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Machinery manufacturing industry: more terrifying than the tide of bankruptcy is low-price competition!

Time: 2017-08-10    View: 3138    Burst: 

In recent years, in the machinery manufacturing industry, news of some small enterprises "closure", "shutdown", "bankruptcy", "wage arrears", "declining performance", "loss" and other news has shaken people's hearts. Due to serious domestic overcapacity, many companies either have no business or rely on low profits to survive.

The long-lasting "sub-health" operating model has become a fatal injury for enterprises, and it has become an inevitable result that some small and medium-sized enterprises have been dragged out. However, in addition to the external environment, internal vicious competition is also devouring the good prospects of the machinery manufacturing industry. In order to maintain customers and ensure that there is business to be done, some companies do not hesitate to sell goods with a "guaranteed" attitude, increasing the risk of more small and medium-sized factories closing down. "There are people doing business with low prices!" Now it seems that "low-price competition" is even more terrifying than the "bankruptcy tide".

In the buying and selling market, if you want to buy something, of course you have to buy it cheaply, but the key problem is that when the customer is unable to identify the quality of the product, the seller’s bottomless operation eventually disrupts the market and starves to death. Others are exhausting themselves and cheating the wrong phenomenon of the enterprise.


Starve others to death

For example, in the same area, the manufacturing industry is prone to form agglomeration areas. The homogeneity of products of the same type is serious, and the demand is limited. If a company lowers prices to occupy the market, the remaining peers will inevitably have no orders and product squeeze. Workers’ wages cannot be paid. If things go on like this, the market will be disrupted.

I am exhausted
The gross profit margin of many machinery is controlled at about 20%, which is a normal range. However, in fact, some manufacturers have a gross profit margin of 5% in order to do business, and some 2% or even lower. I received the order, of course I am happy. The small workshop is in full swing and rushes to the construction schedule day and night, and the marketing department is busy issuing orders and arranging shipments every day.



Behind this seemingly prosperous, life is really easy? By the end of the year, after the final settlement, the wages of workers, rent, utilities, marketing expenses, logistics, sanitation, internet, telephone, and various fines will be excluded. Alas, the result of low-price competition is a year of hard work. , In the end, there are only three melons and two dates left.

In recent times, more and more heads of machinery manufacturing companies have complained that low-price competition has disrupted the normal industry order. "No matter what kind of product, there will always be products with lower prices. No matter how low the price given by downstream users, someone will always take the order. From a production point of view, such prices cannot guarantee profit margins at all. If they can do it, it must be cutting corners in raw materials and processes. "In the long run, the healthy development of the industry will inevitably be threatened, and the influence of China's manufacturing will definitely decline.


Downstream customers
The buyer thought they had taken a big advantage, but they didn’t know that they should cry most. I often hear complaints from various customers, but I don’t know that the cost of raw materials is rising severely, and the costs in all aspects remain high. What kind of high-quality products can be bought at such a low price? Covetousness ultimately harms one's own vital interests.

To our dear customersDear customer
The style of life is your taste,
The quality of the product is your choice!
Just choose the right one, time will prove your rationality and foresight!
So expensive, yes, because it is so expensive!
The quality of the product is more important, and the taste of the person is more important!
The premise of service is profit,
Profit margins can be squeezed,
But can't disappear,
Otherwise, the service will disappear along with the profit.
Please don’t over-demand blindly,
Every company must survive,
You took away the living space of the manufacturer,
How to guarantee service and quality?
To be a business is to be a conscience,
We would rather explain the price for a while,
Don't apologize to customers for a lifetime because of quality!

Conclusion:
"Grab other people's orders, cut one's own way!" Companies that take orders at low prices only value immediate benefits, and seemingly compelling individual choices are jeopardizing the overall healthy development of the industry. Such a business model will not last long, and in the process of industry transformation and upgrading, the company has also lost the ability to improve from product development and process innovation. Its development path can only become narrower and narrower. In the end, it will be found that this is a dead end. .
In fact, in the game of price wars, companies can rely on tapping their own advantages to obtain more benefits. ——Rely on the product to speak, win the price war!

Source: Internet

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