Recently, the Central Economic Work Conference was held in Beijing. The meeting believes that next year's economic and social development, especially structural reform tasks, will be extremely heavy. Strategically, we must adhere to the principle of seeking progress while maintaining stability, grasp the pace and intensity, and tactically focus on five major tasks: reducing production capacity, reducing inventory, deleveraging, lowering costs, and filling gaps. These key points also provide four directions for the transformation and breakthrough of the door and window industry.
1、 Alleviating overcapacity is of paramount importance
The contradiction of overcapacity has been facing all door and window enterprises for the past few years. In 2016, the overcapacity contradiction in the entire door and window industry once again became white hot. For all door and window enterprises, in the future, they must take advantage of the direction pointed out at this round of the Central Economic Work Conference. On the one hand, they need to eliminate a large amount of homogeneous door and window production capacity that exceeds demand; On the other hand, it is necessary to increase the supply of some mid to high end production capacity through structural transformation.
In Industry 4. Under the tide of zero, Chinese door and window enterprises need to take advantage of this round of "machine replacement" to truly release a large amount of low value-added and high labor capacity, and increase the supply guarantee of high-end door and window products. In the past two to three years, a group of large enterprises have continued to promote the "machine replacement". From the current perspective, this layout needs to be rapidly expanded across the entire industry, and the real solution to the "supply-demand contradiction" in the current market lies in the production and manufacturing process of door and window products. This means that there is a serious surplus of demand for a large number of low-end homogeneous products, while some high-end door and window demand cannot be met. The Chinese door and window industry must be able to release ineffective production capacity as a lever to improve the production and operation efficiency and manufacturing quality of enterprises.
2、 Focus on real estate and achieve targeted measures
At this Central Economic Work Conference, the central government raised the issue of "housing prices" for the first time and explicitly encouraged the development of housing to release and reduce housing prices, as well as destocking. Obviously, this also has extremely high commercial and transformational value for the current Chinese door and window industry.
Firstly, door and window enterprises are currently facing the challenge of destocking. However, compared to the real estate industry, in the past three months, door and window companies have initiated a proactive change by reducing prices to release inventory. However, in addition to increasing shipments at the terminal and addressing inventory issues. In the upstream production and manufacturing process of door and window enterprises, corresponding measures to reduce production and limit output need to be taken to avoid the embarrassment of clearing inventory this month and coming back next month. Secondly, the development of China's door and window industry has always been influenced by real estate. The fluctuations in the real estate industry, especially the proactive price hikes by developers to alleviate inventory of commercial housing, and the increase in real estate shipments, are actually major policies that drive downstream supporting industries in the entire real estate industry. This will directly drive and stimulate the growth of home building materials industries such as doors and windows.
In the development process of 2017, door and window enterprises should also seize two points: one is to destocking, accelerate circulation and circulation, improve the efficiency of capital operation, and maximize profits under the premise of pursuing a certain scale; Another point is to closely monitor changes in the real estate market, adjust corresponding product production and sales plans in a timely manner, and truly achieve "targeted".
3、 Improving business structure by reducing costs
The Central Economic Work Conference proposed to "temporarily increase the fiscal deficit ratio", the core of which is to allow the government's fiscal revenue to grow negatively and break away from the previous situation of "only increasing without decreasing" regulation. This is precisely because the entire social economy is currently facing significant transformation pressure: on the one hand, it needs to appropriately expand total demand and stimulate total consumption; On the other hand, if we need to focus on improving the supply side, we must allow for a decrease in overall fiscal revenue.
For door and window manufacturers, they should be very sensitive to the fact that allowing fiscal deficits means that the government needs to open up tax reduction space for enterprises and reduce their daily operating costs. So door and window manufacturers must seize this round of national fiscal tax reduction benefits, truly make good use of this national inclusive new policy, and seek and promote the transformation and transformation of their business models, methods, and institutions. On a larger scale, gradually shifting from pursuing profit maximization while pursuing scale to pursuing profit maximization based on a certain scale. Enhance the competitiveness and market share of mid to high end new products. Since childhood, we have been striving for new changes in our profit methods and tools. For door and window enterprises, it is necessary to improve the past "large quantity, thin profit" model and the "small quantity, good profit" model of door and window distributors, and truly solve the habits formed over the years from the perspective of business philosophy. Attempt and explore new business models, such as maximizing profits by pursuing segmented populations and differentiated needs, and pursuing a value-added model of "selling products to selling services" in regional markets and strong regions, to truly improve the business structure of enterprises.
4、 Using supply side reform to solve the problem of homogenization
For the current problems of overcapacity and sluggish demand in a large number of traditional industries in the entire social economy, it was clearly stated before the Central Economic Work Conference that supply side reforms should be implemented and promoted. And the important core content of the entire socio-economic development in 2016 was also the expansion of supply side reforms.
For the door and window industry, the demand for supply side reform is also urgent. A large number of homogenized doors and windows are emerging in China's door and window market, while differentiated and competitive products are scarce. Technological innovation in the entire door and window industry, especially in product differentiation functions and application innovation around user needs, is urgent.
Recently, many door and window manufacturers have launched crazy and continuous price explosions and product promotions in the terminal market in order to survive and save their lives, although they have solved the problems of inventory backlog and poor demand for a while. But it has not fundamentally solved the core contradictions that plague the door and window industry: technological and product capabilities, as well as the level of trust towards users. In this situation, the fundamental goal of promoting supply side innovation at the national level is to address and encourage relevant enterprises to return to technological and product innovation in industrial competition, and truly solve the problem of uniform and highly homogeneous products and services on the supply side through innovative and differentiated products.