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Seize the Post-pandemic Industrial Opportunity to Boost the Modernization of the Sewing Machinery Supply Chain

From:Date:2022/01/24 10:45:40

In 2021, propelled by the synergy between global economic recovery and surging demands in a post-pandemic era, the sewing machinery sector in China has resumed robustly, and the spare parts sector has particularly secured a rapid growth enabled by both burgeoning production and sales. Nevertheless, the spare parts sector is still faced with grave challenges though favorable development opportunities are emerging; as the industrial transformation develops, traditional operation modes become vulnerable to collapse. Therefore, it has become a subject of utmost importance to carve out a high-quality growth path for the spare parts sector, modernize the relevant supply chain, and catapult China into the top tier of sewing machinery powers in a new development phase following the pandemic.

For the purpose of better facilitating the spare parts sector to realize virtuous cycle, China Sewing Machinery Association (CSMA) has invited leading sewing machine companies and key spare parts enterprises to discuss and study the future development trends of the spare parts sector focusing on promoting the supply chain modernization at the annual meeting of the Spare Parts Subcommittee, which is quite constructive and inspirational to the whole sector.

The spare parts sector has secured rapid growth this year

The spare parts sector in China has taken active measures in response to the outburst of Covid and its lingering consequences and the following industrial lull; with immediate adjustments, the sector has resumed in a short period. In 2021, sewing machineries have witnessed a recovery of demands enabled by global reopening and a robust domestic market. Triggered by machineries assembly and associated demands, the spare parts sector has grown at a high rate throughout the year.

According to Li Ren'gen, Rotating President of the Spare Parts Subcommittee, and Chairman of Jiaojiang Association of Sewing Machineries and Parts, Jiaojiang Association's data show that till Q3 of 2021, 15 companies above the designated scale have grossed 980 million yuan in sales, increasing by 103% compared to 462 million yuan the same period the year before. In particular, Zhensheng has reached 150 million yuan in sales, which will exceed 200 million in the end of the year, Oufeng 100 million, Xiangfang and Sanhui more than 80 million each and hopefully 100 million each in the end of the year, companies like Junma, Haiqing, Hengshen and Yong'gu 60 to 80 million till the year-end. Considering their production activities and orders received, they can sustain the auspicious trend in Q4.

Judging from the situations in major spare parts bases nationwide, leading companies in this sector have seen year-long thriving production and sales; demands for some parts cannot be met even though companies work overtime. The production capacities of a certain amount of enterprises have returned to pre-pandemic level and even set new records.

Regionally, spare parts companies in Ningbo have been struggling to satisfy the demands, and cannot fulfill the orders even though working overtime in 2021; Wanping, home to more than 200 spare parts companies, has seen a 30% average growth of sales on the whole; looper production in Changli has lagged far behind demand; those in Dongyang have generally grown at a relatively rapid rate, and resumed to pre-pandemic level.

Bracing for challenges, spare parts companies speed up their transformation and upgrade

"We should notice that the high growth rate of the sector is driven by, on the one hand, a low benchmark in 2020 in the context of a freefalling global economy incurred by the pandemic, and on the other hand, a rising short-term demand elevated by the revenge bounce-back globally," said Wu Jiling, Deputy Director-General of CSMA and Executive President of the Spare Parts Subcommittee, "According to statistics, the market begins to develop downward obviously since the last quarter of 2021, and some machineries pile up in the warehouse. Whether the end-users' demand can sustain requires further observations. Taking into all the factors, it's sensible for the sector to remain optimistic and cautious."

Besides external elements like market uncertainties, the inherent setbacks of the spare parts sector have revealed themselves as the pandemic rages, imposing more and more visible restrictions on enterprises. Major spare parts companies' feedbacks reflect that since the onset of Covid the rising prices of labor and raw materials have become a grave problem, and what's more, policies concerning environment conservation, firefight, emission reduction, production limitation and power cut have disrupted the rhythm of production and delivery schedule.

Faced with emerging challenges in the new development stage following the pandemic, spare parts enterprises, under the motto of high-quality growth proposed by CSMA, have extensively taken active measures, and sped up the transformation and upgrade based on their own situations. Drawing lessons from trailblazers' recent experiences like Deying and Strong-H, it's sensible for spare parts companies to change their mindsets, get rid of conventional labor-intensiveness growth model, put effort into consolidating their own supply chains and external ones, adopt modern business governance and gain edges in market segments starting with "professionalism, virtualization, automation, IT, workflow building and systematization".

First of all, to optimize top-down design regarding software and hardware. As for software, it's of urgency to develop regulated process, upgrade ERP, bring in MAS system, and establish a proprietary and applicable management system, so as to deliver system-based automated management; in terms of hardware, to increase relevant investment, emphasize technological renovation of production lines and the development of automated equipment, and gradually wean off key procedures' reliance on skill levels, and stage by stage realize the automation of a single item, production lines and workshops. Those with better infrastructures may as well promote the transition into being intelligent and digital.

