In the next 5-10 years, the main theme of China's industrial products market is internal circulation, the essence of internal circulation is industrial upgrading, and what is the industrial status quo in China's industrial field, and what are the opportunities among them?
It's either expensive or poor, and there is no dumbbell status quo in the middle state.
In 2019, I participated in a coal chemical instrument valve bidding, the participating suppliers (valve manufacturers) of this tender came to 23 in one bid section, and went back to wait for the bidding results to do a preliminary industry analysis, and I found a very interesting phenomenon:
According to data from China General Machinery Association, in 2019, there were 1809 enterprises above the scale of China's valve industry, and the scale of China's industrial valve market increased from 2121.93 billion yuan to 346.979 billion yuan from 2014-2018, with an annual compound growth rate of 12.98.
At that time, the first place in the domestic industrial valve industry was Suzhou Newway, he was a private enterprise, in 2018, Suzhou Newway's operating income was 2.781 billion yuan, a brand accounted for 20% to 50% of the industry to be considered the leader, it is surprising that the market share of a leading enterprise in china is less than 1%.
What surprises us even more is that there is no second and third place in the whole industry, what does it mean? That is to say, all the remaining market share is divided between thousands of small companies, small brands, foreign giants, and even small workshops.
(Control valve only)
This market state is too special
Because looking at the world, the mature market model is like this, there should be two or three giants in one field, serving 80% of users, and then many small companies focus on the remaining 20% of the market segment.
However, in China, many industrial products industry is not like this, and later we refer to other industrial product industries and find that the domestic state similar to the valve industry is universal.
For example, water pumps, China's pumps are also a large market of 100 billion, but the largest 3 manufacturers together account for less than 15% of the market share, and the remaining share is divided by many small factories with sales of less than 100 million yuan.
(Industrial shielded pumps only)
It wasn't until 2020 that I began to contact the Industrial Internet that I understood such a concept: "ant market".
The ant market, that is to say, the whole market is like a huge cake, which is divided into food by countless small factories, these small factories are like ants, and there are no elephants in the market where ants are eaten, that is, there is no absolutely leading large enterprise.
In such a state of competition, the market share of each company does not exceed 10%. Among them, it may be possible to find the first place, and even to get a vague glimpse of the second place, but who is the third place? No one knows, can't choose. This is the ant market.
The ant market is characterized by a low threshold and fierce low price competition, and it is very prone to two extreme differentiations:
1. There are a large number of cheap products on the market: this kind of product has a low threshold and is easy to get started, so many small factories are doing it, you are cheap, I can be cheaper, and sacrifice quality at all costs.
2. Finger product prices are too high: a few product quality is better, because the proportion of the market is too small, in order to maintain profitability, it can only keep the product high gross profit
China's demographic dividend, even a towel that many people feel is not worth mentioning, has the market potential to cultivate a "UNIQLO".
However, this dividend is now divided among thousands, even tens of thousands, of small factories that make cheap goods.
Under the huge wave of the overall upgrading of China's manufacturing industry, the ant market is either expensive or poor, so that users have no good choice, and the huge demand cannot be released. So the products in the ant market are either expensive or poor, and he does not exist in the intermediate state.
The original sin of the ant market
1. There is no standard, no cognition
Such products generally do not have the concept and standard of grades, and it is difficult for users to establish a perception of the price and quality of the product. The industry is not concentrated, and the information is asymmetrical, making it difficult for users to trust the manufacturer.
2. No brand.
The players in the ant market are all small players, with low differentiation from each other, and there are no players who are enough to unify the rivers and lakes. The player's own strength is small, and it is not united, and the cognition given to the user is also divided. Due to the large number of players and the dispersion of channels, it is difficult to establish a strong reputation and unable to implant brands among users.
3. There is no incentive to innovate.
Because the technical threshold is low and it is easy to get started, any research results and innovations, if there are no strong barriers of their own, will be immediately copied by opponents and divided up the innovation dividend. In the long run, enterprises will lose the motivation to innovate.
4. There are no good quality products with good value for money.
Because Ant players do not have a brand effect as an endorsement, even if they make high-quality mid-range goods, they cannot survive the price war, after all, other players can control the cost lower due to copying the cottage.
Do ants or make catfish
Catfish effect
In the years of the great development of China's manufacturing industry, it consumes the same resources, produces a large number of inferior products, some backward products have overcapacity, and the manufacturing output is large but may not make money, and it is impossible to continue to invest in order to improve quality, which is a vicious circle of helplessness.
Ant markets are mostly mature markets, many traditional industries have actually been solidified, the overall situation has been determined, everyone is at peace, innovation and technological competition is very insufficient, these markets maintain the old model for 10 years or even more than 20 years, many years have not changed, everyone lives in the comfort zone.
The quality of products has always been a matter of the entire upstream and downstream industrial chain, so entering the ant market, the supply line that has been solidified is a difficult obstacle to pass, and it is not easy for new enterprises to enjoy the dividends of the internal cycle.
If there is a new force stirring up an industry at this time, it will pay a great price, and when you want to break the original balance of an industry, you will naturally be resisted by traditional forces.
Ant market is the need for "catfish", when the "catfish" is with a new logic, a new team, a new business model and more stringent product standards to do things, to optimize the channel, optimize the supply chain, break through the old thinking, change the industry's old industrial chain, then the industry appears "elephant".
At present, there is no shortage of enterprises in China that dare to do catfish:
Xiaomi's intelligent hardware and ecological chain have led to the upgrading of many industries and brands
Huawei's 5G, of course, Huawei is not just a catfish, it is a shark, tearing at the international market.
Ants vs Elephants
Let's make a comparison: in 2019, the amount of China's imported valves was 7.154 billion US dollars, roughly calculated to be 50 billion yuan, according to the General Administration of Customs, the average price of China's imported valves was 69,900 US dollars / set, mainly concentrated in China's high-end market.
There is competition between ants in China's industrial products industry, and ants also have to fight against the elephants of the outside world, there are many international "elephants" in china's industrial products market, ABB, Siemens, Emerson, Schneider, Fox, GE, Bosch, etc., these companies are basically tens of billions or even hundreds of billions of enterprises, these elephants will not compete with domestic manufacturers to compete for the low-end market, they have been occupying the top of China's various industries.
Around 2000, many factories are not remarkable, are muffled to make a fortune, during this period, as long as they rely on, OEM, OEM, self-production and self-sales can also allow enterprises to develop, but in recent years, many entrepreneurs have also found that enterprises must have their own brands to go further.
In the future, the transformation and upgrading of all walks of life in the domestic market, the intensification of the reshuffle, the accelerated development of China's economy, the industrial products market is expected to appear more tens of billions of enterprises, we hope that there are more industry elephants, more "Huawei", can lead their own brands to go out, and these foreign elephants in the international market to break the wrist.