Huangshi City Friction Material Raw Material Association | Voice of Friction Materials, Issue 2, 2016

The Zao Yang Market in the Eyes of You Shi

(Wang You Shi from Xinyi Company)

On May 31, 2016, I attended a discussion meeting held by the Huangshi Friction Material Raw Material Sub-Association at Xinyi Company regarding the operation of the Zao Yang market, hosted by General Zhao from Qifa Company. He detailed the situation of manufacturers in Zao Yang and highlighted a series of issues faced by several companies in Huangshi during their operations in the Zao Yang market, particularly the inconsistency in product pricing among salespeople from each company, which led to a price-cutting situation and resulted in some products being sold at a loss due to vicious competition. Following that, Directors Wang, Cao, and Shi made important speeches, sharing their views and suggestions on the issues in the Zao Yang market, laying the groundwork for resolving conflicts and contradictions in business development. They also hoped that everyone would refrain from price wars and mutual destruction, unite, and develop together, contributing more to the development of friction materials in the Huangshi area. I was very moved; as an employee of Xinyi Company, I have been stationed in the Zao Yang area for ten years. During these ten years, I have encountered various situations and reported the issues faced in operations to the sub-association leaders, along with my thoughts and suggestions.

1. The main production of Zao Yang's friction material factories is brake pads, with varieties including drum pads, disc pads, and clutch plates, totaling over 40 manufacturers. 90% of the manufacturers produce drum pads, and 80% are small-scale producers with only 4-8 presses, mostly producing low-end brake pads. Therefore, the materials we use are also of low quality, such as the most commonly used products like talc powder, talc cotton, low-grade barium sulfate, and low-grade chromite, all of which are priced very low. Coupled with the fierce competition for market share, price wars have led to some products being unprofitable and unsustainable. To ensure orderly development of friction materials in the Zao Yang area, with stable prices and quality, I hope the sub-association can establish a unified pricing system, preferably designating specific manufacturers for production, delivery, and packaging.

2. Through my visits to the Zao Yang market over the years, I have learned that Zao Yang brake pad factories believe that the Huangshi area is rich in mineral resources, and they often say that our stone powder is worthless. In our brake pads, the quality of the filler is not important, making it difficult to recover payment for supplies. Therefore, we must unite, unify our thoughts, and standardize prices for every product of friction materials to ensure capital recovery and achieve better benefits.

3. The Zao Yang market has its highlights; it is a small city with many concentrated brake pad manufacturers, making it convenient to develop business and visit manufacturers, saving time and costs. As a result, many suppliers come to Zao Yang to develop business, and in the competition for market share, each supplier rushes to deliver to manufacturers without discussing payment, which severely pressures brake pad factories to lower product prices and payment terms. In summary, if you do not supply, someone else will, and some manufacturers may not even be able to recover their payments.

I hope the sub-association can negotiate in an organized manner; if that fails, we should resolve the issue of outstanding payments through legal means. However, the several companies in the Huangshi area must reach a unified opinion, ensuring that no goods are delivered to manufacturers who do not make payments, and recover outstanding debts to ensure the normal operation of the Zao Yang market.

4. Since there are several companies in Huangshi that do business in Zao Yang, under intense market competition, each raw material manufacturer wants to gain a certain market share in Zao Yang. During operations, mutual price cutting has occurred, resulting in products not only lacking profit but also incurring losses. We must recognize that such behavior is harmful and counterproductive, undermining unity. I hope the sub-association can coordinate solutions and establish relevant rules and regulations for every distributor to follow, ensuring better development of friction materials in Zao Yang in the future.

5. Based on the specific situation of the Zao Yang market, I hope that under the leadership of the sub-association, the friction material manufacturers in Huangshi can move in unison, develop together, ensure product quality and quantity, survive on quality, and adhere to the principle of honest sales. Only then can our products gain recognition in the entire market, allowing our business to grow and thrive, while also leading everyone to research new products and promote them in the market, paving a bright future for friction materials.

The above points are my insights from the Zao Yang market over the years, including the issues I have discovered during business development, as well as my thoughts and suggestions for everyone's reference, facilitating the sub-association leaders to better carry out their work. In the future, I will absolutely comply with the rules and regulations set by the sub-association, follow all arrangements made by the sub-association, and ensure unity with fellow salespeople in the industry to ensure orderly sales of our products in the Zao Yang market, contributing more to the development of friction materials in the Huangshi area.

