Part of the floor business crisis

After the spring water floor was exposed in early November, after the CEOs broke the "road" due to the breakdown of the sideline capital chain, recently, the St. Lagger floor and the dry ground floor bosses suddenly disappeared, leaving empty the brands and factories they had created. The collapse of the capital chain caused the collapse of the company. Why is it happening frequently in the flooring industry? Under the influence of negative factors such as the regulation of the property market and rising costs, which industries in the household circle are at risk?

Small and medium-sized flooring companies take the lead in "crashing"

Within the last month, the drama of the floor company's bosses running through the breakage of the capital chain has continued. In all parts of the country, the collapse of floor companies and the conversion of production have also occurred frequently. In the winter of the entire home industry, the situation in the flooring sector seems more difficult.

The reporter learned that, compared to furniture, cabinets, sanitary ware and other technical, design, labor and other factors require a higher category, the floor industry entry threshold is low, even a few million can be used to hire small factories to OEM production .

The rapid development of the home industry in recent years has also prompted many people to flock to the flooring industry. Compared with big brands with deep brand accumulation and strong technological innovation capabilities, small and medium-sized flooring companies have been stifled in long-term price wars and their profits have been continuously diluted.

This reporter learned that the China Forest Products Industry Association and China Consumers Association jointly issued the "floor ***", will strengthen the floor price cordon positioning 70 yuan, but the market as low as five or sixty yuan products abound. This also led to the results described by Zhang Bo, the general manager of St. Matt's flooring, in the sales performance to eliminate the costs of store decoration, many companies' gross profit margin does not exceed 8%, and pay is not proportional to the benefits.

According to Hu Zhongxin, secretary-general of the China Home Building Materials Decoration Association, there are currently thousands of flooring companies in the country, and less than 30% of them are truly profitable, and many of them have gross profit margins of only about 5%. After the financial crisis, the export orders of floor companies have plummeted, and the US “double reverse” investigation has further blocked floor exports. Under the power of property market regulation, the domestic market demand is also shrinking; at the same time, the prices of raw materials, labor, and channel costs have risen. Stay high. "In such a grim situation, the flooring industry was the first to set off a wave of collapse, which was not expected."

Which industries are in danger outside homes and furniture? “In fact, all companies that are engaged in the real economy are facing risks,” said Fan Wenjian, general manager of WorldFriends Flooring Beijing. The cash flow and profitability of home companies are already extremely low, and many companies are maintaining their survival. Become the victim of the next crash. Hu Zhongxin said that plate furniture companies and home improvement companies have been hit harder, or they will become the next "high-risk group."

At the 2011 China Panel Furniture Development Forum held in the middle of this year, some experts said that the current domestic market for panel furniture has been shrinking. According to statistics from a senior industry professional, the cost of sheet metal accounted for 30% to 40% of the total cost of production and distribution of panel furniture, and the wages of workers accounted for 10% to 20%. In addition, there were operating costs and high field rental costs. Wait. Compared with solid wood and European and American furniture, plate furniture is low in price and profit is thin. Gross profit is about 26%, and net profit is only 7%. If you do not increase selling points and increase new profit items as soon as possible, some panel furniture companies may be unable to escape the fate of converting, transforming or closing.

The home improvement company has undoubtedly become a hard-hit area on the home sandbox in 2011. Hu Zhongxin pointed out that high-end brands with strong ability to withstand risks and extremely low-grade enterprises can win certain markets with their price advantage, while mid-range home-improvement brands will face cruel market tests due to lack of visibility and vague positioning.

â–  Causes of collapse 1. Inadequate operating resources Some companies consider that the profits of household products are low, and they cannot reject the temptation of private lending capital. So they use the company entity as a guarantee to conduct microfinance. In this way, when there is a problem in one part of the company's operating chain, the entire capital chain is also randomly broken. The company cannot offset its debt and the owner can only run away. In addition, some companies are engaged in the production or sale of household products, and are also engaged in industries with higher risks, such as agricultural products or real estate, and the poor management has caused the sideline to drag down the main business.

2. The cost of labor and logistics has soared The rising costs of raw materials, labor, and transportation have also become unaffordable for home companies. It is reported that from the beginning of the year to now, the total cost of the floor companies rose by 25% to 30%, of which the most serious part of the labor and logistics. Regardless of short-distance transport or long-distance transport, the transportation cost equivalent to double floor per square meter doubled compared with previous years, and the wages of factory workers also rose.

Not only the floor, furniture, bathrooms, cabinets and other categories are also facing cost pressures. At the same time, the home-based enterprises that are located in supermarkets and building materials cities also have to bear high construction costs such as rents. Home decoration company's cost is mainly reflected in the manual, even a bricklayer's monthly salary will be higher than the ordinary white-collar workers.

3. The long-term consumption of price wars is based on the example of the reinforced floors of small and medium-sized brands. The production cost per square meter is more than 40 yuan, and the logistics and installation costs are more than 20 yuan. Agents also need to increase their prices, but even so, the market is still There are a lot of warning lines below the floor of 70 yuan. The reason is that the lack of brand awareness, product added value, can only rely on price wars out of the sky. When prices become the only selling point, home companies are caught in a vicious cycle of not discounting, selling, and discounting and losing money. Long-term internal friction will also increase the speed of death of some companies.

4. It is an indisputable fact that domestic and foreign markets have difficulty in increasing the domestic demand for household goods due to the control of the property market. Among them, the building materials category is due to declining demand and increased competition due to hardcover housing projects, home improvement companies, and other reasons. More inclined to choose a well-known, reputation, cost-effective big brands.

At the same time, after the financial crisis, the overseas market demand was sluggish, and the high tax rate levied after the United States' "double counter investigation" forced foreign exporters to give up some orders. Under the circumstances of internal and external difficulties, enterprises cannot sustain themselves but only collapse.

5. The direct model risk is higher than that of the first-tier or second-tier cities in the agency system. Establishing direct-operated stores in the second-tier, third-tier, and third-tier markets will help companies share risks and ease pressure on the capital chain. In contrast, if a single direct adoption model is adopted, home companies are more flexible and sensitive in terms of product mix, daily marketing, pricing, audience feedback, etc. However, when the market is booming, the manufacturers enjoy their own interests, and when the market declines, the manufacturers also bear the sole responsibility. Risk is naturally not conducive to smooth wintering under adverse circumstances.

■Industry claims that innovation is conducive to competition ● Fan Wenjian, General Manager of Shiyou Floor Beijing Co., Ltd. The reshuffle of the flooring industry has already begun. If an enterprise wants to survive, it must first rely on innovation capabilities, including increasing the utilization rate of raw materials, increasing the degree of automation, and reducing labor costs. Develop new products and launch new services as brand support. Second, relying on differentiated marketing, such as intensive cultivation in first- and second-tier cities, upgrading customized services, and deepening brand influence; enhancing the atmosphere of stores and expanding the area in third- and fourth-tier cities, reflecting the feeling of one-stop shopping. In addition, whether the company's funds are sufficient is also important, which requires establishing a good credit relationship with banks and a smooth capital chain. In the future, the flooring industry will be expected to form a highly concentrated competitive landscape like the home appliance and beverage industries.

Domestic brands need long-term planning ● Hu Zhongxin, secretary-general of the China Home Building Materials Decoration Association For many home companies, the reason for the collapse is the lack of planning. Home companies should calm down and make an overall plan, including combing product structure, audiences, and overall market positioning. For example, is it a national brand or a regional brand? In the past, many companies sold their products in order to sell products, and now they must go up to the brand level to do business.