The devastating impact of the disease, as well as the systemic pressures created by deglobalization in 2021, make dual circulation an unavoidable strategy for improving China’s competitiveness. In such circumstances, the sewing machinery sector faces chances and challenges in the post-pandemic age to alter the development layout and improve the industry’s overall competitiveness. Reporters from the China Sewing Machinery Association have recently had an in-depth understanding of all aspects of the supply chain, and are attempting to reveal the changes and characteristics of a key development stage through a series of reports in order to objectively reveal the status quo of China’s sewing machinery industry.
Upstream supply chain firms such as replacement parts and electronic control systems are functioning at full capacity and in limited supply at the start of 2021, which best reflects the rapid growth of their business activities. At the turn of the year, recruitment information emerges frequently on WeChat, overtime has become the new normal, and the anticipation of further expansion in the face of adversity has become a phenomenal event in China’s sewing industry’s supply chain.
On the one hand, the prices of various raw materials have skyrocketed in the last two months, leading to an increase in manufacturing expenses; on the other hand, competition is hesitant to raise prices, according to hundreds of parts and electronic control system firms interviewed. Companies must incur 5% to 10% greater manufacturing costs than before as a result of rising raw material prices. The problem of declining manufacturing capacity due to workforce shortages has not been fully addressed, and supply remains scarce. If the price is increased even if the items cannot be delivered, the loss of market share may balance the gain.
Parts and component manufacturers have announced that beginning January 1, the unit price of semi-finished products will increase by 10% to offset cost increases caused by worker shortages and rising labor costs. Parts and component makers, such as copper parts, aluminum parts, casting parts, and electronic control system firms, have begun to pursue cost transmission in this context, with some companies issuing price increase warnings.
The practice of changing the buying price accordingly has been generally recognized, treating the Spring Festival as a turning point and taking into account pertinent elements. Several respondents in the spare parts industrial bases of Ningbo and Taizhou said that rising raw material prices had caused an increase in manufacturing expenses for them. Many of the parts and component firms interviewed stated that they are only absorbing the cost increases temporarily. They will undoubtedly negotiate with sewing machine makers to increase the sales price if the price of raw materials remains at the current level for a long period, or even rises again.
Many spare parts providers stated their intention to raise costs to them around January 1, according to information from prominent sewing machine makers. The question of when and how much to raise the price is still being debated. Sewing equipment manufacturers fully understand and support the goal of accessories firms to adjust prices within a limited length of time according to their own conditions, which is a realistic market adjustment behavior, given the cyclical nature of raw material costs.
In recent years, Jack Company has led the way in changing traditional procurement and payment methods, promoting a virtuous loop of supply-side businesses. Simultaneously, the SRM (Supplier Relationship Management) system enables real-time visualization of procurement details such as quality, performance, delivery, and quality inspection. The executive team led by Jack founder Ruan Jixiang began inspecting spare parts industry bases and important businesses in the second half of 2020, with the goal of harmonizing the interaction between sewing machine and replacement parts producers and looking ahead to the future.More crucially, in early December, Jack made orders for the following five months as a key action to reinforce the supply side, ensuring that upstream supporting firms have plans and goals, as well as confidence in growth and cooperation.
While firms are continually pursuing high-quality, high-tech value-added goods, they think that achieving this goal is inextricably linked to the supply of basic parts. Hikari has created a relatively steady cooperative relationship with supply chain partners after years of hard effort, bolstering the contact between sewing machine makers and spare parts suppliers. We are currently observing the impact and pressure that rising raw material prices are having on some manufacturers. We will engage carefully with relevant suppliers to establish an arrangement, taking into account the volatility in raw material prices.
The high-quality development of sewing machine makers is dependent on the firm basis of the supply chain, which has long been recognized as a community with a common industrial destiny. In recent years, an increasing number of manufacturers have begun to pay attention to defending their suppliers’ rights and interests, and have worked to increase cooperation and interdependence, in this case between sewing machine manufacturers and spare parts suppliers. improving on a daily basis. Furthermore, in the new era of change, by constructing a more sensitive and reasonable purchasing price fluctuation mechanism based on original cost changes and market regularity, and transmitting this fluctuation to the entire industry chain, further construction and improvement of sewing machinery new It is totally conceivable to design an industrial layout, which is also what some manufacturers anticipate.