At present, the centuries-old financial crisis triggered by the US subprime mortgage crisis has caused violent turbulence in the international and domestic financial markets, and the stock market, futures market, foreign exchange market, and insurance market have all been severely affected. Due to the close linkage between the domestic glass market and the international glass market, the glass industry is obviously unable to survive alone in this financial crisis. The impact and challenges brought by this storm on the development of China's glass industry cannot be ignored.
One of the challenges is the decline in growth rate. The financial crisis has led to a decline in the prosperity of the glass industry. At present, under the dual effects of cyclical economic adjustment and the impact of the financial crisis, the glass industry as a whole has accelerated its decline. In 2008, the output of flat glass was approximately 570 million weight cases, an increase of approximately 5.1% year-on-year. This is the first time in nearly 10 years that the growth rate of glass production has slipped to single digits. According to the statistics of the Ministry of Information of the China Building Materials Federation and the China Building Glass and Industrial Glass Association, in 2009, the downward trend of national glass production growth was more obvious. Hebei, Shandong, Henan, Guangdong, Zhejiang glass output declined. Henan glass output decline growth rate.
The second challenge is the reduction in demand. The main reason for the decline in the growth rate of China's glass output in 2008 is that the market demand has shrunk. In recent years, the three major engines driving the glass industry—the real estate industry, the automotive industry, and exports—have suffered a sharp decline due to the impact of the international financial crisis, which has led to a simultaneous reaction in the glass industry. In March this year, 60 domestic key glass companies produced 31.26 million weight cases of float glass, and cumulatively produced 93.09 million weight cases of float glass from January to March. Compared with the same period in 2008, the cumulative output decreased by 7.12%. The provinces with the largest cumulative output are 16.64 million weight cases in Hebei Province, 10.25 million weight cases in Shandong Province, 10.21 million weight cases in Jiangsu Province, 9.88 million weight cases in Guangdong Province, and 8.95 million weight cases in Zhejiang Province.
The third challenge is that the real estate industry whose price decline is closely related to the glass industry is going through the severe winter, and the glass market is also in a slump. In the financial crisis of China, with the fluctuation of the RMB exchange rate and the international financial market, the price of glass declined in line with the international market. After September last year, Shandong glass prices fell back, and in October the province's glass prices continued to decline. After the price of flat glass fell to the lowest point in recent years in the fourth quarter of 2008, the overall price is still hovering at the bottom.
The fourth challenge is the shortage of funds. The financial crisis has led to a significant increase in the risks of enterprise inventory and funds. Since the beginning of this year, the glass production and sales rate has dropped, and inventories have increased, while the increase in inventory has taken up 20% of the funds. Although flat glass sales rebounded in October and the inventory at the end of the month decreased from last month, it still increased 11.09 million weight cases from the same month last year, mainly due to the backlog of ordinary float glass. The current market sales situation is still not optimistic for the flat glass industry with excess float glass production capacity. The liquidity contraction brought about by the financial turmoil has affected some companies' ability to pay. With regard to the return of funds, after the export of glass products, affected by the crisis, it was difficult for the purchaser's funds to be recovered on time. The arrears and delinquencies from overseas were increasing, which affected the income of some export-oriented glass companies. According to the survey, affected by the financial crisis, some glass companies have significantly increased their capital risks due to inventory and other factors.
The fifth challenge is that the export is blocked. The financial crisis has caused a big impact on the export of enterprises. China's glass industry is mainly affected by export-oriented enterprises. The US financial turmoil has triggered a global economic crisis that has led to shrinking demand from countries around the world, which directly affects China's glass product exports. As an export-oriented Chinese economy, the main export markets are the United States and the European Union. The current financial turmoil has hit the real economy of the European Union. The American economy is also sliding to the brink of recession. The trade surplus between China and the United States has dropped significantly. It has some impacts on the export of Chinese glass enterprises' products. Some glass export companies are complaining. The financial crisis has led to a reduction in orders, and many companies have under-started. In recent years, some glass enterprises in China have gone to the world. Although the assets of these enterprises abroad are not large compared with the total assets of the enterprises themselves, the proportion of losses caused by financial storms caused by China ’s overseas glass enterprises is not small. Shrink gradually under the action.
The sixth challenge is that the difficult financial crisis has further deteriorated the operating environment of glass companies, making them increasingly difficult to survive. In general, the price of production cost components such as equipment parts, raw materials, auxiliary raw materials, logistics costs and labor costs involved in the production and operation of glass enterprises has increased sharply, which has caused the production costs of enterprises to rise steadily and the profits of enterprises. Was constantly eroded. After September last year, it was hit harder by the financial turmoil. At the end of March this year, more than 40 float glass production lines in China had ceased production. Some small factories that rely on big companies to change orders or provide support for large factories have even more difficulties in their business, and some have even closed down. The double squeeze of rising costs and low product prices has led to a significant decrease in the profit margin of glass companies and an increase in losses. The glass industry began to lose money from the profit at the beginning of last year to the fourth quarter of last year, and there is still no loss of turnaround until now.
