The Dilemma of China's Manufacturing Industry | chaoman toy

March 31, 2022

This is a monologue from a Chinese factory with more than 20 years of experience in the plush industry. When you finish reading this article, you will clearly know the sad history of this industry. In other words, this is also a valuable experience, and you will be more I understand the status quo of this industry in China. I think this status quo also represents the vast majority of manufacturing enterprises, due to many reasons, most of them can not speak out freely, we call them Silent Majority

The prosperity of the industry

Exports, consumption, and investment are the main driving forces of China's GDP growth. China's real comprehensive reform and opening up was in 1992. From then until 2019, export trade accounted for most of China's GDP growth momentum because of China's low labor costs. , Providing cheap labor is the main source of income for ordinary people. In 1998, my father started to set up a workshop to help government companies provide plush toy production. From then on, I also began to understand this industry.
At that time, the entire industry did not have any mechanical equipment, and most of the processes were done manually, such as cutting pieces and stuffing cotton, etc. Due to the development of the industry, some new equipment was manufactured one after another.

From prosperity to recession

In the plush industry, we can be regarded as one of the earliest batch of factories producing these products. At that time, the orders were crazy. Due to the low price and the strong dollar, we made a little money by working hard. I remember that it was basically in 2005. U.S. companies are chartered, and we are not allowed to produce orders from other companies. The business is very good, and we have also made some money. Before the 2008 financial crisis, the entire industry was still at the top. Due to the impact of the financial crisis, we started to lose money from 2008 to 2010. At that time, in order to feed more than 100 workers, we continued to insist on not having enough orders, and we also added some new equipment.The world environment changes day and night, but what we should change is the strategy.

I my eyes, I summarize the reasons why we are not too successful as follows.
1. The older generations have insufficient thinking skills, rely too much on the orders of trading companies, do not take the initiative, and most of the profits are taken away by foreign trade companies

2. The judgment on the future is not enough. When the industry is not good, we still expand the number of workers, introduce machinery and equipment, and believe that the impact is only temporary

3.Excessive reliance on the industry market without leading the industry, and no long-term plan to build a company brand or product brand

4.Ignore the management of intellectual property rights. This problem comes from China’s cultural education. We are too pursuing short-term interests and neglecting the barriers to competition for long-term development. Intellectual property is the foundation of long-term development. I think the most impressive thing about Chinese manufacturing is that the price is cheap and the other is fake and inferior. We hate fake and inferior products, but we don’t know how to protect ourselves, which leads us to miss a lot of our self-designed and popular products.
Intellectual property is a high investment and slow results, but it is worth doing. Now we have to pay for the previous mistakes 

Low-end manufacturing does not match economic development

In recent years, China’s economic development has largely relied on China’s demographic dividend. With the development of the aging society and the increase in GDP, the rise of e-commerce networks, factories that used to rely on low-end labor in China will gradually be eliminated by the society because of the increasing labor costs. Then the thinking of the older batch of entrepreneurs still stays in the low-end manufacturing industry, resulting in their products without core competitive advantages. Even if the products have advantages, the top intellectual property rights do not belong to them, which forms a vicious circle: Costs rise and profits fall.
The essence of business is to sell services or goods. There are only two ways to increase profits, which is to reduce costs or increase profits. From the essence of business, the products sold by low-end manufacturing are our cheap labor, the way to increase profits is to oppress workers Or looking for cheaper labor. if they are working hard in this area, only bankruptcy awaits them.

Changes in 2020

There are two aspects that change China's economy, one is the China-US trade war, and the other is COVID-19.
The China-US trade war has taught us that we cannot control the core technology and can only be slaughtered by others. At present, most technology companies are awakening, but it takes a long way to go from awakening to recovery.
Although China has controlled COVID-19 very early and resumed work and production very early, the industry is a whole part, and it needs a global economic recovery to not be affected by the general environment. China has done a good job, but there is no way in a short time, change the world economic structure.
Now the loose policy of the world currency dominated by the US dollar has led to the rapid growth of global upstream assets. Specifically, in our plush industry, we will find that cotton has risen by 20%, fabrics have risen by 15%, PVC has risen by 40%, steel, The aluminum industry has even increased by 100%, but the consumer end is still the same as before. This shows that upstream costs are rising, downstream consumption is stagnant, and the middle factories can only survive with low profits or even loss-making businesses.
Fortunately, we were not greatly affected. The epidemic caused us to lose a lot of orders. However, after the epidemic, our factory production quality won the trust of customers, so we quickly entered the normal production stage and became busier than before. But all this is not what we want.

How can we highlight the siege


As a factory, we cannot change the world environment, but calmly thinking and making the most correct judgment is what we need to do. How to deal with the current environment and how to do it in this field for a longer time. As the second-generation manager of the factory, let’s It is my personal suggestion, and it is also a strategy that most factories with similar experiences above should refer to.

1. Don't forget the original intention of business, this original intention is not to make more money, but to provide better products and change human life through products

2. Always have brand awe or belief in building a brand, even if this is the most difficult step, it must be a step

3. Always provide the best quality of production and provide customers with better service

4. Persevere

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