(The photo shows the staff of Xinyi Company posing at their exhibition booth)

On the Necessity of Sharing Corporate Information and Resources

and Related Suggestions

(Liu Kunhua from Xinyi Company)

The sharing of corporate information and resources refers to the establishment of mutual support and cooperation between enterprises, customers, and government agencies on a voluntary, equal, and mutually beneficial basis through various technologies, platforms, and methods, creating a common goal, sense of responsibility, and a win-win community.

A well-known example of corporate information and resource sharing is Taobao, which is the most direct and convincing success case; of course, this is also an inevitable product of the internet and big data era. The development of enterprises cannot be separated from the circulation of products, which requires support from the real economy and also needs circulation channels; the circulation channels are the support and cooperation of enterprises with surrounding groups.

1. Taking the Huangshi Entrepreneurs Association Friction Material Sub-Association as an example, the mutual sharing of information and resources between enterprises helps cultivate competitive advantages and avoid market risks.

Market risks arise from both procurement and sales. Affected by the industrial chain, the resources of minerals in various regions determine the production costs and product quality of enterprises. Effectively controlling production costs and procuring suitable mineral resources through orderly and centralized procurement not only enhances the competitiveness of enterprises but also protects mineral resources. Similarly, facing a mixed market of enterprises and untrustworthy customers is challenging, and dealing with enterprises that have good production and operational conditions and reliable payment is the expectation of every raw material supplier in the friction material industry. Therefore, whether in procurement or market information, sharing information and resources is not just about huddling together for warmth, but about joining hands to increase warmth, strength, and enhance the cultivation of competitive advantages for enterprises. This also gives traditional manufacturing enterprises the wings of innovation, allowing them to keep pace with the tide of supply-side structural reform.

2. Current Analysis of the Status of Corporate Information Resource Sharing

Currently, many enterprises in the sub-association hope to establish information technology systems and achieve partial information sharing, but often remain at the level of intention and lack implementation. Some enterprises are overly conservative and still observing; due to loose and ineffective connections, information sharing becomes difficult, mainly existing in the following forms.
1. The planning of information resource sharing models is unclear.
The model relies on support from both software and hardware; software represents the collision of ideas between enterprises, and achieving this work requires a mutual benefit and trust-based awareness. However, some enterprises are slower to adapt to this initiative, and some have not kept pace with the sub-association's steps. A few enterprises still need to unify their management systems, personnel allocation, network interconnection, and system compatibility.
2. The funding for the information resource sharing model is limited.
Limited funding does not mean that there is not enough money; it mainly refers to the relatively narrow scope of application, with traditional media fields being used more. Although there are certain effects, there is a gap compared to diversified development. The investment in websites, WeChat groups/QQ groups, mobile apps, and physical experience stores across the country (similar to express service points) is not sufficient, and the lack of informatization construction has also affected government support.
3. The security of the information resource sharing model needs to be improved.
Security mainly refers to the business secrets and patented technologies of each enterprise, which is also an intangible resistance; this will not be elaborated further.
4. Information resource sharing is insufficient with government agencies and customer platforms.
The development of enterprises cannot be separated from the support of government and other institutions, and it is even more dependent on the foundation of customer groups. In the internet era, effective communication platforms should be established.

III. Measures to strengthen enterprise connections and promote resource sharing.

(1) Concept innovation.
It is essential to fully recognize the importance of information and resource sharing between enterprises; only by understanding the far-reaching strategic significance of this work can it be seriously implemented in action. A sound and complete resource information sharing system and assessment mechanism should be established.
(2) Increase investment.
Investment should be gradually refined and implemented in areas such as platform development, webpage creation, communication platforms, mobile apps, and management systems. The framework for information and resource sharing must be established to allow for effective execution. Personnel allocation should strive to transition from part-time to full-time responsibilities for conveying and supervising the sub-association's resolutions, as well as collecting and organizing information and resources from various enterprises.
(3) Strengthen database construction.

The information resource sharing database can store and manage various information from the entire raw material sub-association, thus becoming an important internal information resource center for enterprises. Through data analysis and internal networks, it can facilitate communication and sharing between enterprises, government, and customers, as well as summarize experiences and clarify development directions.