In early July, several companies including Shandong Jinbao, Jianye, Mingkang, Weilibang, and Jinan Guoji issued price notices for copper foil and copper clad laminates. At the end of July, Dongcheng Hongye, Morgan Electronics, Haile Electronics and other PCB companies announced the price increase notice of the circuit board, and the increase was almost 10%.
In the price increase notice, the rising costs of sheet metal, labor, and chemicals have become the three major factors in this price increase. In fact, an important factor in this price increase is the change in supply and demand. The popularity and replacement of electronic products has increased the demand in the terminal market, and the downstream small-span LED market has continued to rise, driving demand for multilayer PCBs. In addition, another important factor behind the rising prices of raw materials is the environmental storm that has swept across the country.
Nothing touches the nerves of LED industry more than "price increase". News, analysis and reports on price increases have swept the headlines of the industry. Most people in the industry said that the price increase is a prelude to the market's return to rationality and product return quality, which indicates that enterprises need to strictly control product quality.
Regarding the crazy price hikes of raw materials and the one-size-fits-all environmental remediation, Zhang Xiaokui, general manager of Zeyou Electronics, expressed his views on the other side. He believes that “there is no consensus on the harm of Chinese SMEs and even the Chinese economy. It is no exaggeration to say that if we do not adjust it again, the results of China’s 30 years of reform and opening up will be ruined."
Raw material prices soared, and the only way out for price increases
For the LED industry, the impact of raw material price increases is huge. Since the price increase of copper and aluminum and packaging materials at the end of last year, the upstream of the LED industry chain has experienced multiple rounds of price increases, and the profit margins of many small and medium-sized enterprises have been further compressed. “The price of raw materials fluctuates, and SMEs are the biggest victims.†Zhang Xiaokui told Gaogong LED.
Due to the rising prices of raw materials, it is easy for companies to reluctantly sell. On the one hand, SMEs need to raise prices to customers, and on the other hand, they cannot guarantee on-time supply. At this time, customers will seek new suppliers. As a result, orders will shift from SMEs to larger companies with more supply guarantees and bargaining power.
“The procurement of raw materials for large enterprises has obvious advantages in futures and capital flow, while the raw materials for SMEs are generally used now or the raw material inventory cycle is short. Therefore, when raw material prices rise sharply, the raw materials used by large PCB companies are still The price advantage before the price increase has been revealed.†Zhang Xiaokui analyzed, “In addition, large enterprise products tend to have high added value and strong ability to withstand price increases. Usually large enterprises rely on advanced equipment, advanced technology and more. Good service can get orders with much higher profit margins, and SMEs can only seize the low-end market with low prices and quick response."
In addition, the proportion of raw material costs in large enterprise orders is relatively small, and the increase in raw materials is less driven by the cost of the entire product, while the raw material cost of SMEs accounts for a large part of the cost of its products. Therefore, when the price of raw materials soars, SMEs only have a way out.
Multi-pronged and effective cost control, Zeyou Electronics has no price increase plan
As a high-tech enterprise that has long served the LED lighting industry, Zeyou Electronics has produced single, double-sided and aluminum-based circuit boards that have been widely adopted by China's top 100 LED industry companies. Faced with the rising price of CCL raw materials, Zeyou Electronics not only conducts from the inside, but also actively communicates with suppliers and customers to resolve the cost pressure caused by rising material prices.
Zhang Xiaokui said, “On the one hand, we communicate effectively with our customers, and we recommend that customers do a 1-2 month stocking plan in advance to avoid tight supply due to tight materials. On the other hand, we will talk with raw material manufacturers. Directly issued a three-month sheet demand plan; with long-term cooperation and high-reputation manufacturers to place orders, lock in real-time prices, to ensure that the price of future plates will not be affected. Third, Zeyou Electronics strengthens the factory through reinforcement Internal production efficiency, with efficiency gains to counter the rising cost of raw materials."
When talking about whether the company's products have a price increase plan, Zhang Xiaokui told Gaogong LED. "Because our customers are large enterprises, the purchasing staff are highly sensitive to the supply and price of the upstream raw materials market. They usually work with us. Communicate and resolve the passive situation. Zeyou Electronics will decide whether to increase the price depending on the situation. There is no price increase plan at present."
The price increase crisis has made customers trust, and Zeyou focuses on manufacturing quality products.
In the LED lighting industry, many small and medium-sized enterprises have lost the capital to survive in the price hike: most of them choose to “sit on the ground†when raw material prices soar, or use inferior materials for product production due to cost pressure. Or because there is no effective material supply chain, there is an obstacle to product delivery. All kinds of factors make it gradually lose the trust of customers, and then go to the abyss of bankruptcy.
Zeyou Electronics is different. The rising price of raw materials has strengthened the relationship between the company and its customers and established good cooperation.
Zhang Xiaokui said to Gaogong LED, "In the case of the increase in the instability of raw material prices, Zeyou Electronics actively communicated with the plate merchants and used the long-term reputation to ensure the supply of the plates. In addition, Zeyou will not be because of the plates. The shortage of delivery causes delays in delivery or interruption of supply, which also makes customers more confident to hand over the orders to us. At the same time, we will adopt a friendly negotiation attitude with the customers for the adjustment of product prices, and will not adjust the price for the price. Cargo strategy. Since the price hike in 2016, we have been in crisis with our customers. There is no impact on the delivery of any customer due to the price increase and shortage of plates. This has also made our customers fully trust us."
Based on the positioning of Zeyou Electronics “Huize Company's shareholders, employees, partners, and manufacturing high-quality productsâ€, the company has increased its sales by more than 30% every year since it was officially put into production in January 2014, and finally achieved an annual output of 1 million square meters. Meter PCB. At the same time, Zeyou Electronics has high-quality customer resources, more than 80% of which are listed companies, which directly promotes its continuous strength from product and product quality.
“The company strictly implements the ISO quality management system, and the products will be tested and shipped 100%. In addition, we form strategic partnerships with most of our customers and get the praise of our customers.†Zhang Xiaokui confidently said.
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