Analysis of the Status Quo of China's Tool Industry Market and Its Strategic Policy for the Next Decade

I. Analysis of the current situation of China's tool market

From the beginning of 2011 to the current year, the tool industry in China has experienced great changes in the ups and downs and ups and downs. I remember that in May 2011, during the club financial and information work conferences, companies felt that the market demand was strong, orders flocked, demand exceeded production capacity, and the task could not be completed without working over the weekend. However, the sales situation that exceeds supply will quietly change from the second half of the year. First of all, we feel that the market is getting colder. SMEs that produce low-end products have seen orders drop sharply, and even production and sales are in trouble. At the same time, for most key enterprises, although orders have also decreased and the growth rate has slowed down, overall, the momentum for faster development has been maintained in the second half of the year. The average growth rate has remained at 20%. Above, it is particularly pointed out that most high-end products continue to maintain a strong growth momentum.

On the whole, in the second half of 2011, the production and sales activities of various companies in the Chinese tool industry have seen a marked polarization following the country’s increased efforts to regulate and control the macro economy. First, some of the less powerful SMEs are With low visibility, backward product structure, and unstable quality, in the market where supply exceeds demand, it is first marginalized and the sales declines significantly, even falling into an unsustainable predicament. Second, in stark contrast to this is a large number of companies with good brands, stable quality, and good service. In the changing market conditions, they continue to gain the support and recognition of the majority of users, and still maintain a high rate of increase in order shares. Third, some companies with more innovative capabilities walk in front of their peers in product structure adjustment, and have accumulated considerable strength in the research, development, manufacturing, and sales of modern and efficient cutting tools, and have entered the modern advanced manufacturing industry such as mass production. Domain capabilities.

We all saw that in the severe macro environment of the second half of the year, sales of the third category of companies were in a contrarian direction, and they achieved remarkable results with a year-on-year increase of more than 50%. Make the whole industry excited! This fact once again tells us vividly: The demand for cutting tools in the domestic manufacturing industry is shifting from the middle to the low-end to the high-end, and the demand for modern and efficient tools will increase significantly. At the same time, it should also be noted that the macroeconomic regulation and control implemented by the country in the context of “structuring and promoting transformation” is not simply a comprehensive contraction, but has pressure on different industries, reflecting the strategic intention of promoting structural adjustment. . The advanced manufacturing technology and equipment will be the key support development areas for the country. In this regard, the majority of tool companies should have sufficient awareness and response preparations.

At present, China’s economic operation has encountered serious challenges in the deterioration of the international and domestic environment, and the economic growth rate is declining on a monthly basis. As can be seen from Figure 1, the development of China's tool industry further slowed down in 2012, and negative growth continued from January to April. This situation is even more severe than the prediction that the growth rate of this year's fourth quarter of this year brought down to 10% to 15% this year. We believe that the reason for this is that the CPI for four consecutive months from June to September in 2011 was more than 6%, far exceeding the preset 4% control target at the beginning of the year, posing a serious problem for the stable development of the economy. With high inflation, we must not continue to adopt measures to tighten monetary policy and control the scale of investment. In particular, the regulation of real estate has repeatedly reiterated that it will never waver. Although the intensity is a little bigger, it is necessary to promote the healthy and orderly operation of the economy and implement the scientific concept of development. Given that China’s economic growth at this stage is mainly driven by investment, the impact of tightening monetary policy has increased, and the growth rate of all walks of life has fallen. It can thus be seen that although the state's control intention is to maintain pressure and not engage in one-size-fits-all measures, it is not an easy task to truly handle the relationship between steady growth, inflation control, and structural adjustment in practice.

At present, the goal of controlling inflation has been initially achieved, and steady growth has been put on the agenda. The government began to free up its hand to reverse the declining economy. This is because the prevention of a downward trend in economic growth is also a top priority for the overall situation. The executive meeting convened by the State Council on May 23 proposed that in response to the impact of the current deterioration of the domestic and international economic environment, the Chinese government plans to introduce a new round of policies to stimulate industrial development. "Stable growth in a more important position," and will promote a number of major projects of the "12th Five-Year Plan" to be implemented on schedule and start as soon as possible a number of projects that are related to the overall situation and are highly motivated.

Based on the above developments, we analyze that under the timely and effective operation of the central macro-control measures, our country’s economy will find a new orientation in a new international and domestic complex environment, and gradually embark on a rational growth, adjust the structure and change. A new way of combining development methods. It can be expected that under this new macro environment, China’s tool industry will also evolve from the old mode of low-level expansion to a new path of high quality and efficiency along with the strong development of modern manufacturing.

Second, the next 10 years, the country's basic economic policy to guide the development of the basic strategy and tool industry response measures

Under the current policy conditions in China, the government's guidelines for macroeconomics essentially represent the country’s development orientation and possible policy support for the relevant industries. This is a macroeconomic environment with Chinese characteristics. All industries must be serious. Research, otherwise the development of the industry and the company will have to detour. Then, what are the national guidelines for macroeconomics in the next 10 years?

1. "Adjusting the economic structure and transforming the mode of development" is the basic strategy guiding the country's economic development in the next 10 years.

At the 2012 National People's Congress, Premier Wen Jiabao announced that the Chinese government's annual economic growth target for 2012 is 7.5%, which is in line with the target of the 12-year plan for the 12th-year plan to increase by an average of 7% annually. Compared with the average growth rate of about 10% since the beginning of reform and opening up, it is obviously a substantial decline. We understand that this represents a strategic determination of the country to speed up economic restructuring and change the mode of development.

