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Survival of the Fittest- Chinese Fastener Market
by Tanya Shih, Fastener World Inc.
The Darwinism published over 150 years ago still has its influence nowadays. It is commonly used to explain the prosperity or decline of many industries. In the beginning of 2015, a report regarding the annual car sales in China was released. The report shows that the sales record of 23.49 million units of vehicles in China not only exceeded the figure of previous year but also made China a “war zone” with the fiercest competition in the world. China has been in the no. 1 place for 6 years in terms of the annual car sales.
The automotive industry always plays a leading role among heavy industries. With such prosperity, companies in the supply chain can all benefit from it. However, as is observed, Chinese fastener industry is situated at the peak of the influence brought by the Darwinism. The best description for Chinese fastener industry in 2015 may not be only “Survival of the Fittest” but “Survival of the Fittest with More Flourishing Results.”
Acquisitions Generate More Flourishing Chinese Fastener Companies
Shanghai Prime Machinery’s acquisition of Dutch Koninklijke Nedschroef in 2014 not only sent a good message to the Chinese fastener market, but also aroused echo in the hearts of counterparts in other countries. “The official entry of Chinese fastener market to the integration period” should be just the most important revelation of this acquisition. The strategy of Shanghai Prime Machinery offers a very good chance for the different products of these two companies to complement with each other, so it is believed that through the integration of these two companies with different cultures Shanghai Prime Machinery will be stronger than ever. This acquisition won’t be the last one in China, as with the support of Chinese authorities, there should be more and more acquisitions among large-size companies in the next few years and that is why many flourishing fastener companies in China can become bigger and bigger.
Antidumping Measures Eliminate Several Small & Medium Fastener Companies but Advantageous Ones
According to the official journal of the EU, the EC will announce the determination for the expiry review of carbon steel fasteners originating from China before April 29th this year. Whether the measure will be extended or not is influential. I’ve got some feedbacks from local Chinese managers at exhibitions which I visited last year and realized that, compared to other metals like stainless steel, aluminum, or copper, carbon steel fasteners are still the most commonly used products, so almost all Chinese fastener suppliers feel frustrated, as they are not able to cross over the high wall of the European market set by the antidumping rates.
On the other hand, these managers told me, compared to the previous year, Chinese market has revealed an obvious sign of decline since 2014 and they are not as optimistic about the result as the government is. Fastener companies focusing on domestic/overseas sales or domestic sales all suffer a difficult time. As a result, I think only the companies with healthy corporate structure and advantageous products can safely pass through the influence of Darwinism if the EU determines to extend the antidumping measure again and the government plans to integrate certain companies with others.
...to be continue