Secondly, to strengthen IT and data efforts. Since the improvement of analysis relies on data, it's advisable to run the company in a holistic manner through consolidating information about estimated sales, order analysis, procedure development and rollout, process management, QA/QC, human resources management, statement management, and online approval. To gather information readily can improve service efficiency, and is helpful in supervising product quality, breaking down the existing barriers and removing the hindrance to exchanges.

Thirdly, to ramp up fundamental research and put in place innovation mechanism. Spare parts companies are expected to jettison the traditional ways of processing on buyer's drawing. On the one hand, they need to conduct more basic researches, and grasp the functions and characteristics of different parts, especially their roles in sewing procedures, so as to engage in and coordinate the processes of developing novel sewing machines from its beginning, and reinforce cooperation; on the other hand, they have to recruit talent teams and create relevant mechanism for innovation, accelerate their comprehension and converting of new technologies, materials and applications, and empower spare parts and components. In the meantime, spare parts companies should place emphasis on intellectual property rights, and build an advantage of technological patents necessary for business growth.

Fourthly, to meticulously carry out QA/QC and standard verifications. In recent years, the overall quality of spare parts has kept improving as manufacturers begin to pay closer attention to quality control, and the quality of some parts is catching up with that of international counterparts at a faster speed. However, spare parts companies still have shortcomings to be overcome on the whole in terms of infrastructures, staff and means of inspection and examination, including production standardization, uniforms and clamps standardization, all of which require remedies in future.

Fifthly, to solidify fundamental management and alleviate labor shortage through standardization. Specifically, to strength and refine fundamental management, create talents training mechanism, and comb through existing regulations and procedures to make them more practical and encompassing. To institutionalize supporting software for different workflows for the purpose of realizing standardized operation, put forward standards concerning operation, technology, work, meeting, etc., promote all-embracing operation and improvement with a lean mindset, and clarify each position's duties and responsibilities.

It's high time for supply chain modernization

Although the pandemic poses unprecedented challenges and difficulties, it has also created significant opportunities for spare parts companies to expedite transformation and upgrade, and deliver capacity transition. It has become a preferable choice to explore companies' potentials and build up their inner strengths when the market goes downward; essential measures include fully integrating information and industrialization, laying a solid foundation for information structure, facilitating the renovation and upgrade of software and hardware, realizing automation of key processes, and improving the assembly lines. After a glimpse of all the spare parts companies with eye-catching performance in 2021, it's easy to conclude that they are all plucky to convert challenges into opportunities, and determined to focus on key businesses; furthermore, even when the prospect seems gloomy, they unswervingly put in resources and spur the transformation, which enable them to excel in subdivision market.

As an integral link of the industrial chain, sewing machine companies have put forward pertinent advices and suggestions for spare parts companies. Luo Qian, President of Supreme, said that the industrial chain of sewing machineries in China is mature and full-fledged and its quality is increasingly improved. When it comes to practical application, minor problems happen to consistency, stability, and quality control, in which case, key control elements like thermal treatment and surface process should be paid more attention to. Besides, spare parts companies are supposed to follow the innovation trends of sewing machines more closely to facilitate better coordination. Luo Yiming, Chief Engineer of Precious Science and Technology, advised that spare parts companies should expand their production from single item to assembled unit, and transition themselves from spare parts manufacturers to experts, which will substantially ease the collective growth of spare parts sector and sewing machine sector. Zhuo Ruirong, President of Shing Ray, held such a belief that spare parts companies should concentrate on subdivision market, endeavor to deliver breakthroughs in fields where they are in advantageous positions, improve their proficiencies before outcompete their counterparts, and take heed of QC and verification of each and every link of the production processes.

Yang Xiaojing, Director-General of China Sewing Machinery Association (CSMA), has noted that the changes that happen to production, consumption and trade in a post-pandemic era will definitely lead to a profound manufacturing transformation regarding its content, form and mode, posing new challenges, as well as opportunities, to the sewing machineries sector that is about to embark on a new journey of growth during the 14th five-year. Yang hopes that all the spare parts companies can insist on their core businesses, work hard to deliver the 5 ideals of "innovation incentivization, quality first, demand orientation, intelligent transformation, and structural revamp" based on the Guidance on the High-Quality Development of China's Sewing Machinery Sector promulgated by China Sewing Machinery Association, remedy their shortcomings and take the initiatives with "new facilities, technologies, applications, and industries", and strive for innovative growth driven by intelligent transformation; particularly, they shall boost the supply chain modernization from the following three aspects: meeting clients' demands, improving supply quality, and deepening the reform.