The valve industry is a pillar industry in Yuhuan City. As the gathering place of Yuhuan valve enterprises, the market competitiveness of Chumen's valve industry is directly related to the healthy, coordinated and sustainable development of Yuhuan County's economy. Starting with the current situation and development trend of the valve industry, Edexin Valve analyzes market competitiveness and proposes countermeasures to enhance market competitiveness based on the actual situation of the valve industry in Yuhuan County.
1. Current situation and development trend of the valve industry
Valves are generally classified into gate valves, globe valves, throttle valves, instrument valves, plunger valves, diaphragm valves, plug valves, ball valves, butterfly valves, check valves, pressure reducing valves, safety valves, steam traps, regulating valves, bottom valves, filter valves, sewage valves, etc. Classified according to main parameters, among which, according to pressure, can be divided into vacuum valves, low pressure valves, medium pressure valves, high pressure valves and ultra-high pressure valves; classified by valve body material, can be divided into non-metallic material valves, metallic material valves and metal body lined valves. It is widely used in high, medium and low pressure systems such as tap water, sewage discharge, cold and hot supply, and gas and oil supply pipelines. The largest users are the petrochemical industry, power department, metallurgical department, chemical industry and urban construction department. According to relevant data, the global annual demand for valves is about US$50 billion, including US$8 billion in the United States, US$10 billion in Western Europe, US$8 billion in the Middle East, US$10 billion in Japan, South Korea and Southeast Asia, and about US$14 billion in other countries.
The valve industry originated in Milan, Italy during the 1930s. It has a history of nearly 70 years in Western countries, and can be considered an “aging” industry. In the 1980s, the main production areas for valves internationally were Italy, Japan, Germany, South Korea, and Taiwan, China. After the 1990s, due to currency appreciation in these countries and regions, as well as increased costs associated with labor and land prices, along with environmental concerns, these industries gradually lost their competitive edge in the international low-to-mid-range market. They shifted their focus to producing high-end valves and sanitary ware products. Low-to-mid-range products were then transferred to less developed or more backward countries and regions. Since China's valve industry has been developing for nearly 20 years and has a certain foundation, developed countries have chosen China as a major destination for valve manufacturing. As a result, four major production bases for copper valves have emerged in Taizhou, Ningbo (including districts such as Ninghai, Cixi, and Yuyao), Nan'an in Fujian (Luncang Town and Anxi Town), and Dingkou Town in Zhuji. Additionally, there are three major production bases for sanitary ware products in Guangdong (including Shunde, Shenzhen, and Shuikou Town in Kaiping), Nan'an in Fujian (Luncang Town and Anxi Town), and Ruian in Wenzhou (Meitou Town). After the Asian financial crisis, Southeast Asian countries such as Indonesia, Thailand, and Vietnam rapidly developed their valve industries, becoming another important destination for valve manufacturing. At the same time, as people's living standards improve, valve products are increasingly focusing on durability and environmental sustainability. Sanitary ware products have gradually become the new mainstream in the development of the valve industry.
In recent years, the international market of the valve industry has been very active. Valve imports and exports in East and Southeast Asia have grown rapidly. Market trade among developed countries in North America has continued to develop. Exports from countries such as Germany, Italy, and Japan have continued to expand. The rapid growth of imports from countries such as the United States, the United Kingdom, and France has formed a support point for the prosperity of the international valve market. The further expansion of international trade in valves has made competition in this industry more intense, from relying solely on price competition in the past to comprehensive competition relying on factors such as quality and brand.
