Entrepreneurs must take on the historical responsibility of leading the tool enterprises to accelerate the pace of “adjusting the structure and promoting transformation”

Abstract In 2014, most of the sales of tool companies entered the rising channel. Is it a short-lived or a beginning of a stable growth period? This is a question that everyone cares about and hopes to have a more realistic judgment on the development prospects. Although no one has the ability to predict the future exactly,...
In 2014, most of the tool companies' sales entered the rising channel. Is it a short-lived or a stable growth period? This is a question that everyone cares about and hopes to have a more realistic judgment on the development prospects. Although no one has the ability to accurately predict the future, through the analysis and research of various related factors, it is still possible to make a reasonable pre-judgment for future development trends and provide assistance for enterprises to formulate development strategies.

We believe that the positive factors affecting the growth of tool companies have the following three aspects: First, the macroeconomic situation is stable and there is no ups and downs; second, the development of the tool market itself has room for improvement; third, the market subject consciousness of tool companies and The sense of crisis has increased and progress has been made in improving competitiveness. Now we will present our analysis and judgment on these three aspects.

First, China’s macroeconomic situation will be stable and stable under the new normal.

Premier Li Keqiang recently pointed out that "China's economic operation in the first three quarters is still in a reasonable range, and there have been some positive and profound trend changes. At the same time, the external environment is still complex and volatile, and the downward pressure and difficulties affecting China's economic development are still not Small, reform measures still need a process to fully bear fruit. In short, we are full of confidence in the Chinese economy, and we are not taking lightly on the challenges we face. We will achieve the main tasks of the year with a spirit of hard work."

This passage shows that the central government is full of confidence in the development prospects and is based on a full understanding of and difficulties in preparing for difficulties and challenges. It is not blindly optimistic.

The practice in the past two years has proved that the new central leadership collective can always point out the direction and struggle goal of the whole party and the whole nation at a critical moment, so that China's economic and social development can be carried out under the complicated international and domestic environment. , insist on grasping the right direction and breaking the waves.

Second, China's tool market has a stable growth space, providing a good development prospect for tool companies.

These two years of practice have proved that in the context of the economic downturn, the demand for modern high-efficiency tools in China's manufacturing industry has not declined, but has increased. In the future, with the disappearance of the so-called demographic dividend and the change in labor supply and demand, the trend of high-end tool demand growth will be further strengthened, thus effectively promoting the process of China's manufacturing modernization. A large number of so-called low-end manufacturing enterprises engaged in export processing are gradually bidding farewell to the era of extensive management relying on cheap labor and national tax rebates to maintain their livelihood, and truly begin to enter a new era of survival and development by virtue of their own competitiveness.

The transformation and upgrading of the manufacturing industry has opened up a brand new market space for the majority of tool companies, and the development prospects are very good.

Figure 1 shows the size and annual growth rate of the tool market in major regions of the world published at the European Tooling Conference in May 2014. It can be seen that Asia has the highest growth rate, which is 2.5 times the global average. Figure 2 shows that in 2013, China, the United States, Germany, South Korea and Japan, five major machine tool consumption countries, their consumption accounted for the global proportion. The machine tool is 64% and the tool is 69%. The figure shows that China's machine tool consumption ranks first in the world, which has been going on for several years. However, a very interesting phenomenon is that the proportion of tool consumption in all manufacturing countries is higher than that of machine tools. The share of tool consumption in China is far lower than that of machine tools.

According to the information we have, the annual manufacturing of machine tools in the major manufacturing countries is roughly twice that of tool consumption. However, China's machine tool consumption has reached 5-6 times of tool consumption. The difference between domestic and foreign is so great. There is only one possible explanation. The tools used in domestic manufacturing are cheap and inefficient. The majority of tool companies must see the gap from this backwardness, but also see the business opportunities that may be brought about by the advantages of latecomers.
Figure 1 Tool market size and annual growth in major regions of the world
Figure 2 The share of machine tool consumption in China, the United States, Germany, South Korea and Japan in 2013

Third, continuously improving competitiveness is the key to determining the success of an enterprise.

