Abstract Li Xianchao, the general manager of Zibo Sisha Taishan Abrasives Co., Ltd., held a very timely meeting. At present, the upstream industries are all raising prices. The manufacturing enterprises are under great pressure and are difficult to digest. In the face of this situation, it is necessary for the industry to unify understanding and explore countermeasures. ...
Li Xianchao, General Manager of Zibo Sisha Taishan Abrasives Co., Ltd.
Below I would like to talk about a few questions about our industry.
As a person engaged in business, our thinking and vision should always pay attention to a big problem and a macro problem at all times. This macro issue is the basic situation of the international and domestic. What are the next trends in these related or not directly related to us? What is the current status? After mastering this dynamic, if the judgment is correct, it may give some help to the industry and enterprises. For example, the current international community, economically speaking, I divide it into three big blocks: Europe is a piece, America is a piece, and Asia is a piece. From the current point of view, Europe is likely to face economic turmoil in the past two years. Why do you say that? The whole trend of Europe is turning to the right. The independence of each country is very strong. The EU faces the disintegration of ideological and conceptual consciousness. Combined with a series of previous European crisis, such as the Greek economic crisis and other economic crises, this may cause the whole of Europe to become more The big economic shocks have put the economy in a downward or fluctuating trend. This trend may have an impact on the export of our entire industry, because the trend of internationalization of the market is becoming more and more obvious, and we cannot ignore these factors.
In the Americas headed by the United States, the United States will change this year. After the new President Trump takes office, the ruling strategy will be the same as he said before he took office. This is difficult to determine. What he said before can be used as a reference, but when thinking about this problem, it should be prevented in advance. Some thoughts and some words before Trump came to power were obviously conservative: the United States is mainly based on its own interests. This kind of conservative route will have several kinds of influences or possibilities: First, it will have an impact on the economy of the world. Because the United States has a lot of physical strength, the impact is obvious. Second, for its own sake, it is good or good. Poor, I am afraid I have to say two. Success has developed well; but this conservative consciousness is likely to bring the counter-reaction of the entire international community. If there is a counter-reaction, it will be unfavorable to it, and it may not work. He may go on. This is an uncertain factor.
As Asia, Asia is now the main kinetic energy in China, and China has affected the whole of Asia, especially Southeast Asia. Since the beginning of 2006, the economy of Southeast Asia has been affected by the impact of the US dollar. In Southeast Asia, the economies of some countries in South Asia are also declining, and some products exported to Southeast Asia are decreasing. Asia must first look at China. So what is China now? From the official report, it is "economically good." In particular, in recent months, intensive economic data shows that the trend is improving. But we have to carefully analyze the classification of the economy to good data, which is pulling, and which figures have risen. After careful analysis, it will be seen that the real economy is not the manufacturing-type real economy, but other aspects, the growth rate of China's manufacturing industry in 2016 should be declining. In the past quarter, I analyzed data on investment growth, 90% of which was in real estate, finance, and other areas. The investment in the real economy grew by only 5%-6%. In fact, the real economy is in an empty state. Why is it empty? Individuals or entity bosses who have rich money in China are ready to invest abroad. They don’t invest in China. They want to withdraw their funds. They feel that they have long-term investment in the domestic market. In the end, they are busy, and may even become bloodless. There is no way to vote. The domestic real economy may now be divided. One is the large-scale enterprises and control enterprises that the state vigorously protects, and the market is controlled. These are better, such as railways, which account for a large part of the national real economy; the traditional real economy, Traditional industries are shrinking, including our industry and related industries. For these, the people we engage in in business should have a bottom in mind.
How to deal with these problems? It involves the issue of investment development; the issue of expansion; the question of what to follow and the way of development, it will have a certain impact on our decision-making. You are a route to blind expansion, a large and comprehensive route, or a specialized and precise route. Each enterprise and each operator will have different judgments and different ideas, and the results will be very different. This is a macro aspect. From the micro level and our industry, what is the development concept and the development method for each individual enterprise? Of course, industry companies are not the same, and there are similarities. Its development mode and competition concept are mainly quality problems, quantity problems and price problems. Is the pursuit of quality or the pursuit of quantity? It is the pursuit of low prices, to compete in the market with low prices, to expand into the market, or to develop models with high quality, high prices and high profits. This is not the same. Even in the same industry, state-owned enterprises and private enterprises are different. The cost of state-owned enterprises is relatively high. The financial accounting systems of state-owned enterprises and private enterprises are different. The various depreciation of state-owned enterprises is calculated into the cost. Some private enterprises do not calculate depreciation, such as investing 10 million yuan or 20 million yuan. The investment is here. When calculating the income, regardless of it, only the variable cost can be calculated, and the fixed cost does not matter. This year, raw materials, manpower and material resources invested 10 million yuan and sold 12 million yuan. In the end, it earned 2 million yuan and no loss of profit. But this algorithm is a serious loss in state-owned enterprises. This is a difference in financial systems and financial accounting.
