Integration or differentiation? Analysis on the Future Development Pattern of Abrasives Industry in China

After the golden development period of previous years, under the multiple factors of slowing domestic economic growth and continued weakness in the international market, the prosperity of China's abrasives industry has come to an abrupt end, the overall market is sluggish, and the downward pressure on the industry continues to increase. .
From the characterization point of view, the output of the main products of the abrasives industry (grinding, coating, super hard) fell across the board, the total profit was deep, and the number of enterprises that reduced production and production stopped increasing. China's abrasives industry seems to have entered the winter. Note: The above statistics from the Abrasives Industry Association are for reference only.

Rational view of industry trends <br> The current difficult situation has caused people to worry about the future of China's abrasives industry, especially the bosses and employees of many small and medium-sized enterprises feel unsupported and pessimistic.
The current difficulties in the abrasives industry are mainly due to the downturn in the real estate industry from external factors, and the overproduction in the interior. The glorious period of the abrasives industry in the past few years is in the stage of a sharp increase in the scale of real estate investment in China. At that time, the abrasives industry directly or indirectly related to real estate stood on the cusp of the market, and the scale of the industry expanded rapidly. Nowadays, in the context of economic downturn, the real estate industry, which is the mainstay of the national economy, has excess inventory and shrinking demand, and the growth rate of investment and development has plummeted. This has directly led to the dilemma of “more people and less food” in the abrasives industry. There is no market for chemical products, and companies are fighting price wars. Except for a small number of enterprises, most of them make money hard. This has caused the overall slump of the industry. The development of our industry is actually kidnapped by real estate.
From a practical point of view, the abrasives industry is abducted by the bulk of the ordinary low-end (brown corundum, white corundum, black silicon carbide, green silicon carbide, diamond, cBN, grinding wheel, coating). With abrasive products, etc., the production capacity is seriously over-capacity, and the related business difficulties are difficult. These enterprises are either new or old enterprises that have expanded their production capacity in the past two years, and their combination also reflects China's abrasives. The overall level of the abrasive industry. There is no bad industry, only bad companies, from the data collected by the industry, some industry companies actively transform, boldly try to lead the products from the traditional field to another industry, these companies in 2015 and 2016 In the first half of the year, it achieved a gratifying situation in which production, prices, and profits all surged against the trend.
From the macroscopic situation, a series of favorable policies introduced by the state have provided new opportunities for the development of abrasives in China. The market prospects of the industry are not bleak, but rather attractive, especially in the high-end manufacturing field and non-grinding applications. There is huge room for development. More people in the industry bluntly pointed out that China's abrasives industry has not fallen into the cold winter, the abrasives industry is still a potential industry, the future development of abrasives market is still broad.

Industry future pattern analysis
At present, the level of customization of abrasives and abrasives enterprises is generally low, which is an important reason for product homogenization. Many small businesses copy those big brand companies, which leads to more serious homogenization. Some small and medium-sized enterprises lacking visibility have opened up the market and resorted to vicious price competition. If things are similar, buyers will definitely choose big brands, so small brands have to attract buyers at ultra-low prices, but consumers will find that they can't keep up with quality or follow-up services. These companies have to cut prices again, which is a vicious circle.
The current sluggish market and the sluggish background will directly trigger the industry to reshuffle. In this wave of industry reshuffle, the first thing to be cleaned up is the non-standard enterprise that has madly poured into the industry during the “four trillion” period, which is slimming for the industry. The common point of these enterprises is that they have no technical content, do not pay attention to the production process and product quality. In order to compete for the price war, they are finally killed. This is the first stage.
This is followed by the establishment of a new order, which is the second phase of the industry reshuffle. This process will show the overall pattern of integration and differentiation, whether it is the ordinary abrasives industry, the superhard materials industry, or the coating. The abrasive industry will do the same. If the industry's first stage of reshuffle is “de-capacity”, the industrial concentration is still low. Even if the effect of de-capacity is staged, once the industry recovers, the production capacity will still be released on a large scale without control, and the new round of capacity competition will be It will start again, and the problem of overcapacity may be highlighted again. Therefore, accelerating industry integration and reorganization in de-capacity and increasing market concentration are necessary conditions for China's abrasives industry to achieve healthy development. In particular, the integration of industry enterprises that produce large-scale products will become more apparent. For example, a brown fused alumina abrasive enterprise may be a cross-regional merger and reorganization, or it may be a resource integration within a key production area; for example, the original concentration of the coated abrasive abrasive cloth manufacturing plant in China is already high, but for now Competition is still heating up. It is not just the enterprise itself but the entire industry. It is better to integrate and reorganize with its internal struggles. Through better allocation of resources, it will form a force and compete with foreign companies. Of course, the development of these abrasive cloth manufacturers may also have another situation--differentiation. This differentiation means that the enterprise gives up a large and comprehensive model based on its own resource advantages on the original basis, and exclusively produces one or several applications. A product with a fairly competitive market in a specific field. Of course, this kind of differentiation is more suitable for small and medium-sized enterprises. It pursues specialization and precision. Enterprises can make full use of the limited resources in their hands and gather the power of the whole factory to develop a certain product. Abrasive manufacturers can produce special abrasives with special physical and chemical requirements according to market demand. Abrasives manufacturers can also be a professional abrasive manufacturer in a refinement field. This differentiation is similar to the German SME development model. It is also possible that some large-scale integrated enterprises will use their strengths and avoid weaknesses, eliminate inferior projects, and use more energy to advantage industries.
Enterprises that can survive to the second stage are enterprises with certain strength. Actively slimming down or being integrated and reorganized may be unwilling. After all, a large amount of human and financial resources are invested in the early stage, which will cause considerable losses to the enterprise, but The consumption with the peers is destined to be jade and jade powder. It depends on the enthusiasm of the leadership of the enterprise. Is there any determination and courage to break the wrists in order to reborn?
In this industry consolidation, state-owned enterprises will play a decisive role. Relevant information shows that this year's private fixed asset investment growth rate dropped from 10% to 5.2%, which took less than four months, which is an amazing data. In contrast, state-owned assets have shown a frenzied expansion in a very short period of time. Do not look at the decline in profits of state-owned enterprises is the most powerful, but this will not affect the bullishness of state-owned assets. In addition to the local capital purchases in the country, the momentum of the state-owned assets overseas is also very strong. Similarly, in the abrasives industry, the integration of state-owned enterprises and large enterprises will dominate, and some heavy restructurings have already emerged; SMEs are either integrated by large enterprises, or integrated, or differentiated into a specific field. If the first stage is based on “de-quantity”, then the second stage will mainly focus on technology.

Tap on their own advantages and actively innovate
Impetuousness, speculation, quick success, and blindness are common problems in many Chinese abrasives and abrasives enterprises. The lack of attention to their own production processes, technologies and services, and the lack of understanding of external market information are the reasons why these companies cannot survive in the wave of shuffling. The main reason.
Enterprises must find their own strengths and core competencies, and persist in focusing on their own affairs. Enterprises should fully understand and tap their own strengths and core competitiveness, focus on and adhere to their own affairs, cultivate internal strengths, and work hard to achieve the ultimate. At the same time, companies must take advantage of the trend, disruptive innovations in the old business model, and enhance the overall strength of the company.
After chaotic and disorderly competition, China's abrasives industry will surely have a polarized development pattern, either small or sophisticated companies in one area to achieve the ultimate, or some large and comprehensive enterprises to the industry Effective integration. This is a multiple choice question that you have to do. How do you choose?

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