2. Analysis of the market competitiveness of our county's valve industry
The Yuhuan valve industry started in the 1980s and started in Chumen. It has experienced three stages: initial entrepreneurship, accumulation and development, and adjustment and improvement. The period from 1981 to 1988 was the initial stage of entrepreneurship. The first ball valve sample was introduced from Shandong Qingdao Foreign Trade Company; the earliest valve product, iron valve, began production at County Feihuan Valve Factory; the first ball valve manufacturer, County Plumbing Equipment Factory, was born; the earliest sand casting process was formed in Kanmen Shuilong Village. The period from 1989 to 1996 was the stage of accumulation and development. The production and manufacturing technology and processes of the valve industry have gradually matured, and the processing supporting system has gradually formed. The product has developed from a single ball valve to multiple series of varieties such as copper ball valves, water nozzles, gate valves and plumbing equipment. The export value and domestic sales value have expanded year by year, and a number of enterprises with an annual output value of over 10 million yuan have emerged. Among them, 1989 was a year when the development of Yuhuan valve industry made a major breakthrough, and the number of production companies increased from a dozen to hundreds. After entering the 1990s, valve exports developed rapidly, and products began to be exported in large quantities to countries and regions such as the Middle East and Southeast Asia. At the same time, product brands have also been continuously valued. Since Jiefangtang Ball Valve Factory registered the first copper valve trademark of "Ningmao" in 1989, domestic products such as "Yongdesheng" and "Jushui" have been registered one after another, creating the popularity of Yuhuan valve products in China. Especially at the end of 1996, with the successful introduction of hot forging technology, Yuhuan Valve achieved its first historic leap, and the overall product quality level was comprehensively improved. From 1997 to the present, it has been the stage of adjustment and improvement. Due to the impact of the Asian financial crisis, Yuhuan's valve production companies actively adjusted their market structure and shifted their export focus to markets in Europe, America, the Middle East and Africa, which promoted the rapid expansion of the company's scale, basically forming an industry pattern with enterprise groups as the leader and annual output value of 10 million yuan as the backbone, supplemented by other production companies and accessory production companies. After more than 20 years of vigorous development, the product specifications and varieties of Yuhuan valve industry have become increasingly improved, the scale of the enterprise has continued to expand, and the management level has been greatly improved, basically forming a serialized and professional industrial chain. In 2006, the output value of the county's valve industry was nearly 15 billion yuan, accounting for 30.4% of the county's total industrial output value and 45% of the total output value of similar products in the national valve industry; the total export delivery value of the whole society was 7 billion yuan, accounting for about 50% of the foreign trade exports of similar products across the country. Yuhuan Valve occupies a pivotal position in the national valve industry, and has been named "Valve Capital of China" and "China Hardware Machinery (Valve) Export Base."
However, in the face of the new situation and a comprehensive analysis of factors such as the price, variety, quality, brand, scale, market and development environment of our county's valve products, the comprehensive competitiveness of the valve industry is still mixed.
(1) Highly concentrated labor-intensive industrial clusters reduce production costs and give product price competitiveness certain advantages. Compared with other domestic valve producers, Yuhuan has no advantages in the prices of labor, water, electricity and other factors and resource conversion costs, but is at a disadvantage. The average monthly wage of workers in Yuhuan County is 100-200 yuan higher than that of Cixi, Ninghai and Fujian. Due to location reasons, the freight per ton of raw materials and finished products is 400 yuan higher than that of Ningbo. Coupled with the shortage of water and electricity, the increase in production costs has intensified. Since the vast majority of the county's 1400 valve production enterprises gather in the provincial-level valve and plumbing characteristic industry cluster at the junction of Chumen Town on the Zekan Line, and the 600-acre valve industry functional area in Longxi Township, an industrial cluster of professional division of labor and cooperation in seven aspects from mold making to copper rod processing, forging, electroplating, sand throwing, assembly, and packaging has been formed, making up for the productivity of valve manufacturing and supporting processing processes 15-20% higher than that of other places, thus making up for the cost of freight, The cost of production factors such as labor, water, and electricity reduces the total production cost, showing the strong labor-intensive low-price advantage of medium and low-end valves.
(2) The product varieties are relatively complete and there is large room for market expansion. Our county's main products are medium and low pressure copper valves and accessories, plumbing devices and plunger valves. Medium and low pressure copper valves and accessories have more than 100 varieties and more than 1000 specifications such as yellow (green) copper forged ball valves, gate valves, globe valves, check valves, and filter valves. They are mainly used in tap water and sewage discharge systems. Plumbing devices include 100 varieties and 1000 specifications such as bathtubs, face plates and kitchen faucets, showers and hoses, steam heaters, and floor drains. They are mainly used in kitchen and bathroom drainage systems. Plunger valves are also mass-produced. Our county has a wide variety of valve products and complete specifications. The company can also produce products of different fineness and specifications according to customer needs. Therefore, there is strong market development space.
(3) Private enterprises have flexible mechanisms and strong viability. The valve production and processing enterprises in our county are all private enterprises, and most of them implement corporate management, forming a first-mover advantage in terms of system and mechanism. With this advantage, it supports the valve industry economy to maintain high-speed growth and shows strong development potential. At the same time, the county's existing corporate funding sources mainly come from private funds and rarely rely on financial support. Therefore, it is rarely influenced by national macro policies and has a strong competitive advantage.