With the in-depth development of China's market-oriented reforms, the market is increasingly playing a decisive role in resource allocation, and competition among enterprises must be intensified. The survival and development of each enterprise will depend on its competitiveness. So how to improve the competitiveness of enterprises?

(1) The development trend of the domestic tool market is that the high-end market is expanding and the low-end market is shrinking. Enterprises should accurately target the target market according to their own conditions and formulate corresponding development strategies.

For domestic tool companies, entering the high-end market is currently the main development opportunity. The reason is that most domestic tool companies have greatly improved their equipment and are close to foreign-funded enterprises. The biggest gap is in R&D and service. According to the post-emphasis of economics, we have an opportunity. However, for most companies, it is difficult for R&D capabilities to catch up in the short term. It is only possible to adopt a transitional approach of first copying and then creating, digesting and re-innovating. However, the service can't be sloppy. It must be followed up immediately. It should be solved by learning and gradually improving. It should be emphasized that service capability is a necessary condition for tool enterprises to enter modern manufacturing industry, and it is also a shortcoming of most of our enterprises, and must be filled as soon as possible.

(2) To develop high-end tools to avoid homogenization competition, resulting in consequences

Over the past 10 years, with the acceleration of China's manufacturing modernization, more and more tool companies have joined the ranks of expanding market space in the high-end field. This development trend has changed the domestic high-end tool market dominated by imported tools. The situation is very gratifying. At the beginning of this century, only a small number of large state-owned enterprises entered this field. Most of them were small and medium-sized private enterprises. They naturally formed large and small collocations, each with their own goals and clear targets, and replaced imports.

In recent years, with the gradual shrinking of the traditional low-end tool market in China and the rapid expansion of the high-end tool market, the high-end tool industry has attracted more investors' attention, and a number of investors in the background of state-owned and private capital have increased their Investment in hard alloy high-end tools. In just a few years, some of these new projects have been completed and put into production, and they have entered the stage of sales promotion. However, from the information feedback from the market, the situation is somewhat abnormal. These new production capacity has a great impact on the domestic low-end cemented carbide tool market. Some small and medium-sized cemented carbide tool enterprises are facing fierce low-price competition, and some have led to the collapse of the capital chain and bankruptcy restructuring. In stark contrast, foreign companies have not felt that they have increased their competitors in China. Therefore, we speculate that most of the new capacity has not entered the high-end market and cannot participate in the competition to replace imports.

It is hoped that new tool companies entering this field must pay attention to prevent this from happening. The solution is simple, that is, to clearly target the substitution of imports.

Entrepreneurs must take on the historical responsibility of leading the tool enterprises to accelerate the pace of “adjusting the structure and promoting transformation”

Today, I have said so much, and the most important point is that this sentence: Entrepreneurs should take on the historical responsibility of leading the tool enterprises to accelerate the pace of “adjusting the structure and promoting transformation”. In the past two years, the reform and innovation of the new central government has been vigorously initiated. The central issue is to improve the construction of market mechanisms. The burden will ultimately fall on the shoulders of the entrepreneur’s family, the entrepreneur.

Now it seems that the repositioning or transformation of this role is not an easy task for the government and the enterprise. There are many complicated factors in the transformation of the role of the enterprise. The restoration of the status of the market and the strengthening of competitiveness depend not only on whether the transformation of government functions is in place, but also on whether the market subject consciousness and independent efforts of the enterprises are in place.

Deepening the process of reform will inevitably have numerous difficulties and challenges, but we are convinced that the wheel of historical development cannot be stopped: the dominant position of enterprises in the market will surely be consolidated, and the decisive role of the market in resource allocation will certainly be strengthened. It must be noted that the major changes that are taking place in this series mentioned above have brought the important role of Chinese entrepreneurs in economic development to an unprecedented height. They will play a key role in leading the company's historical mission to break through the history of China's economic development.

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