Do or die, 2008
2008-07-29

In 2008, many factors impose burdens on Chinese fastener enterprises. For instance, increase of steel price, implementation of labor law, appreciation of RMB, frequent antidumping cases and so on.

As the largest steel company in China, Baosteel has agreed to pay 19.88 percent more to Pilaral Blend Fines and Hiy Fines, and 96.5 percent more to Pilbara Blend Lump and Australian Rio Tinto for 12 months beginning April 1, 2008.The rise in steel price would Influence the price of fastener greatly because the competition in fastener industry is tight and the rise in materials is hard to be reflected on the selling price. Furthermore, Most of the China fastener enterprises do not have the right of pricing international goods. As a result, there is limited space for them to increase the price. Therefore, the industry is in dilemma.

Another factor is implementation of labor which increases labor costs. The development of foreign trade is stepping into a high-cost period. The pressure coming from the cost of labor force becomes more and more obvious. Regarding the New Labor Law, most of the fastener companies say that they have already strictly followed the new law and its enforcement is not as difficult as they expected. In some degree, the launch of the new Labor Law of China, regulates a company's development, it brings new problems at the same time.

Since 2008, less than a month’s time, the RMB exchange rate reached 1.4 percent increase, the change has created the fastest speed of the appreciation. Annual appreciation rate of more than 16%, this rate is estimated that to the end of 2008, the renminbi against the dollar will be close to 1:6. The pressure coming from the appreciation of RMB will last a certain period, so that the trade companies are asked for new demand and high challenge. It imposes another burden on Chinese fastener enterprises.   

According to the World Trade Organization, dumping occurs when "a company exports a product at a price lower than the price it normally charges on its own home market." But the U.S. government and some other western countries have been imposing more antidumping measures on its trade partners than any other WTO member country. At present, the frequent antidumping complaints filed by foreign countries are mainly caused by the vicious price competition. We have been indicted dumping and suffered the antidumping measures for many years in the international market. Meanwhile, as our export products are in shortage of intelligent property, although we take advantages in price and cost, we have to handle more and more international trade disputes. So it is no doubt that domestic fastener companies will be involved in various antidumping cases in future.

2008 is a "do or die" year for many Chinese fastener enterprises. So it is wise for enterprises to think deeply before making choices, for gaining the market by low price does not work any longer. Thereby, it is time for "Made in China" products to upgrade themselves. And in my own view I think the whole industry is certain to succeed in overcoming all negative aspects and welcome a better future.