(4) The scale of enterprises is small and their competitiveness is weak. In 2006, valve enterprises in the county achieved an output value of nearly 15 billion yuan, with an average output value of about 25 million enterprises. Among them, there are more than 2000 enterprises with annual sales revenue of more than 10 million yuan, 30 enterprises with annual sales revenue of more than 50 million yuan and 11 enterprises with annual sales revenue of 100 million yuan to 500 million yuan. At present, the annual output value of Ningbo Emeike Company has reached about 1.2 billion, and the annual sales of valve enterprises in Italy and other countries have reached several billion US dollars. Compared with it, due to the small scale of enterprises in our county, it is difficult to unite many small and medium-sized enterprises to participate in and compete with large enterprises and large groups in the international market.
(5) Product quality has gradually improved, but the grade is not high and the competitiveness is not strong. Mechanical processing in our county has a history of nearly 40 years. In the 1980s, mechanical processing technicians from state-owned machinery factories went to sea to establish valve factories, thus forming today's valve industry army of 50,000 people and a group of technicians proficient in mechanical manufacturing. personnel. In recent years, companies have increased investment in technological transformation, introduced advanced equipment, used special machine tools for valve automated production, adopted the domestic leading hot forging production process, modern practical and efficient integrated processing technology and a new generation of electroplating surface treatment technology. Introduce advanced testing equipment, establish a quality testing center for valve and plumbing products, strengthen the testing of raw material purity, product hardness and wear resistance, and ensure the stability of product quality. At present, more than 120 companies have obtained various quality system certifications such as ISO9002, UPC, UL, and KS. However, most of the certified products are medium and low-end copper valves and accessories products. Due to the lack of high-tech production equipment and production processes, the key indicators such as smoothness and durability of some plumbing devices cannot reach the corresponding level, which affects the competitiveness of products in the international market.
(6) The regional brand effect is prominent, and corporate brand awareness is not high. As the "Valve Capital of China" and "China's Hardware Machinery (Valve) Export Base," Yuhuan County has a certain reputation for regional brands, which can be comparable to Italy's "Leading Valley" and Taiwan's "Leading County". However, the private brands of enterprises in the county are not strong and the effect is not prominent. Even county-level enterprises with certain popularity in the domestic market, such as Bomin, Huanyu, Jinyuan, Shida, Fenghua, Sulda, Angle Valve, etc., when their products enter the international market, they often export their products under brands from Italy and other countries. At present, there are only 4 national inspection-free products in the county, only 10 provincial-level famous trademarks and famous brand products, and 15 well-known brands in China's construction hardware industry. The total number of various brands accounts for only 2% of the total number of enterprises. Due to the lack of international well-known brands such as TOTO, KOHLER (Kohler) led enterprises, resulting in "China Valve Capital" regional brand lack of strong support.
(7) Foreign trade exports have expanded strongly, and the diversified strategic sales market in the international market needs to be strengthened urgently. The county's domestic valve products are concentrated in large and medium-sized cities and coastal areas across the country, and export sales are concentrated in the Middle East, Europe, America, South Africa and other markets. The total sales in the Middle East market account for about 65% of the total export sales. In this way, the sales market is too concentrated and products are easily saturated. In addition, in terms of sales share in the international market, very few products actually enter the market through their own marketing channels, and a large number of products enter the international market through the marketing channels of foreign companies. In this way, in fact, enterprises in our county only earned a small amount of processing profits, and a large amount of potential profits were lost.
(8) Insufficient scientific and technological innovation capabilities, and accelerated regulation of the market economic order. Most enterprises in our county lack independent innovation capabilities, and some carry out innovation activities, but they only simply imitate innovation. Only 7-8 companies in the county, including Xinxin, Bomin, Fenghua, and Sang Naili, have established specialized R & D institutions and R & D personnel, and only 1-2 new products are researched and developed annually on average. In addition, there is vicious competition among companies to suppress prices and grab customers. Although the valve and plumbing industry association has been established, the association lacks the means to effectively prevent vicious competition, causing companies to lose the initiative to make external quotations.
3. Measures to enhance the market competitiveness of Yuhuan valve industry
(1) Promote joint reorganization of enterprises and improve the level of enterprises
To change the current situation that a single enterprise is too small and its competitive strength is weak, in addition to the enterprise's own growth factors, the most direct and effective way is to achieve the enterprise's capital expansion through alliances, mergers, and reorganizations among enterprises, thereby further expanding the market. Share and remain invincible in competition. This is a relatively popular practice in the international economic field today, and it is also the development direction of the valve industry in the future. Small and medium-sized enterprises should be encouraged to form joint-stock companies or group companies. For changes in property rights (equity) such as land, real estate, vehicles and boats, patents, trademarks, etc. involved in asset integration during the enterprise establishment process, the payment of some local fees involved must be deferred in full; for the sales revenue of an industrial enterprise exceeding 100 million yuan, the local income portion of income tax and value-added tax shall be based on an increase of a certain percentage of the actual payment in the previous year every year within three years, and the portion exceeding the base shall be fully rewarded; If capital reserve, undistributed profits and surplus reserve are used to convert into share capital, the local income portion of the personal income tax payable must be collected first and then rewarded. Strive to build a number of enterprise groups with an output value of more than 500 million or even 1 billion yuan in 3-5 years.
