In the past, the hardware tool sector experienced rapid growth, particularly during the planned economy era. Industries tended to focus on increasing their size, and the tool industry stood out. By the late 1980s, a core team of over 100 key enterprises and定点enterprises had established an annual capacity of 300 million high-speed steel tools and over 10 million measuring tools, placing China at the forefront globally. Meanwhile, our neighbor Japan produced around 120 million high-speed steel tools annually at its peak. However, as the manufacturing sector evolved, demand for standardized tools declined, causing Japan's output to fall to 90 million pieces. Despite China's smaller scale compared to Japan, its tool production was three times higher, signaling potential overexpansion.
Over the last five years, the expansion of export markets has led to reduced prices, with some enterprises slashing costs by 40-50%. Domestic sales volumes have dropped to around 200 million pieces. Moreover, during the mid-to-late 1980s, optimistic market projections spurred growth within China’s tool sector. Key enterprises expanded while nurturing numerous joint ventures. Many of these ventures later split from their parent factories, leading to the rise of private and township enterprises. While these entities are agile and free from state-owned burdens, talent, technology, equipment, and management deficiencies have kept them reliant on outdated expansion strategies. Within a decade, total production surged to over 1 billion pieces, yet these products—mainly low-end items like twist drills, construction drills, and calipers—account for only about 30% of the domestic market. Despite being largely excluded from formal sales channels due to brand and quality issues, they've impacted China's tool export market.
Another significant strategic misstep involved failing to adapt to technological revolutions and shifts toward international manufacturing. China missed opportunities to enhance its tool product and service structures. Twenty years of reform and opening-up widened rather than narrowed the gap between China and foreign counterparts. Developed Western nations transitioned into post-industrial stages in the 1960s and 1970s, entering high-tech fields like information, biotechnology,新能æºandæ–°ææ–™in the 1980s. The knowledge economy introduced high-tech transformations in traditional sectors, integrating advanced technologies like IT, automation, and modern controls. The machinery industry set unprecedented standards for tool precision, efficiency, reliability, and specialization—termed "three highs and one specialty." Traditional standardization clashed with these demands, leaving China behind.
By the early 1960s, developed countries had abandoned outdated twist drill processes, embracing innovation toward modern standards. Conversely, China failed to capitalize on these advancements, leaving weaker firms struggling. The widening gap reflects inevitable consequences of stagnation versus foreign progress.
Industry insiders lament weak markets and sluggish sales, but demand remains robust for high-tech products. Annual imports rose from $40 million to over $80 million between 1998-2000. Survival demands adapting to market realities. Enterprises must accurately self-identify: what are their strengths? Who do they serve? How can they deliver value? Proper positioning underpins success, fostering strengths while minimizing weaknesses.
Drawing lessons from the planned economy, China’s hardware tools industry must maintain competitive price-performance ratios for traditional standardized tools while avoiding盲目expansion. For modern tools and specialized services, we lag behind global leaders. Yet, international tool industries include both large multinationals and countless smaller enterprises thriving through niche expertise. China must follow suit, emphasizing specialization. Large enterprises shouldn't overestimate themselves; innovation requires focusing resources strategically.
Reflecting on past missteps, we must evolve. Enterprises must adopt realistic strategies reflecting industry needs. Doing so will harness collective advantages, accelerating modernization.
Guangdong Kinen Sanitary Ware Industrial Co.,Ltd. , https://www.kinengroup.com