The opportunity provided by the financial turmoil for the development of China's glass industry
However, it should be noted that while the US financial turmoil poses challenges to China's glass industry, it also provides a rare opportunity for the development of China's glass industry.
One of the opportunities is that the global financial crisis of industrial integration has led to lower valuations of enterprises, which provides domestic enterprises with relatively insufficient resource reserves a good opportunity to integrate resources and complete international expansion through mergers and acquisitions. From the perspective of the glass industry, scale, liquidity and diversification will reappear, and highly diversified companies and large-scale enterprises will have more channels for external financing, and small businesses will undoubtedly be eliminated. The glass industry will increasingly show the advantages of mass production. The crisis is also a good opportunity to integrate the glass industry.
The second opportunity is favorable policies. Various policies adopted by the country in response to the US financial turmoil, such as tax reduction, financing, export promotion, and increased consumption, will bring benefits to glass companies. In particular, the 100 billion yuan investment arranged by the country to further expand domestic demand is aimed at affordable housing projects, rural livelihood projects and agricultural infrastructure, railways, highways, airports and other infrastructure construction, education, health and other social public utilities, ecology Environmental construction, accelerating the independent innovation and structural adjustment of enterprises and the restoration and reconstruction of earthquake-stricken areas. More importantly, the 4 trillion economic stimulus plan is used for the reconstruction and reconstruction of earthquake-stricken areas, rural livelihood projects, rural infrastructure, ecological environment, and affordable housing projects. These major investments in these countries will stimulate our glass market and The development of the glass industry has played a huge role in promoting.
Future market strategy choice
Building confidence, overcoming difficulties, and solidifying confidence through the crisis are powerful weapons to deal with the current world economic turmoil and financial crisis. Enterprises must rely on confidence to stabilize market expectations and rely on confidence to overcome difficulties. The once-in-a-century financial crisis puts higher demands on the person in charge of the enterprise. Instead of thinking about problems with conventional thinking, it is necessary to soberly grasp market changes and carefully plan development strategies. At present, we must pay special attention to the four key factors of raw materials, technology, market and finance.
Reducing production and insuring prices, accelerating sales, and withdrawing capital The building materials industry, like the real estate industry, is an industry that relies heavily on capital. Many small and medium-sized enterprises operate on the bank lending model. Once the “money†is tightened, these enterprises will be affected. Cash flow. At present, "reducing production and insuring prices and accelerating sales" has become the common choice of many glass companies. Some large glass companies have introduced production restriction measures, and more and more small and medium glass companies can't bear the pressure to stop production and shut down. In response to the reality of falling glass prices, some companies have set a minimum price to limit the selling price of glass in order to obtain good benefits. It is necessary to strengthen the return and flow of funds. Export-oriented glass enterprises should pay attention to preventing the foreign exchange risk of export. According to the credit status of the other party, corresponding export credit insurance shall be provided; new customers shall be charged for payment and delivery. Glass companies in the domestic market must also guard against the risk of capital repatriation, prevent the precipitation of funds, and speed up the flow.
Unswervingly "going out" and actively looking for blank spots "going out" has become an inevitable choice for companies to seek better development in response to the financial crisis. Although the financial crisis will not hurt the current industry. However, if the short-term credit mechanism in the United States cannot be started quickly, the consumption in the United States will continue to shrink, which will have a great impact on China's export market. This storm makes it possible for our glass companies to "go out" better. Because the rapid decline in the value of global companies has provided important opportunities for acquisitions and created conditions for strengthening internal management and reducing costs. At the same time, after the baptism of the storm, the true value of overseas assets will gradually become apparent. At this time, our overseas investment may be worth the money, which brings opportunities to China's powerful glass companies.
Encourage the restructuring of superior companies and mergers and acquisitions of disadvantaged companies to both save the disadvantaged companies and make them stronger and stronger. Corporate mergers and acquisitions have a great relationship with the glass market. The more the glass market is at a low point, the more favorable it is to mergers and acquisitions, and after the merger and acquisition of enterprises becomes a hot spot in the industry, it can accelerate the reshuffle and integration of the market.
Restructuring and continuous innovation At present, the deep processing rate of glass in China is only 30%, while the world average is about 55%, and 65% ~ 85% in developed countries. The value-added rate after processing is only 2.5 times that of the original film in China, and 5 times in developed countries, so there is a big gap in the deep processing rate and processing depth. All of these provide a broad market space for glass companies. Especially safety glass and energy-saving glass, the annual growth rate is more than 30%. The financial turmoil has brought new opportunities for the structural adjustment of China's glass industry. Therefore, to better respond to the financial crisis, we must adjust the industrial structure, save energy and reduce emissions, and eliminate high-pollution and high-consumption enterprises.
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