Interpretation: Crisis comes to China's glass industry with challenges

At present, the 100-year-old financial crisis triggered by the US subprime mortgage crisis has caused fierce turmoil in international and domestic financial markets. The stock market, futures market, foreign exchange market and insurance market have all suffered quite severe impacts. Due to the close linkage between the domestic glass market and the international glass market, the glass industry is clearly unable to survive in this financial crisis. The impact and challenges brought by this storm to the development of China's glass industry cannot be ignored. One of the challenges is the slowdown in growth. The financial crisis has led to a decline in the prosperity of the glass industry. At present, under the dual effects of economic cyclical adjustment and financial crisis, the glass industry as a whole has accelerated its decline. In 2008, the output of flat glass was about 570 million weight boxes, an increase of 5.1% year-on-year. This is the first time in the past 10 years, the growth rate of glass production has slipped to single digits. According to the statistics of China Building Materials Federation and China Building Glass and Industrial Glass Association, in 2009, the downward trend of glass production growth in the country is more obvious. Glass production in Hebei, Shandong, Henan, Guangdong and Zhejiang declined. Henan glass production declined. The second challenge is the reduction in demand. The important reason for the decline in the growth rate of China's glass production in 2008 was the reduction in market demand. In recent years, the three major engines that have driven the glass industry, the real estate industry, the automobile industry and exports, have experienced a significant decline due to the impact of the international financial crisis, which has led to the simultaneous reaction of the glass industry. In March of this year, 60 key glass enterprises in China produced 31.26 million weight boxes of float glass, and cumulatively produced 93.09 million weight boxes of float glass from January to March. Compared with the same period in 2008, the cumulative production decreased by 7.12%. The provinces with the largest cumulative output were 16.64 million weight boxes in Hebei Province, 10.25 million weight boxes in Shandong Province, 10.21 million weight boxes in Jiangsu Province, 9.88 million weight boxes in Guangdong Province, and 8.95 million in Zhejiang Province. Weight box. The third challenge is that the real estate industry, which is closely related to the glass industry, is in a stale winter, and the glass market is also in a depression. In the financial turmoil in China, with the fluctuation of the RMB exchange rate and the international financial market, the glass price has shown a decline in consistency with the international market. After September last year, Shandong glass prices fell, and glass prices in the province continued to decline in October. After the price of flat glass fell to the lowest point in recent years in the fourth quarter of 2008, the overall price is still at the bottom. The fourth challenge is the financial crisis, which has led to a significant increase in corporate inventory and capital risks. Since the beginning of this year, the glass production and sales rate has decreased, the inventory has increased, and the increase in inventory has taken up 20% of the funds. Although flat glass sales rebounded in October, end-of-month inventory fell from last month, but still increased by 11.09 million weight boxes compared with the same month last year, mainly due to the backlog of ordinary float glass. The current market sales situation is still not optimistic for the flat glass industry with overcapacity of ordinary float glass. The liquidity contraction brought about by the financial turmoil has affected the ability of some enterprises to pay. In terms of capital withdrawal, after the export of glass products, affected by the crisis, it is difficult for the purchaser's funds to guarantee timely withdrawal. The arrears from overseas are increasing, which has affected the income of some export-oriented glass enterprises. According to the survey, due to the impact of the financial crisis, some glass companies have significantly increased their financial risks due to factors such as inventory. The fifth challenge is that the export financial crisis has led to a major impact on corporate exports. China's glass industry is mainly affected by export-oriented enterprises. The US financial turmoil triggered a global economic crisis, which led to a shrinking demand in the world, directly affecting China's glass products export. As an export-oriented Chinese economy, its main export markets are the United States and the European Union. The current financial turmoil has already hit the real economy of the European Union. The US economy is also slipping to the brink of recession. The trade surplus between China and the United States has fallen sharply. It has some impact on the export of China's glass enterprises. Some glass export companies are complaining. The financial crisis has led to a decline in orders, and many companies are underemployed. In recent years, some glass enterprises in China have already moved to the world. Although the assets of these enterprises abroad are not much compared with the total assets of the enterprises themselves, the financial turmoil has caused the loss of China’s overseas glass enterprises to be small, and the assets are in financial crisis. Gradually shrink under the effect. The sixth challenge is that the difficult financial turmoil has further worsened the operating environment of glass companies, making them more and more difficult to survive. In general, the price of the production cost components such as equipment spare parts, raw materials, auxiliary materials, logistics costs and labor costs involved in the production and operation of glass enterprises has risen sharply, which makes the production cost of enterprises rise upwards and the profits of enterprises. Being eroded constantly. After September last year, the financial turmoil hit even more. At the end of March this year, more than 40 float glass production lines were shut down in China. Some small factories that rely on large enterprises to transfer orders or support large factories, business is even more difficult to sustain, and some have even shut down. The double squeeze of rising costs and low product prices led to a significant decline in the profitability of glass companies and an increase in losses. The glass industry began to lose money from the profit at the beginning of last year