adopted the policy of “quantitative easing” several times, triggering a new round of global liquidity surplus and rising inflation of commodity prices. What is the trend of the world economy in the second half of the year? Overall, it is not optimistic. In our country, in order to stabilize people's livelihood and curb inflation, the country's tightening monetary policy of economic regulation and control has been continuously strengthened. In this economic situation, SMEs with weak domestic anti-risk capabilities face enormous challenges. If business operations return to the predicament of 2008, the consequences will be more serious than they were in the past. Because of the global economic crisis in 2008, governments of various countries at that time were still able to adopt public intervention to support demand and reduce financial market uncertainty and systemic risks. For example, China will invest 4 trillion yuan in basic project construction, effectively stimulating domestic demand and reducing the risk of crisis. With the efforts of the international community, the world economy has quickly "turned negative". Many of our bearing companies tasted the sweetness of the economic recovery from late 2009 to early 2011. In contrast, this time, the country adopted a relatively tight monetary policy.

How to deal with the current severe economic situation, in order to survive and develop in the contrarian? Every business owner should put this issue on the agenda. According to the discussion with some business owners, the Association proposes the following suggestions for member companies, hoping to help member companies, and to inspire them, inspire everyone, make concerted efforts, and discuss good solutions to tide over difficulties.

First, establish an active concept of risk aversion, and establish a correct business strategy to avoid risks, should establish a positive concept of risk aversion, rather than a negative attitude to avoid risk and avoid risk. It is necessary to make correct countermeasures in accordance with the national policies and the characteristics of the market economy; to see the situation clearly, to properly assess its own strength, and to adjust its business strategy. A company can only adapt to the trend of the development of the times if it is strategically positioned accurately, seize opportunities, speed up development, and gain momentum in the contrarian.

Due to the economic recovery from late 2009 to early 2011, some companies increased their capacity investment without own strength and market. If the economy continues to pick up, the drawbacks are not obvious. Now that the market is a bit weak, it immediately feels embarrassed. This is the result of inaccurate strategic positioning. Under the current situation of national economic contraction, if the company has already expanded production, it is recommended to adjust its strategy, rationalize its layout, reduce its inventory, and reduce its liquidity investment so as to set a target for production. For those who have not yet expanded production, they must review the situation, exercise caution and limit large-scale capital investment. We must rationally arrange the funds so that the financial status of the enterprises will maintain a good state; accelerate the collection of accounts receivable and avoid the emergence of new receivables; strengthen the internal management, sort out the authority flow, establish and improve the internal control system, and prevent the capital chain Fractures: Strengthen cooperation and communication with financial institutions, establish and maintain good relationships, maintain smooth channels, use idle assets, optimize resources, and use conditional cooperation when necessary to attract external funds, integrate resources, and strengthen alliances. Enhance the company's strength; rationally arrange production plans, optimize the allocation of production jobs and labor hours, reduce labor costs; strengthen employee education, care about the lives of employees, introduce and strengthen the incentive mechanism for the survival of the fittest in personnel management, and reduce redundant departments and related personnel, An atmosphere of cohesiveness and competitive pressure is formed among employees.

Second, rely on technological progress and scientific management, to form their own competitive advantage There are currently two types of companies on the economic downturn caused by the impact is not great. One is a micro-small enterprise; the other is a company with strong strength, product characteristics, and competitiveness. Micro-small enterprises are small because of their own investment, the risk is small; competitive companies rely on technological progress, scientific management and other means to form their own competitive advantage. The competitive advantage is various, mainly product quality, technical characteristics, service level, brand effect and so on. These advantages have been achieved either because the company has acquired unique technology or because the company has a high level of management and business philosophy, or a combination of these factors. It cannot be denied that most of our companies are sensitive to changes in the economic situation because their products have no characteristics, lack of competitiveness, and can be described as "Spring Plumbing Duck Prophet." Only by relying on technological advancement, scientific management, and other means, these enterprises can develop their own competitive advantages and can improve their ability to resist risks. They cannot rely solely on price competition, especially among local counterparts. In the situation where the demand for bearing products in the industry has decreased, some companies have lost confidence and it is easy to sell their products by means of price cuts. However, if there is a situation where prices are competitive with each other in an industry, there are many disadvantages:

