The hottest Chinese style dividend reverses the sh

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Chinese style "bonus" reverses the shrinking profits and forces the coating enterprises to transform to services

Chinese style "bonus" reverses the shrinking profits and forces the coating enterprises to transform to services

June 10, 2015

[China coating information] faced with the situation that the whole coating industry is scattered, small, single structure and increasingly meager profits, "The profit of pure manufacturing will become thinner and thinner, and the added value in services will become higher and higher. It is reasonable for coating enterprises to accelerate the transformation to service providers."

the hot market of nine gold and ten silver has not been staged in the past oneortwo years. Under the influence of multiple factors, such as the shift from high-speed growth to medium and high-speed growth of the macro economy, and the adjustment of the real estate market, the paint market has also felt a cold wave. Even in the traditional peak sales season, the market is still very flat and the profits are shrinking. Transformation is a common problem that almost every coating enterprise has to face when Anqing is one of the three new chemical bases in our province. A key question is, where is the way for the transformation of coating enterprises

manufacturing profits shrink

"from the beginning of 2014 to now, although sales have achieved gratifying growth, profits have not increased at the same time, but have decreased compared with previous years. Fortunately, they are within the controllable range." The person in charge of a paint enterprise said

as for the decline in profits, the person in charge analyzed that: first, the continuous rise of various costs has further compressed the product profit space; Second, the market price is very tight, and the gross profit gradually decreases. In addition, due to the comprehensive impact of other adverse factors, the overall profit decline is inevitable

at present, the net profit of coating enterprises is only 7% ~ 8%, but some insiders feel that this figure is a barely qualified report card for coating enterprises. In fact, this view is not unreasonable. When the magazine recently visited various coating enterprises, most of the coating enterprises disclosed the information of declining profits. Many enterprises, including large paint enterprises, are facing the embarrassing situation of "increasing income without increasing profits"

this journal has checked the audit report and transfer instructions published by Guangdong metus building materials Co., Ltd. in the National SME share transfer system. According to the audit report, the total operating income of Metz from 2012 to 2013 was RMB 821.6 million and RMB 909.9 million respectively, and the net profits attributable to the shareholders of the parent company were RMB 37.4727 million and RMB 8.814 million respectively. Compared with 2012, the net profits in 2013 showed a sharp downward trend

according to the transfer instructions, the company (metus) has gradually turned into a mature development period, with steady growth in operating revenue and stable gross profit margin. In 2013, the operating revenue increased by 10.74% compared with that in 2012, and the revenue realized in 2014 was 44.05% of that in 2013. However, the net profit margins of the company in 2014, 2013 and 2012 were 0.68%, 0.97% and 4.56% respectively, showing a downward trend, The main reason is that the company increased its marketing and management investment in 2013, resulting in a substantial increase in period expenses, which remained at a high level in 2014. If the company cannot reasonably control period expenses and improve sales performance in the future, there may be a risk of continued decline in profitability

new changes have taken place in the coating market since 2010, and the long-term trend of profit margin of coating manufacturing enterprises has shown signs of decline. Some insiders believe that the main reasons for the decline of profits in China's coating manufacturing industry are: price factors restrict the growth of profits, the rapid rise of purchase prices, the sluggish growth of product sales, and the increase of manufacturing costs; Then the price competition continued, leading to a decline in profits; In addition, due to non-standard enterprise management, various expenses have increased

in recent years, coating enterprises, especially small and medium-sized coating enterprises, have faced severe challenges such as rising factor costs and shrinking profit space. Many enterprises have increased their operating costs, management expenses, labor costs and the prices of production factors. In addition to external factors such as rising costs, the decline in paint manufacturing profits is also related to the fact that the main contradictions such as the industry's own industrial structure, independent innovation and talent shortage have not been fundamentally solved

it is understood that due to the low threshold for the paint market access, many enterprises have been spreading and expanding on a large scale in recent years. However, the "one-off" enterprises did not make a lot of money after using thermoelectric conversion materials and solar cells. Instead, they fell into the vortex of overcapacity and high inventory. This is the problem caused by the inadequate adjustment of industrial structure. These outstanding problems and contradictions have restricted the healthy development of the current coating industry

however, from the current pressure faced by coating enterprises, both the rise in raw material prices and the rise in human costs highlight that the industrial development is based on the traditional comparative advantage. In the past, coating enterprises gradually realized capital accumulation by relying on traditional comparative advantages. However, with the change of times, the traditional comparative advantages in the past have been gradually replaced by new competitive advantages such as technology, capital, brand, management and service. However, local coating enterprises have not laid the foundation to realize new competitive advantages such as technology, capital, brand and service during the period of "comparative advantages", Therefore, there are more and more bottlenecks in development

"in the past, the advantages of cheap land and human capital were brought into play to form the competitiveness of the current coating industry. But now, after the 'dividends' of low-cost elements such as land and human resources that the coating manufacturing industry relies on have been lost, its development has fallen into difficulties. Then, transformation and adjustment has become the main tone in the future." Limingyue, an observer of the Market Research Department of Tu Jie enterprises, said