to the fourth quarter of last year, and has not turned losses until now. The financial turmoil provides opportunities for the development of China's glass industry. However, we must see that the US financial turmoil has brought challenges to China's glass industry and also provided a rare opportunity for the development of China's glass industry. One of the opportunities is the integration of the industry. The global financial crisis has led to lower valuations of enterprises. It provides a good opportunity for domestic enterprises with relatively insufficient resource reserves to integrate resources and achieve international expansion through mergers and acquisitions. From the perspective of the glass industry, scale, liquidity and diversification will reappear, and companies with high levels of diversification and large-scale enterprises will have more channels for external financing, and small enterprises will undoubtedly be eliminated. The glass industry will increasingly show the advantages of mass production. The crisis is also a good opportunity to integrate the glass industry. The second opportunity is that the policy is conducive to the various policies that benefit the enterprise in response to the US financial turmoil, such as reducing taxes, financing, encouraging exports, and expanding consumption, which will bring benefits to glass enterprises. In particular, the country’s 100 billion yuan investment in further expanding domestic demand is oriented to affordable housing projects, rural livelihood projects and agricultural infrastructure, infrastructure construction such as railways, highways and airports, and social public utilities such as education and health. Environmental construction, accelerate the independent innovation and structural adjustment of enterprises and the restoration and reconstruction of earthquake-stricken areas. More important is the 4 trillion economic stimulus plan for the reconstruction and reconstruction of earthquake-hit areas, rural livelihood projects, rural infrastructure, ecological environment, and affordable housing projects. The major investments in these countries will drive China's glass market to China. The development of the glass industry has played a huge role in promoting. Future market countermeasures choose to build confidence, overcome difficulties, overcome the crisis and strengthen confidence is a powerful weapon to deal with the current world economic turmoil and financial crisis. Enterprises must rely on confidence to stabilize market expectations and overcome difficulties through confidence. The once-in-a-century financial crisis has put forward higher requirements to the responsible person of the enterprise. We cannot consider the problem with conventional thinking, but we must clearly grasp the market changes and carefully plan the development. At present, we must focus on four key factors of raw materials, technology, market and finance. Reduce production and insured prices, speed up sales, and return capital. The building materials industry is the same industry as the real estate industry. It is an industry that relies heavily on capital. Many small and medium-sized enterprises are operating in a bank lending mode. Once the 'Yingen' is tightened, it will inevitably affect these enterprises. Cash flow. At present, 'reducing production and insuring prices and accelerating sales' has become the common choice of many glass enterprises. Some large-scale glass enterprises have introduced production restriction measures. More and more small and medium-sized glass enterprises can't stand the pressure to stop production and go out of business. In response to the reality of falling glass prices, some companies have set minimum prices to limit glass sales prices in order to achieve good results. It is necessary to strengthen the return and flow of funds. Export-oriented glass enterprises should pay attention to preventing the risk of foreign exchange collection. According to the credit information of the other party, the corresponding export credit insurance should be made; the new customers should pay for the goods. Glass enterprises in the domestic market should also guard against the risk of capital withdrawal, and prevent the precipitation of funds and speed up the flow. Unswervingly 'going out' and actively looking for a blank point to 'go out' has become an inevitable choice for enterprises to seek better development in response to the financial crisis. Although the financial crisis is still not going to hurt the current industry. However, if the short-term credit mechanism of the United States cannot be started soon, the consumption of the United States will continue to shrink, which will have a major impact on China's export market. This storm has made it possible for our glass companies to better 'go global'. Because the rapid decline in global corporate value provides an important opportunity for acquisitions, creating conditions for strengthening internal management and reducing costs. At the same time, after the baptism of the storm, the real value of overseas assets will gradually appear. At this time, our overseas investment can be value for money, which brings opportunities for China's powerful glass enterprises. Encourage the reorganization of advantageous enterprises and the reorganization of inferior enterprises to save the disadvantaged enterprises and to become bigger and stronger enterprises. Corporate mergers and acquisitions have a lot to do with the glass market. The more the glass market is at a low point, the more favorable it is for mergers and acquisitions, and the merger and reorganization of enterprises becomes a hot spot in the industry, which can accelerate the reshuffling and integration of the market. Adjusting the structure and constantly innovating At present, China's glass deep processing rate is only 30%, while the world average is about 55%, developed countries reach 65%~85%. The value-added rate after processing is only 2.5 times that of the original film, and the developed country is 5 Double, so there is a big gap between the deep processing rate and the processing depth. All of this provides a broad market space for glass companies. In particular, safety glass and energy-saving glass have an annual growth rate of more than 30%. The financial turmoil has brought new opportunities for the restructuring of China's glass industry. Therefore, in order to cope with the better development of the financial crisis, it is necessary to adjust the industrial structure, save energy and reduce emissions, and eliminate high-pollution and high-consumption enterprises.

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