Analysis of Cost Compression of Enterprises with Overcapacity in Flooring Industry

On February 8, the Hunan Administration for Industry and Commerce on its website linked a “Quality Monitoring Report for the Circulation Field in the 4th Quarter of 2011”, which showed that there were solid wood floorings produced by many wood flooring companies such as Yihua Wood. Thickness, width, film adhesion and other indicators failed. Industry insiders pointed out that companies are saving costs and cutting corners. This is a major reason for large companies such as Yihua Wood, or there are problems with poor management and disregarding flooring.

Wang Shaofang, secretary-general of the Shanghai Timber Industry Association, said that these three indicators are very basic indicators. Normally, regular enterprises do not have such unqualified phenomena. Last year, the sales in the flooring industry declined, and companies are cutting corners in order to save costs.

Due to sluggish real estate sales last year, directly affecting the downstream flooring industry, Wu Bian told reporters that, according to rough statistics, sales in the flooring industry fell by at least 20%. Under such circumstances, some companies are cutting corners in order to save costs. The Shanghai data provided by Wang Shaofang also confirmed this: “In 2011, solid wood flooring in Shanghai fell by about 30% compared with 2010, and sales were very poor.”

At present, nearly half of China's flooring industry is idle. There are approximately 2,300 wood flooring companies in China with annual production capacity of approximately 800 million square meters, but nearly 400 million square meters of production capacity has not played a role.

The problem is equally serious in Nanxun, which is about half of the wooden floor capital of China's wooden floor. Jiang Xuelin, president of the Nanxun Wood Flooring Association, said that nearly one-third of the production capacity in Nanxun is surplus, and some SMEs are facing shutdown or restructuring.

Wallhead houses leaked rain, and in the case of excess capacity, they encountered severe real estate regulation. Taking Shanghai as an example, the Shanghai property market turnover was only 7,279,600 square meters in 2011, a record low, down 24.90% year-on-year. However, the volume of commercial housing fell most severely in the second half of last year. According to Hu Zaoqi, who is responsible for the floor of the World of Friends, the floor industry is in the downstream of real estate. In general, the impact on real estate will have to be delayed for half a year before it can affect the flooring industry. In other words, the flooring industry will face even more severe in the first half of this year. situation.

In this situation, many companies have taken various measures to reduce costs. Most of the problems that occurred this time were due to improper compression costs. According to national standards, whether or not the floor width is qualified depends on a tolerance value. If the tolerance value does not exceed 0.3 mm, it is a qualified product, and vice versa, it is unqualified. When the sales are sluggish and the profit declines, most companies choose to approach 0.3. Millimeter tolerances to save costs, which can easily lead to non-compliance of their products.

For the future trend, many industry insiders frankly stated that the industry reshuffle is inevitable. Under such circumstances, it is easy to produce some products that are unqualified. Only the government and other relevant departments can strengthen industry supervision and corporate self-discipline in order to maintain good results. Industry reputation. However, industry insiders also admitted to reporters that large enterprises such as Yihua Wood also have problems, which may be caused by improper management. “In recent years, the company and its parent company have focused on the development of real estate, furniture and other businesses, and the decline in management capability is likely to be related to the contempt of their parent company for the main floor business.” said the person.

However, relevant persons in the Yihua Wood Market Department explained that the product to be inspected was a sample of a store, which took a long time and was affected by the environment such as temperature and humidity, and was easily deformed. Therefore, such a situation occurred. However, the source said that the specific reason is not yet clear, the company is through various channels to understand the situation.