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Manufacturing industry needs a way out, raw material price rises, how to break?

Recently, the rising prices of raw materials have put a lot of pressure on manufacturing enterprises. Compared with the situation in early 2016, PVC prices increased by 60%, glass prices 40%, plastic prices 30%, aluminum prices 30%, iron prices 30%, carton rose 30%.

Even if it is a long-term downturn in the steel prices in 2015, unexpectedly also: Every dog has his day ministry monitoring data show that from October 31st to November 6th, steel prices rose 1.9%, rose for 6 consecutive weeks, the cumulative increase of 6.1%, prices hit a record since the beginning of May.

TV panel prices continue upward. According to Ovid yunwang data show that since April this year started turning panel prices rebound, 32 or 46.2% inches, 43 inches or 63% inches, 49 inches or 38.4%, 50 or 64.7%.

The cost pressures are quickly transmitted to manufacturing firms. Steel prices on the impact of white goods is huge, refrigerator, washing machine and air conditioning power consumption accounted for all three steel the entire appliance industry of steel consumption of 80% air conditioning, the cost of raw materials overall increase of about 8%~10%. And Qingdao, Haier, GREE and other mainstream manufacturers of air-conditioning gross margin of only about 30%.

Predictably, in 2016, after the double 11 carnival, the domestic appliance brands will appear a round of price increases to cope with cost pressures, "chop hands" the original choice is not worthy of regret. For manufacturing firms, however, the rate of rapid thinning of gross margins is not good. In 2014, the profit margin of China's top 500 manufacturing enterprises was only 2.7%, which was quite different from that of American manufacturing enterprises. At this time, the rise in raw material prices, can be described as "house leakage, partial even overnight rain."".

China's manufacturing industry is in the transition from low-end processing to high value-added manufacturing. As we all know, the development of HUAWEI mobile phones, Godson CPU and other high value-added products require huge R & D investment. R & D investment comes from the accumulation of funds, and if the manufacturing profits are insufficient and the situation is barely supported, it will be difficult to accumulate sufficient R & D funds to complete the upgrade and transformation. The manufacturing sector is a pillar of China's economy, and the above situation is certainly something we do not want to see, so we need to eliminate the impact of rising raw material prices as much as possible.

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Contact: Alan Huang

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