So far, China's national economy has been developing at the highest rate in the world, but like other countries in the world, it faces various problems such as “unbalanced, uncoordinated, and unsustainable” in economic development, such as imbalances in global economic development and export growth. Decline, excessive resource consumption, increased environmental pollution, unhappy people’s livelihood, increased social conflicts, etc. Dealing with the new contradictions and new problems that have arisen in these developments is an urgent task to ensure the rapid, steady development of China's economy. It can be said that the strategic principle of "adjusting the structure, changing the mode" will always run through the entire process of improving the quality of economic development in our country.

Premier Wen stressed that the goal of lowering the growth rate is to guide all parties to focus their efforts on accelerating the transformation of economic development methods and improving the quality and efficiency of economic development in order to facilitate a longer period, higher levels, and better quality. development of.

It should be pointed out that there are sufficient conditions and foundations for realizing this new development goal proposed by Premier Wen. As an emerging economy, compared with developed countries, China is still at the stage of industrialization and urbanization. Therefore, the potential for economic growth in China is very strong. In the next 20 years, hundreds of millions of farmers will move into cities and towns, and a large number of small cities and towns The huge demand for infrastructure construction and housing construction is unprecedented. At the same time, with the reduction of the rural population, the scale and modernization of agriculture will also bring huge business opportunities. Therefore, the economic circles at home and abroad are generally optimistic about the medium and long-term prospects for China's economic growth. Of course, in order to turn the prospects into reality, we must seriously resolve the various contradictions and challenges that currently hinder the rapid and steady growth of the economy. For example, China’s strong domestic demand potential has been artificially curbed for a long time and it has not been transformed into a driving force for growth. Also, under the influence of the GDP-only theory, the extensive development model still plays a major role in China’s economic activities, independent innovation capabilities and an innovative environment. The construction is lagging far behind the development needs, resulting in a generally low level of industry and a weak competitiveness. These problems have basically been solved in the developed countries. We must catch up and we can continue to occupy a place in the in-depth development of economic globalization. Because, in the increasingly fierce market competition in the future, China's old road of low-level development that has lasted for decades has been difficult to sustain. In other words, in all walks of life in the new journey of adjusting the economic structure and transforming the mode of development, we must work hard to improve our own development level and quality to a new level in order to meet the objective needs of sustainable development in the next decade.

2. The tool industry's implementation of the strategy of “adjusting the economic structure and transforming the mode of development” is to accelerate the pace of industrial upgrading, from the development of the traditional standard tool to the modern high-efficiency tools.

At the May 2011 branch meeting on finance and information work, the author told everyone about the economic development during the “Eleventh Five-Year Plan” period and the outlook for the “Twelfth Five-Year Plan”. Finally, he said: “Looking at the development of the next five years, the biggest challenge for the tool industry is to abandon blind optimism and see potential crises in the context of the better of the current days. Determined to adjust the structure, change the mode of development, and modern manufacturing. The demands are closely linked, and great efforts are made to enter the high-end tool market, which will be a serious challenge that determines the future of the industry. Of course, domestic tool companies should also see great opportunities when facing challenges: China has become a global scale. The largest and fastest-growing machine tool market, with strong demand, will be a huge driving force for development."

In the first half of 2011, the sales situation of tool companies across the country was excellent. However, the author stressed that the problems and challenges facing him were not foresighted. However, the objective situation at the time of the international and domestic events was already clear. If the economic structure is not subject to major adjustments, it will continue. It is impossible to maintain high economic growth along the old road of development.

Now everyone has seen that this year's export growth rate has dropped to a single digit, not only directly affecting the export of the tool itself, but also affecting the demand for tools for domestic export manufacturing. At the same time, the decline in demand caused by the tightening of investment by the state has spread to all walks of life. But it should be pointed out that, surrounded by many bad news, we have found a welcome change in the domestic tool market, that is, the demand for high-end tools has generally maintained a strong momentum. There are two reasons for this analysis: First, the domestic high-end manufacturing industry has shifted some of its high-efficiency tool orders from foreign companies to domestic tool companies to reduce costs. Second, traditional manufacturing industries have also actively adopted advanced machine tools to increase efficiency and reduce labor costs. . Although this second change has just started, it shows an important signal that China’s low-end manufacturing industry has also begun to free itself from the vicious circle of one-sided reliance on cheap labor, and has taken the first step to rely on technological progress to increase efficiency, and it is worth high Pay attention. We have introduced many times that the ratio of advanced high-performance cemented carbide tools and traditional high-speed steel tools is 70:30 to 75:25 in the tool composition used in the manufacturing industries of developed countries, but only 40:60 in China, that is, high speed. Steel standard tools still dominate. At present, this situation is rapidly changing. The demand for modern and efficient tooling in the domestic manufacturing industry is growing faster than low-end tools. Every tool company must make a thought: How long will it take to stay in the low-end tool shelter? In particular, it should be pointed out that after the technological transformation in the last 10 years, the equipment conditions of China’s tool companies have been greatly improved. Now that they have entered the high-end market, the equipment conditions are no longer a problem, and the market is ready-made, depending on whether the company has this Courage and determination, knowing how difficult it is, took a new world.

In 2011, domestic tool consumption reached 40 billion baht, of which 13.5 billion baht was imported, and domestic production was 26.5 billion batons. In terms of market share, domestic tools accounted for 67%. However, high-end products that are comparable to imported cutting tools in China-made tools are only worth more than 2 billion yuan. There is ample room for import substitution. At present, a number of domestic tool companies have entered the high-end market with remarkable results. We hope that more tool companies will be able to emancipate the mind and join the ranks of the high end.

Although it is difficult to accurately predict how long the life cycle of low-end cutting tools is in China, from the perspective of the development of developed countries, with the increasing processing requirements of modern manufacturing, the marginalization of low-end cutting tools is not an option. Avoided. Therefore, every tool company must make choices in the future.

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