Someone asked me what happened in 2016? The actual situation is that production has not increased, basically flat, sales increased by 10%, and profits increased by 20%. A lot of investment, consuming raw materials, consuming energy, treating workers as porters, pursuing a good-looking, how much sales, but ultimately no profit, then this has lost the purpose of doing business, because companies must pursue profits. How to pursue profits? My philosophy is to minimize investment and maximize profits. From the current industry situation, the profits of most enterprises will not exceed 10%. As soon as the raw material prices rise, the profits are washed away and the company may lose money.
For the price increase of raw materials, we had a pre-judgment at the beginning of the year, and it is estimated that raw materials will definitely increase in price. So many users let us cut prices, saying that some peers or similar products have dropped, but we insisted on not falling because there is no reason to cut prices. During that period of time, raw material prices were relatively low. Some companies considered their own competitiveness and gained market share, and they cut prices, but did not consider the latter things. In fact, the price cut is equal to the shackles on their necks. Why do you say this way? Because the price cut is easy, it is difficult to raise prices. For price cuts, some have to cut prices, product homogenization is too serious, there is no own characteristics, no competitive advantage. If you have a competitive advantage, you will definitely not cut the price, others must also buy you. Therefore, from this point of view, each of our companies may not have to pursue a big and complete, do everything, and others have to do it. What are your own strengths, and your own strengths, you should play well, so when dealing with the fluctuations of the market environment, the relative mobility will be smaller and the initiative will be stronger.
From the development trend of the industry in recent years, low-end products are basically going downhill, competitiveness is gradually decreasing, and relying on the practice of low-end, low-price competition in the market, this road may become narrower and narrower. Because it is ineffective, it is basically a busy job, and it may suffer losses when it encounters large market fluctuations. At this time, I want to do it and I can't do it. I want to give up and I can't bear it. After I give up, I have nothing to do. From the overall situation of the international and domestic, the general trend is to go up. High-end products require good raw materials, the price is higher, but the energy consumption is not high, the salary cost of personnel is not improved, the tax is not improved, and the product price will be higher, the profit rate is higher, so it is good for the development of the enterprise. some.
Why is the price of raw materials going up this time and the supply of raw materials will be tight? Everyone said that the environmental protection storm caused the price of raw materials to rise. Why environmental protection affects raw materials, we have to analyze this reason. At the beginning of the company's internal meeting, we analyzed that the raw materials will definitely increase in price, because we started to take environmental protection last year. This problem exists in coated abrasives and related industries. Take Henan, how much is there no environmental protection facilities in the abrasive factory? Into the processing plant, the environment is still smog than the fog, the opposite side can not see people, go in a trip, from head to toe is gray; I went to see some industry manufacturing plants, went in less than five minutes and ran out I have a nose and tears. I really can’t stand it. There are no environmental measures. Using different raw materials, the low end and the good price of one ton can be several thousand dollars. In particular, the low-end materials, poor craftsmanship, and environmental protection can't keep up. When an environmental storm factory is shut down, your source of raw materials will be cut off. High-end raw materials are also tightly supplied. It is necessary to protect the original old customers. New customers are too busy to give, and will not give, even if the price may be higher than the old customers, it is more disadvantageous for you, and may force you to stop production and stop. Therefore, this cannot simply blame the price increase of raw materials. This is a problem for the whole concept of the enterprise. The same is true for abrasives, and the problem is with ourselves. Someone talked to me some time ago, sandpaper two or three cents a piece, sand cloth bought four or five cents a piece, there is a market, then I would like to ask, do you have a profit? If you want to buy it, you can't get the money. You have to distribute the goods first, don't sell it to others, don't take it back when you go out, and finally the funds can't move. This is not a business, this is to take life with your wife and children!
This class must be supplemented with regard to corporate environmental protection and emissions. It is not too late from now on. This is a one-time investment. Of course, its operating cost is not low, but once it enters a virtuous circle, it has no effect on the operation of the enterprise, just like Suzhou Far East. The maintenance facilities in Suzhou Far East are very advanced, all imported German equipment, and the operating cost is high. We can also use some domestic environmental protection facilities, which is relatively cheaper. Now we must pay close attention to it. If we don’t make up, the state’s monitoring methods will be more embarrassing and no longer give opportunities for rectification, so work must be done ahead. In the future, the country's environmental protection will be more and more large, which is national. Foreign companies have done a good job in environmental protection and environmental governance is good, but they have also experienced the same process in China. China must definitely follow this path. So it’s better to fill this lesson earlier.
Regarding the price of the product, it is difficult to cut across the board, because each product is different, and the cost of each company is different. The problem is that when it comes to determining the price of a product, it is difficult to say that it can be considered from the overall situation. Each account is counted, or who wants to squeeze it. In the end, no one is killed, but it has caused the development of the whole industry. Very bad influence. I believe that according to the competitiveness of each enterprise's products, we must determine the appropriate and competitive price. The premise is that the enterprise must have a profit, because the profitable enterprise has the capital investment, further improve the performance of the product, carry out technological transformation, and reserve new resources. Product new technology, do your own homework, and seek long-term development. Most importantly, the managers of each of our companies must start from the overall situation of the development of China's coated abrasive industry to consider the problem.
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