1, lower prices will inevitably squeeze profit margins. When the product completely loses its profit margin, the product's manufacturing company and the entire industry will also be dead. Such as linear bearings, slider units, it is understood that today's profits only rely on the residual value of iron and aluminum scrap. "Lishui Bearing must not repeat the mistakes of Lishui Gold Pen!" How many people are appealing and worrying is not unreasonable.

2, the price will hurt the company's development potential. Businesses must have the potential for development. This is a very simple truth. Do not develop in competition and die in competition. What does development depend on? By accumulation. It is expected that the average profit margin of small and medium-sized enterprises should be positioned at more than 20%. Currently, raw material costs, labor costs, and other cost prices are constantly increasing. The price of our bearings does not mention a drop. With such a vicious circle, it is still difficult for enterprises to survive, but also what product research and development, innovation and development and development potential?

3. It is impossible to have a significant effect on increasing the total market demand by reducing sales. In fact, the total market demand for bearing products is changing regularly according to the state's economic regulation and control policies. It is unlikely that the price reduction will increase the current market demand. Bearings are not luxury goods, daily necessities, not Apple's mobile phone technology and price promotions can stimulate the desire of customers to increase the total sales. However, after the price is depressed, it will be difficult to increase prices when market demand increases. Therefore, the price of pressure will harm the interests of the entire industry for a long period of time. In short, the drawbacks of the industry's down-price competition are endless, and they are not single-minded. They hope that the bearing peers will have long-term vision and will consciously safeguard the interests of the industry and must not erode themselves.

III. Emphasis on credit management, establishment of a good corporate reputation and image The reputation and image of an enterprise is an intangible asset that is unique to an enterprise. Regardless of the economic conditions, honesty should not be forgotten. Integrity is reflected in product quality and service quality, and must satisfy users. In the fierce market competition, there is no more important than letting users satisfy. It is necessary to establish a wide range of integrity relationships between upstream and downstream partners.

Fourth, to strengthen network marketing, create more updated market opportunities There is no time and space restrictions on the Internet, its tentacles can be extended to every place in the world. The use of the Internet to engage in marketing activities can be as far from markets that were previously achieved through manual sales or traditional sales methods. Internet marketing can create more updated market opportunities for companies. Finally, in the same sentence, I hope all member organizations will use the association as a platform to unite and work together in a concerted effort to avoid and resist the adverse effects of the severe economic situation and ensure the smooth transition of enterprises.

Fifth, strengthen innovation and integrate resources so that family-run enterprises can truly advance toward modern private enterprises.

The number of lighter companies in Wenzhou, which occupies 90% of the world's market share, has been reduced from more than 4,000 in its heyday to less than 100 now; similarly, Wenzhou shoe industry has been reduced from more than 6,000 to less than 1,000 today. The same applies to other industries such as electrical appliances, clothing, mechanical processing, and printing and packaging. Even excellent companies that survive are still difficult to obtain from banks. Nowadays, our Lishui bearing industry has shown the same signs as Wenzhou enterprises. After the financial crisis of 2008, such as Dazhen Baote and Chengtai Bearing, it was because of the blind expansion in the scale of development and the closure. These are our lessons. Now we should understand how to work more closely and meticulously. We must not follow the trend in a disorderly way. We must reasonably and scientifically conduct production and investment in accordance with the conditions of our own company so that Lishui's bearing industry can develop healthily.

The above forecast of the economic situation is not necessarily accurate. It aims to plan ahead and give you a warning. If you have different opinions, suggestions and other good ideas and valuable experience, please contribute to the proposal through the association for all members to share.