Gates Winter Strategy: Two Transformations

This time, the government has not loosened its control over the property market and relied on prestige. In the long run, this is a good thing for the development of the Chinese property market. However, for security doors and entry doors in the downstream industrial chain of real estate, this indicates to a certain extent the advent of “winter”.

Affected by the adverse effects of real estate regulation and control, coupled with the soaring labor cost and raw material costs, how will the security doors and entry doors survive the winter?

From the labor-intensive to high-end manufacturing perspective, pan-home businesses still belong to labor-intensive enterprises. This means that the production of enterprises requires a large amount of labor, and the proportion of the labor cost of the company's product costs is relatively large. In labor-intensive enterprises, the average worker’s labor and equipment are relatively low, and their technical content is relatively low. Corporate profits are often proportional to the amount of labor.

However, with the increase in inflation and the rapid increase in labor prices, the labor-intensive production mode of home companies is increasingly challenged. According to statistics, the wages of migrant workers in China increased by 30%-40% last year, and it is expected to increase by 20%-30% annually at least by 2013.

To fundamentally solve the problem of rising labor costs, we must shift companies from labor-intensive to technology-intensive, and to the high-end manufacturing.

Foxconn Group, which employs 1 million people in mainland China, has officially announced that it will have 300,000 robots next year and 1 million robots by 2013. Some of these robots will replace workers.

The industry generally believes that this is a key step for Foxconn to transform from labor-intensive to automation. The transformation of Foxconn will become the starting point for labor-intensive enterprises to upgrade to high-end manufacturing.

China's "Twelfth Five-Year Plan" has listed high-end manufacturing, environmental protection, and new energy as key development industries, giving preferential policies to these industries and encouraging their rapid development.

Anti-theft door companies strive to transition to high-end manufacturing, will make their own core competitiveness to obtain a qualitative leap, but also can get strong support of national policies. The upgrade to automation and the transition to high-end manufacturing are inevitable trends in economic development.

Product and channel transformation According to survey statistics, 91% of non-line brands are mainstream consumer, because 91% of consumers can not afford 9% of the first-line brands (in line with house prices). In order to cope with the characteristics of this market consumption, anti-theft door companies may wish to adjust product categories and introduce a variety of products and brands that are suitable for mass consumers. First-line brand manufacturers can also launch second-tier brands and products to capture the market for ordinary consumer households, thereby expanding their market share.

In terms of distribution channels, multi-level agents have not only reduced the profits of merchants, but also made it difficult to reduce the sales price of products in terminals. At the same time, the mainstream supermarkets in the first and second tier cities occupy a strong position and charge high entry fees to manufacturers, causing manufacturers' profits to fall again and again. Difficulties change, many manufacturers have begun to enter the direct field, and eventually will quickly form a factory-operated warehouse-style supermarkets, cut off the intermediate circulation, profit distribution to consumers, manufacturers can also get more profits.

Sticking to the main business, cash is the king's shrinking profits in the face of doors and windows industry, a considerable number of companies are seeking ways to profit beyond the main business, and some have even turned their investment to businesses that have nothing to do with the main business. For example, in Zhejiang, many bosses no longer concentrate on their main business, but instead invest their funds in real estate or private finance to earn large amounts of “quick money”. Not to mention the negative effect of this kind of "non-professional business" on the anti-theft door industry. Even if the money is made through real estate speculation or borrowing, this kind of "quick money" is hard to last. What's more, the timetable for the end of the real estate speculation is getting closer and closer.

Instead of investing large sums of money in real estate or private financial lending, companies should not only hold cash, but also strengthen R&D and innovation, work hard, spend “winter”, and save energy for the arrival of the next spring.