Analyze the reasons for the decline of profit in the hardware market

Due to the increase in prices of raw materials and other factors, the bathroom hardware industry not only failed to usher in his spring but it has been questioned by consumers. Is it really time for profits in the era of profit? Indeed, with the rising prices of raw materials and the continuous expansion of the consumer market, the hardware industry's market competition is also increasing, the era of profit violence in the hardware industry is gone forever.

Profits start to decline

Here we take the current steel price as an example. The price of steel rose by RMB 100/ton during the day of March 17, 2011. In less than a month, the price of various steel products rose by RMB 300 per ton. 500 yuan. The rise in steel prices has made it impossible for the steelmaking industry, which originally made less profits, to show its superiority. It has generally shown that profits can be almost zeroed and that the benefits of economic recovery are almost offset by an empty one.

Taking bathroom hardware as an example, the biggest cost of producing a tap product is the cost of raw materials. The current faucet products are mainly based on copper materials, and the price of copper is about 38,000 yuan/ton, according to industry insiders, raw materials. The cost accounts for more than 70% of the total production cost. According to the domestic gross profit margin of 30%, the cost price of a faucet is approximately 200 yuan.

Many hardware and electromechanical companies, including bathroom hardware companies, are all good and bad, and they share the same low profits. Their comprehensive analysis is not exceptional:

1, there is no professional market cultivation

The general consumers' purchase of hardware products is the principle of proximity. They are purchased at a grocery store and a daily supermarket. This is closely related to the fact that the hardware industry has not cultivated a professional market.

The traditional hardware product distribution center is no systematic marketing strategy, and lack of related regional protection, stable price system is beyond discussion. Once the professional hardware market is formed and the market has strong supervision, the hardware companies that settled in can be guaranteed to be worthy of the name, forming the centripetal force of consumers' purchases, avoiding the production, the flocking of peers, and the phenomenon of blind purchases.

2, no comprehensive brand capacity

The general circulation of hardware products in the market is single, outdated, and with rough workmanship, even without brand protection, so that consumers can not be trusted.

The relevant market survey shows that 45.3% of hardware consumers use the brand as the primary demand for acquiring products when purchasing hardware products, which implies that it is even more difficult for unnamed brands to gain a foothold in the market. Brands are obviously a signpost in this era of complicated information. They can focus on their own unified management in order to help promote them.

3, foreign-funded enterprises snatch the market

A large number of hardware products in China are based on small workshops, especially the mold industry. Because of lack of professionalism and exquisiteness, many foreign-funded enterprises have an opportunity.

On the contrary, foreign mold companies are mostly small and specialized, small and precise; the proportion of self-produced and self-made molds is as high as 50%, and over 70% of foreign molds are commercial molds.

The proportion of large-scale, sophisticated, complex and long-life molds in the total domestic molds is only about 30%. More than 50% abroad. The ratio of imports and exports was 4.1:1 in 2003; the net import after import and export was US$1.03 billion, which is the country with the largest net import volume.

4, raw materials rose to the public's attention

Since the beginning of last December, the international copper price has repeatedly set a record high since it broke through 9000 US dollars/ton. According to Shanghai ** market data, the copper price rose by 32% year-on-year in half a year, while the steel price rise for two consecutive months will continue into the first quarter of this year.

The mainstream brands of air conditioners, refrigerators, washing machines, range hoods, cookers, sanitary ware, sterilizers, and water heaters, etc., will gradually have a 5%-10% price increase. Compared to the end of last year, the increase in raw material costs has caused production costs to rise by 5% to 8%. Zhou Xiaotian, president of Hisense Kelon, said.

The rise in raw materials was a hardware development buzzword in 2012. By 2013, it still did not reduce its thermal agenda. The rise in raw materials also raised the prices of general products. At the same time, the net profit promotion space could not be compared with the past.