The hardware parts industry in China is currently in a transition period from the low-end to the high-end products, as the quality of labors is elevating and the technical and management level is upgrading. Meanwhile, many major foreign manufacturers have entered the Chinese market as the country provides an ideal base for product processing, which is very beneficial to the development of the country’s hardware industry. The transfer of production to China by these companies will definitely include bringing some advanced workmanship and management models.

Tooling products, such as manual tools and hydraulic tools, represented most of the export value (USD 5.34 billion) of Chinese hardware industry in 2012, followed by construction hardware (USD 4.34 billion). The top export destination markets included USA, Japan, Europe, and South Korea. 

After more than ten years of stable growth and accumulation in the hardware industry, China is now the biggest hardware producer in the world with growing export every year. The export currently maintains at 8% annual growth. Thanks to the upgrade of production level, the expansion of productivity, and huge demand of the hardware parts market, the Chinese hardware products are expected to maintain a growth of more than 10% in 2013.

As one of the major segments of hardware industry, China’s construction hardware achieved steady growth in 2012 despite difficult times. According to the customs statistics, the export value of construction hardware products reached USD 24.538 billion, up 10.01% year-on-year for the first three quarters of 2012. Based on the export facts, it is concluded that: 1. although the international financial crisis led to the shrinking market demand, the growth in construction hardware export indicates that the basic demand of global market still exists, especially the recovering US market and the improving rigid market demand from European countries since this year; 2. The facts also show that China’ construction hardware industry has very strongly competitive advantages.

For the first three quarters in 2012, China imported USD 9.08 billions of construction hardware, down 3.1%. Unfortunately, most of the imported hardware categories saw decline, which reflects two problems: On the one hand, the macro adjustment of domestic market, especially the real estate did affect the drop in the imports of construction hardware products. On the other hand, it shows that the domestic companies constantly improve in substituting foreign imported goods.

Developing Trend of Stainless Hardware

In recent years, the stainless hardware processing industry in China is becoming the main power of the world’s hardware industry. The demand for hardware tools in some developed and developing markets such as Africa and the Middle East is increasing at an annual pace of more than 10%. In addition, with the global competition, the cost has become a major issue for the industry that aims at elevating competitiveness.

The requirements of the international market towards Chinese hardware products are also evolving as higher standards are cast on the quality, packaging and delivery deadline, or even the production process and R&D, combining environmental protection, energy resources and humanity culture. Multinational hardware companies will continue to establish their production centers in China for its huge market and geographic position.

High Technological Development Leads “Small Hardware” onto the Path of “Macro-Hardware”

With wide application range, hardware products such as nails, scissors, wrenches and knives used to be referred to as “small hardware” in China. These small hardware products have now developed into a big industry with global influence. As many characteristic economic bases have been established in China’s offshore region of Zhejiang, Guangdong, Jiangsu, Shanghai and Shandong, the hardware industry in the region has become the local pillar industry or critical industry for development and is playing an important role in the country’s industry.

In comparison to advanced foreign businesses, Chinese hardware industry still lags behind technically in many ways due to its inadequate foundation. According to Luo, Baihui, Chief Analyst of Gmold, China needs to improve and upgrade its hi-end technology, proprietary intellectual property rights, brand publicity and modern corporate management and logistics operation. Many products made in China are still produced by OEMs on behalf of foreign brands, while a large number of Chinese products are still competing on low prices in low-end markets.

Therefore, many Chinese hardware companies are thinking about the question of how to create sustainable competitiveness. In response to that, the concept of “macro-hardware manufacturing” is now being mentioned by the hardware industry businessmen and experts in many occasions and there has been an increasingly strong call for the integration of hardware industry.

Hardware products are made through physical shape change, processing and assembly of metal materials. Any industry that focuses on metal parts assembly can be categorized as a hardware industry.

When we expand the idea of hardware production to the whole manufacturing field, the concept of macro-hard-ware industry emerges; all production activities in the supply chain, from metal materials processing, basic metal products, general production equipment manufacturing, to the production equipment of all industries, can be regarded as macro-hardware production.

Increasing Difference between Import and Export of Auto Parts

According to statistics, the total import value of China auto parts in the first three quarters of 2012 totaled USD 24.149 billion, dropping by 0.95% over the same period in 2011; the export value, however, amounted to USD 43.767 billion, increasing by 12.79% YOY, indicating the increasing difference between import and export of auto parts. Meanwhile, the main sources of auto parts imports were still Japan, Germany and South Korea, representing 76% of the total imports while the imports from Germany and the Czech Republic were growing fast. The main export destination countries were USA, Japan and South Korea, representing 41% of the total export. With enormous foreign capitals coming in recent years, Chinese auto parts export has expanded as production costs of auto parts in developed countries soared. Multinational corporations are relocating the production of labor-intensive products to low-cost areas, which is in favor of China.

China has already become the best choice for production base and attracted many foreign auto parts companies to invest or co-invest in plant establishment. China is able to intensify its auto parts export competitiveness by intaking multinational companies’ production techniques and processing ability. In addition, the global procurement systems of multinational companies provide an export platform for China-made auto parts to enlarge export scale. This also limits the auto parts import, causing the increasing difference between import and export of auto parts.

Notable changes will occur in the external factors of the Chinese economy. The country’s automobiles and auto parts originally enjoyed the export advantages of lower material prices and labor costs; however, due to the recent continuous rise of materials prices and the increasing cost of currency exchange as a result of RMB appreciation, the profit from auto parts exports has shrunk. Consequently, the general increase of material prices, rising production cost and heightened cost pressure, have all contributed to the big challenges for China’s auto parts export in the future.

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