(2) Guide enterprises to implement brand strategies and launch their own brands
Brand competition is one of the two main competitive factors in modern market competition. Whoever creates the brand owns the market. It is necessary to actively guide enterprises to promote the product standardization process and implement brand strategies. Encourage enterprises to adopt international standards and advanced foreign standards, and formulate internal control indicators for enterprises that are internationally competitive and higher than current national standards. It is necessary to actively help enterprises create their own brands, and give certain rewards to enterprises registering their own brand trademarks abroad, setting up branches or offices, and passing a series of foreign quality system certifications or environmental protection certifications. It is necessary to guide the flow of social funds to famous brand products and famous brand enterprises, mobilize social resources to expand the scale of famous brand enterprises, and enable famous brand enterprises to obtain the funds they need for sustainable development.
(3) Pay attention to the adjustment of product structure and guide enterprises to expand into new fields
There are dozens of valve industry products, and I only produce copper valves and accessories in the civilian field, plumbing devices, petrochemical industry, power sector, metallurgical sector, chemical industry and other industrial fields of huge market space has not yet been involved. Therefore, the investment density is moderately relaxed, and enterprises are guided to expand into the petrochemical industry, the power sector, the metallurgical sector, the chemical industry and other fields while consolidating copper valves and accessories and improving plumbing devices.
(4) Increase technological innovation and develop high value-added and internationally leading products
Formulated and promulgated the "Evaluation Method for Growth-oriented Small and Medium-sized Enterprises" to select a group of valve enterprises with high technological content, reasonable product structure, correct investment direction, good growth potential and in line with the five overall planning spirits, as key cultivation objects for "advanced manufacturing enterprises". Continue to increase interest subsidies for technological transformation, adjust the areas of interest subsidies for technological transformation, and concentrate funds on interest subsidies for modern and automated high-precision equipment. By introducing and grafting advanced processes and technologies at home and abroad, we strive to transform the company's technical equipment, accelerate the elimination of ordinary instrument lathes, rapidly popularize CNC lathes, strive to promote special valve machines, and realize the transformation of valve products from medium and low-end to medium and high-end. Vigorously promote CAD, CAM and CIMS product design technologies and ERP management systems to promote industrialization development through informatization. Adhere to the principle of "introduction and training" and strengthen the construction of a R & D talent team. Continue to support capable enterprises to set up technology R & D centers, encourage the use of human resources and research capabilities in the Yangtze River Delta region, and strengthen cooperation and exchanges with research institutions in the Yangtze River Delta region. Select key common technologies, provide supporting funds for science and technology, and organize large enterprises and scientific research institutions to jointly tackle key problems. At the same time, qualified enterprises are also encouraged to separate industry and research and directly locate research institutions in areas with strong innovation capabilities, such as Shanghai, Hangzhou and other places.
(5) Implement diversified sales strategies, stabilize existing markets, and open up new markets
Change the traditional sales method, adopt a combination of "going out" and "inviting in", and make extensive customer exchanges to capture business opportunities through various channels such as conducting e-commerce and holding valve product exhibitions. Combined with a series of important strategic decisions such as the country's implementation of the western development and revitalization of the old industrial bases in Northeast China, we will adjust domestic market sales strategies in a timely manner, strengthen market development forces in the central and western regions, and seize market development opportunities. Face up to the shift trend of the international valve industry, strengthen docking with large international retailers, strengthen contact with European and American buyers, establish an international procurement platform for Yuhuan products, and drive domestically produced products to enter the international market. Encourage qualified enterprises to establish production and trade-oriented bases overseas and carry out overseas capital operations.
(6) Strengthen the leadership of industry associations and give full play to the role of associations
Associations are the bridge and link between the government and enterprises, and between member enterprises and member enterprises. It is necessary to guide the association to conduct in-depth enterprise research, find out the problems existing in the development of the industry, and put forward practical policy suggestions to the government. At the same time, it also solves problems encountered in development for enterprises. The government should be free to let the association handle the work as much as possible, without too much interference, such as organizing enterprises to participate in exhibitions, recommending famous brand products and famous trademarks, etc.