(see all pictures of China paint)

demographic dividend reversal

forced the transformation of service industry

under the leadership of long-term manufacturing, paint people reduce costs through management, are not good at business to create profits, and do not know how to lead to develop their business. Because they are not good at management, painters can accumulate wealth but not create wealth. Because they do not know how to lead, painters are limited to fighting for food in the Red Sea and do not open up a broad world in the blue sea

"what the manufacturing industry cares about is to reduce costs, ensure quality, stabilize production, and keep customers coming. Although R & D and innovation are also carried out, the purpose is to improve production technology, improve production capacity and quality, reduce costs and defect rates, only focus on improving product competitiveness, and ignore the innovation of value, application and service. Flame retardant PP is mainly used in black household appliances, which does not improve the profitability of the enterprise." Li Mingyue said

business is formed by the combination of supply and demand. Transactions are facilitated due to supply and demand, and become a business due to the accumulation of many transactions. The origin of profits is all due to transactions. Products alone cannot achieve transactions. What determines the profit is the customer's demand and the medium of transaction. If the customer has no demand or the transaction lacks access, business cannot be done

"the loss of the coating manufacturing industry is that it focuses entirely on products and production, fails to take into account the market, trading partners, and trading channels and media, and ignores profits outside production, that is, it focuses on the supply level, ignores the demand level and trading level, and does not understand the significance of services." Li Mingyue said

in the face of the current situation that the entire coating industry is scattered, small and single in structure, as well as the grim situation of increasingly meagre profits, "the profits of pure manufacturing will become increasingly meager, and the added value in services will become higher and higher. It is reasonable for coating enterprises to accelerate the transformation to service providers."

the complete coating industry market system includes four parts: equipment manufacturing, R & D technology and manufacturing, capital, coating and service. The coating industry in Europe and the United States and other developed countries is relatively balanced, and the four parts have achieved considerable development. However, in China, the vast majority of coating enterprises are still in the primary manufacturing stage mainly based on imitation and introduction of technology, and independent R & D technology, capital operation and coating services are still in the initial stage. The profit margin of pure coating manufacturing is very low

limingyue said that the main reason for this is that the manufacturing of coating products is generally due to the rise of labor costs and raw material costs, but due to overcapacity and vicious product competition, the final product price drops seriously, which makes it difficult to increase the profit margin. For example, the price of a barrel of 5L ordinary interior wall emulsion paint is now about 220 yuan, while it was yuan seven or eight years ago. However, for example, duluxpro's 5L gold Jingwei five in one ultra-low VOC interior wall coating latex paint cover, there is still 719 yuan, but for domestic coating enterprises, it is rarely sold at such a high price

according to insiders, the current profit of coating manufacturing industry is only 10% or even lower. Indeed, since 2009, the sales profit margin of China's coating manufacturing industry has continued to fall. According to authoritative statistics, from 2005 to 2011, the profit margins of China's coating industry were 5.99%, 6.82%, 6.83%, 5.67%, 7.18%, 7.02% and 6.67% respectively, all far below 10%

"I have worked hard in the paint industry for more than ten years. I remember that in the past, selling a barrel of paint could earn 500% of the profits, but now it is very good to keep% of the profits. The normal profits should be around 20% to 30%. We have already tightened our belts to do business, and the changes are too fast!" Some business people told this magazine

since 2009, the profit margin of China's coating manufacturing industry has basically maintained at about 8%, and the profit decline has a further expansion trend. What is the problem? Although there are many conventional explanations such as industrial price war caused by intensified market competition, cost pressure caused by rising prices of raw materials and manpower, at present, some coating and paint industries pay more attention to the value chain of the whole coating manufacturing industry in the process of transformation, hoping to increase the added value to obtain higher profits

in the famous "smile curve" theory, there is a smile mouth curve with both ends upward. The middle is manufacturing, the left is R & D, and the right is brand and service. The added value in the industrial chain is more reflected at both ends. Generally speaking, the value chain of coating manufacturing industry consists of brand value, technology research and development, technical equipment, raw material supply, product sales and after-sales service. However, few domestic coating enterprises have benefited from the whole value chain

the paint manufacturing link is located at the bottom of the curve, with the weakest profit. Moving from the coating manufacturing link to both sides, the technology R & D on the left and the brand and service on the right achieve more added value than the manufacturing link. And the farther away from the coating manufacturing link, the more added value each link will realize

for independent brand enterprises, although the brand is their own and there will be no problem of transferring profits, the profits are not ideal due to the limitations of technical level and strength. On the contrary, foreign paint giants occupy the high profit market

it is understood that almost all high profit products in China's paint market are not in the hands of domestic enterprises. IPhone shell coating, car coating, ship coating, automobile coating, anti-corrosion coating, and even high-grade coatings for toys are either imported or produced with imported technology. In the paint market of more than 340billion yuan, foreign-funded enterprises occupy more than 40% of the market share, while in the field of high-end products, the share is more than 90%. AkzoNobel, Nippon, PPG, Valspar and other foreign paint giants have set up R & D centers in China. Under the situation of China's macroeconomic slowdown, these

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