The Development Strategy of Small and Medium-sized Coatings Enterprises in the Era of Complex Crisis

The financial crisis in 2008 has been farther and farther away from us. However, several recent corporate malpractices in Dongguan, a major manufacturing city, have caused widespread public concern. According to a person from the National Federation of Industry and Commerce, the Federation of Industry and Commerce has just completed a major survey of small and medium-sized enterprises in 17 provinces and cities. The results of investigation and research show that the current survival of SMEs is very difficult, and the difficulty level even surpasses the initial period of the 2008 financial crisis. In the paint industry, the situation of SMEs is equally not optimistic.

The Development Strategy of Small and Medium-sized Coatings Enterprises in the Era of Complex Crisis

Status Quo: multiple crises strike together

** Difficulties: Since entering the rate hike cycle on October 19, 2010, the central bank has accumulated five interest rate increases, and this year has raised the deposit reserve ratio by six degrees. The policy of raising the interest rate several times will bring serious challenges to the financial face of small and medium-sized paint companies. The financing difficulty of small and medium-sized paint companies will further increase, and there will be risks of capital chain fracture.

Rising Costs: Since 2011, both the coatings industry and other industries have faced rising costs. Cost pressures are mainly reflected in rising raw material prices, rising labor costs, rising logistics costs, etc. In addition, costs are rising as loan interest rates increase.

Demand decline: The national real estate market regulates and reduces the volume of transactions in a short period of time, affecting the transaction volume of the real estate market and affecting the demand for related coatings.

Homogeneity is severe: The Chinese paint market is heavily homogenized, making the downstream market extremely unstable, and customers can easily replace products. In particular, small and medium-sized enterprise paint companies have no characteristics and their market competitiveness is poor.

In the face of crisis, China's small and medium-sized paint companies need to seek self-breakthrough and look for new growth points in the industry. The author thinks that we can proceed from the following points:

First, actively subdivide the paint market, optimize its product structure, and increase product competitiveness.

Participating in competition under the condition of product homogeneity is the reality that China's small and medium-sized paint companies have to face. Large paint companies can rely on strong technical strength to develop new products that lead the market in stages. As for many small and medium-sized paint companies, their resources and technical strength are limited. In the case of product homogeneity, they must actively seek competition. Way out.

First of all, to rationally plan the product mix, to avoid too many product mixes, the resources of small and medium-sized paint companies are limited. If the resources are evenly distributed to each series of products, the market promotion of each product will be greatly weakened. The result is that each All types of products are sold flat. Small and medium-sized paint companies must examine their own products, and must cut down on product varieties that cannot create profits. At the same time, paint companies need to combine product planning with market competition and consumer demand. A single product promotion is the best strategy for small and medium-sized paint companies seeking to break through competition. Enterprises should focus all their resources on the single product category with the greatest advantages. In the past, focusing on this most advantageous product for brand communication and brand building, focusing resources on a single product variety has enabled many small and medium-sized paint companies to succeed in the market.

Second, homogenized products can create differences as well. The first is to create the concept of product differentiation and give the product a new soul. Similarly for high-end cars, BMW is pursuing the pleasure of driving, Mercedes-Benz is pursuing comfort, and Volvo is seeking security. Of course, the point of support for the concept of product differentiation must be the greatest advantage of the coating company. The second is to change the packaging and size of products, and create new differences based on product quality and technology homogenization.

Second, improve enterprise management and reduce management costs

Since 2011, the cost of raw materials for coatings has soared. With the addition of labor costs and logistics costs, the profitability of coating companies has been getting lower and lower, and many companies have to increase product prices to maintain profitability. The rising cost of raw materials, labor, logistics, etc., cannot be controlled by small and medium-sized enterprises, but companies can reduce management costs and reduce the pressure caused by other cost increases. For the cost of SME control and management, the author can organize the following points for reference:

The first is to strengthen supply management and control material costs. Enterprises need to establish a catalog for purchasing raw material control prices, implement a method of parity procurement, implement comparison and purchase, buy and sell at the same price, buy at the same price, have the same price, and can use domestic products without importing. In order to achieve the purpose of reducing costs.

