At the end of June, there had just been a sun rain in Wuhan. There were still several rolls of wires for sale piled up at the door of Laowuwujin Electrical and Mechanical Store next to Hanyang Avenue. The small storefront was sandwiched between a community fresh food store and a car repair shop. The boss, Lao Zhouzheng, was wiping the counter while reading the latest profit data of industrial enterprises.
Lao Zhou has been running this hardware store for almost ten years. It specializes in mechanical and electrical accessories such as copper noses, switches, bearings, cables, etc. It is a regular supplier to many surrounding construction sites, processing plants, and repair shops.
Talking about the latest favorable industrial data, Lao Zhou did not feel too optimistic: “In the past two months, there have indeed been more customers asking about equipment accessories, but they are more cautious than before when placing orders. They first ask about the price and delivery date, and finally ask if they can get less goods. No one
Dare to stock up in large quantities.”
He pointed to the quotation sheet covered with handwritten labels in the store and explained that the pricing of hardware accessories is highly bound to the prices of upstream copper, steel and other bulk raw materials. If the upstream price fluctuates slightly, the terminal selling price will have to be adjusted on the same day.
This situation coincides with the industrial data from January to May released by the National Bureau of Statistics: from January to May, the total profits of industrial enterprises above designated size nationwide reached 3.14396 billion yuan, a year-on-year increase of 18.8%, of which manufacturing profits increased by 20.0%. However, the structural differentiation is very obvious – the profits of the automobile manufacturing industry fell by 19.8% year-on-year, the ferrous metal smelting and rolling processing industry fell by 37.4%, and the non-metallic mineral products industry fell by 48.9%.
The market differentiation between upstream and downstream has finally been directly transmitted to end retail merchants like Lao Zhou: “The biggest fear is that upstream raw materials have increased, and downstream projects are afraid to take goods in large quantities. The cost of having goods in the warehouse for a day is a day.”
Lao Zhou recalled a loss experience in October last year: At that time, he advanced money for more than 20 boxes of cables for regular customers, and the purchase price was 31.8 yuan per meter. As a result, the customer’s construction site was suddenly delayed, and it took almost a month to pick up the goods. In the end, he could only deal with it at a price of 30.9 yuan per meter, which resulted in a loss of nearly 2,000 yuan.
“It’s not entirely the customer’s fault. At that time, the pace of construction at surrounding construction sites was slow, and the turnover of equipment and spare parts in the entire area was not smooth. When the market went bad, the spot goods were like weights weighing on my heart. They would sink every day.” Lao Zhou’s feelings exactly corresponded to the accounts in the industrial data.
Pressure: At the end of May, the accounts receivable of industrial enterprises above designated size were 28.17 trillion yuan, a year-on-year increase of 7.7%; the inventory of finished products was 7.14 trillion yuan, an increase of 8.8%. Whether they are factories or small shops, they are faced with the problem of slow payment collection and excessive inventory accumulation.
Master Chen, an equipment repairman who often comes to Lao Zhou’s shop to pick up goods, also feels the same way: “There are more orders for repairing small motors this year than last year, but customers always like to keep prices down, so they don’t make much money from repairing one unit. They all rely on volume. A while ago, a customer originally promised to replace a whole set of accessories, but in the end he temporarily changed it to only replace the most damaged one. The job that originally cost 2,200 yuan only ended up charging 1,460 yuan. It’s not that I don’t want to do more, it’s just a human being.
Factories are also tight, they will not replace it if they can, and they will postpone it if they can.
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The current differentiation of industrial profit structure also directly affects the consumer preferences of terminals: from January to May, the profits of the mining industry increased by 33.5%, and the oil and natural gas extraction industry increased by 17.2%, but the profits of the electricity, heat, gas and water production and supply industry fell by 2.7%. The rising energy costs made downstream customers become particularly picky in ordering.
Lao Zhou placed the energy-saving small motor controller in the most conspicuous position in the store: “The price is a little more expensive than the old model, but there are so many people asking. Now factories are trying to find ways to extract costs from energy usage and losses.”
At almost four o’clock in the afternoon, a young man in work clothes came to buy an inverter suitable for a small processing factory. Lao Zhou was rummaging through the goods while muttering: “I haven’t seen anything lately.
The few factories are settling their accounts. They will not expand production if they can.
First, make sure the equipment they have is running smoothly. This year’s business will have to live with the factory.
If the factory is slow, we can’t move faster. “For small and micro merchants like Lao Zhou, what is more practical is the daily fireworks of one less box of goods in the warehouse, one day’s payment accuracy, and one more order tomorrow.