The second is to strengthen material management and reduce the consumption of material labor. The level of material reserves and consumption directly affects the rise and fall of product costs. Therefore, all companies must strictly control the formulation of material consumption quotas and the distribution of materials, and implement fixed-quota management over the consumption of various materials such as raw materials, and implement key control over order quantities and stock reserves. The use plan shall be issued in accordance with the principles of application, timelyness, completeness, and economy, combined with financial revenue and expenditure plans and order contracts, and be incorporated into the assessment of economic responsibility system. Systematic and objective management of various consumptions that affect costs shall be implemented to prevent various Unnecessary waste, so as to achieve reasonable storage and use of materials, reduce costs, improve efficiency, so that it not only ensures the reasonable needs of production, but also reduce the capital occupation.

The third is to strengthen marketing management and reduce sales costs. Combining the legal awareness of sales staff with the strengthening of sales management, and careful investigation and approval of the customer's operational status and commitment ability before each sales event occurs, it cannot be shipped rashly, let alone “emotional transactions”. The “gentleman’s agreement” avoids unnecessary economic losses. It is necessary to save money as well as mobilize enthusiasm for salaries, bonuses, travel expenses, subsidies, business fees and handling charges, short-distance transportation fees, transit links, etc. for business personnel. Principles shall be formulated in accordance with the corresponding management methods, and strict assessments and rewards and penalties shall be adopted, and economic, legal, and administrative measures shall be adopted for the positive collection of the arrears of payment.

The fourth is to strengthen capital management and control expenditures to save costs. Enterprises must establish a sound financial supervision system, set up in-plant banks, reduce costs through the implementation of simulation market accounting, control costs to improve economic efficiency, to avoid the use of money without plans, no expenses, standards, batches of funds and funds to take seriously Caused by the use of funds without considering the cost, strict control over funds was tightened, so that all employees felt the pressure of market competition, and several accounts were used for financial management for everyone, especially for administrative expenses and some business expenses. Accounting, including the administrative department's administrative expenses, travel expenses, office expenses and other expenses. In this regard, according to the different nature of the work undertaken, the cost base for each person's head should be calculated and controlled. Each pencil and each manuscript must be listed out of the contract amount.

Third, actively cooperate with upstream and downstream partners to jointly respond to the crisis

With the development of the modern paint industry, the coating industry chain is gradually divided into raw material production, finished product production, and marketing. These links are usually completed by different production companies and distributors. There is a relationship of cooperation and restriction between raw material suppliers and finished product manufacturers and distributors. As the impact of the financial crisis on the paint industry spread throughout the industry chain, people in the industry are more aware of the importance of cooperation with upstream and downstream companies than ever before.

In the face of crisis, the upstream, downstream, and entire industries need to work together in technology, cost optimization, supply chain optimization, and brand building. Only the overall situation of the paint industry is good. A part of this industry, whether it is raw material suppliers, paint manufacturers, or distributors, can get a better living space and development prospects.

fourth. Can consider private capital financing

Cao Fengxi, director of the Center for Finance and Securities Research at Peking University, once stated that establishing a multi-level financing system for SMEs, and in particular opening up private finance, is the best way to resolve the financing difficulties of SMEs. In the current restrictions on grassroots finance (private finance), the upper limit of interest rates has been controversial at one time. It is understood that China’s “Contract Law” stipulates that the highest interest rate for private lending should not exceed four times the interest rate of banks in the same period. However, in fact, the average interest rate for private lending is 20%, and the highest one even reaches 100%. There are indications that the relevant departments may loosen the restrictions on private financing and plan to guide them. Private capital may become an important source of financing for SMEs in the future.

When the crisis bottomed out, we had no way of predicting, but there was bound to be an opportunity in the crisis. The future development of the paint industry must also be optimistic. In the paint crisis era, a number of backward competitors will be eliminated, but small and medium-sized paint companies must understand that the crisis and opportunities coexist. As long as the small and medium-sized paint companies actively seek self-breakthroughs, look for new growth points in the industry, and reduce the overall application costs of enterprises through various measures, SMEs will find their own blue sky.