It is common and aboveboard for well-known brands to find factories to manufacture or OEM products in many industries. Although this is relatively common in the ceramic industry, it does not seem so "glorious". For ceramic tile brands, OEM or OEM actually has a lot of benefits. However, most consumers don’t really buy it. They think that there is a certain difference in quality between independent production and OEM/OEM production, so it is difficult to deal with external OEMs. Give a vote of confidence to the factory or OEM brand.
With the continuous upgrading of consumption, consumers have put forward higher requirements for ceramic tile products, including but not limited to brand, quality, experience, cost-effectiveness, etc., coupled with some industry players adding fuel to the fire, leading to more consumption There are many opinions among consumers about OEM/OEM ceramic tiles, which in turn leads to the feeling that “everyone is shouting” about ceramic companies and brands involved in OEM/OEM.
Today, I hope everyone will take off their colored glasses and follow Zhongtao Jun to look at the OEM/OEM issue from an objective perspective.
Capacity expansion is a problem
It’s time to hug together for warmth
A few days ago, the video column of China Ceramics Network [Today’s Talk about Bricks] published an article entitled "The "marriage" of ceramic tile manufacturers, is it an open OEM? 》video. The video mentioned that a number of ceramic companies have reached strategic cooperation in production, including Guangdong Venus Ceramics and Jiangxi Zhongshuo Venture Capital (Asus Holdings), Guangdong Grammy Ceramics (Jialian Enterprise) and Jiangxi Sun Group, Guangdong Eagle Brand Industrial and Jiangxi Huashuo Holdings, Guangdong Guanxing Enterprise and Guangdong Inno Slate, Shanghai Seagull Champion and Guangdong New School Enterprise.
▲Eagle Brand Industrial and ASUS Holdings have reached a strategic cooperation
Among these cooperations, some are Guangdong ceramic tile brands and Jiangxi manufacturing enterprises integrating resources, while others are well-known ceramic tile brands and large slate manufacturers complementing each other's advantages. In response to this, some netizens were indignant and wrote the comment "Without a factory, OEM is a scam for consumers"; some netizens were more rational and made the comment "Corporate profits are declining and costs need to be controlled." analysis; some netizens have a more positive view, saying that "when the real estate industry is going down, it's time for companies to unite to stay warm."
▲Inno Enterprise and Guanxing Enterprise reached strategic cooperation
In fact, no matter how many people stand on the opposite side of OEM/OEM, they cannot change the development trajectory of the ceramic industry in the context of "dual carbon and dual control". Not long ago, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Ecology and Environment, and the Ministry of Housing and Urban-Rural Development issued the "Implementation Plan for Carbon Peaking in the Building Materials Industry," proposing to strengthen the management of industries such as building sanitary ceramics and accelerate the establishment of prevention measures. A long-term market-oriented and legal-based mechanism for serious overcapacity to prevent disorderly expansion of production capacity.
In today's ceramic industry, the market has shifted from an incremental era to a stock era. Shrinking demand has led to sluggish growth; energy and raw material prices have been at high levels for a long time, and production costs have soared; the "dual carbon dual control" policy continues to be implemented. It is becoming increasingly difficult to achieve cost advantages through expansion of scale; the superposition of multiple unstable factors such as the epidemic and real estate thunderstorms is constantly testing the ability of enterprises to resist risks. Therefore, companies can survive better only by staying together, integrating resources, and sharing business opportunities.
Industry concentration is increasing
Rewriting the competitive landscape of the industry
Ceramic tiles are non-standardized products and have diversified and personalized consumption characteristics. If ceramic companies simply rely on laying out outlets and updating products, their development will easily encounter bottlenecks. Some leading ceramic companies have realized this and have begun to rewrite the competitive landscape of the ceramic industry by integrating resources, capital mergers and acquisitions, and transforming business models. In recent years, brand concentration in the ceramic industry has been rising. Judging from production capacity and sales data, the dividing lines between the head, waist and tail camps have become increasingly clear.
▲Mona Lisa production base
Big data from the "2020 Ceramic Industry Long March V - China Ceramic Tile Production Capacity Survey" shows that the top ten ceramic companies in the country in terms of annual ceramic tile production capacity in 2020 are Xinmingzhu (221.4 million square meters), Weimei (218 million square meters), Asus ( 149 million square meters), Hongyu (146 million square meters), Dongpeng (143 million square meters), Xinquanye (141 million square meters), Mona Lisa (132.7 million square meters), Haosheng (115 million square meters), Xinjincheng (106 million square meters), Shun (104 million square meters), with a total annual production capacity of approximately 1.476 billion square meters. Statistics from the China Building and Sanitary Ceramics Association show that the actual output of ceramic tiles nationwide in 2021 is 8.9 billion square meters. In other words, the production capacity of the top ten ceramic companies can meet about one-sixth of the country's production needs.
▲Dongpeng Holdings Production Base
According to the 2021 financial reports released by several listed ceramic companies, Marco Polo sold tiles for 9.365 billion yuan a year, Mona Lisa sold tiles for 6.986 billion yuan a year, and Dongpeng sold tiles for 6.671 billion yuan a year. Oceano sold 5.105 billion yuan of ceramic tiles in a year...Other data shows that the industry-wide ceramic tile sales revenue in 2021 will be 345 billion yuan, and the sales of the top ten brands will be 55.3 billion yuan, accounting for 16 %. Gong Wei, secretary-general of the China Building and Sanitary Ceramics Association, said that industry concentration (top ten sales) increased from 16% to 19% during the "Thirteenth Five-Year Plan" period, an increase of only 3 percentage points, and there will be at least a 6% increase in the future. In terms of space, the industry concentration rate during the “14th Five-Year Plan” will exceed 25%.
It is foreseeable that the brand concentration in the ceramic industry continues to increase, which will accelerate the differentiation and elimination of existing ceramic companies. In the last-place elimination round, backward production capacities with no transformation value will be directly eliminated, and some will be integrated by leading ceramic companies through OEM, mergers and acquisitions, etc. The home appliance industry is a vivid case. Among home appliances, the top ten brands in the four major categories of refrigerators, air conditioners, televisions, and washing machines account for as much as 80% to 90% of the market share. The living space of non-leading brands has been greatly compressed. Nearly 60% of Skyworth Electric's annual revenue comes from its OEM business. Xiaomi alone can bring in nearly 600 million sales a year. This is how non-leading companies in highly concentrated industries survive.
Promote high-quality development of the industry
From OEM, ODM to OBM
The three most common models in manufacturing are OEM, ODM and OBM. OEM is commonly known as OEM or OEM, that is, the company does not directly produce the product, but completes the production of the product by letting the manufacturer do the production on its behalf; ODMDifferent from OEM's pure foundry, manufacturers need to have their own research and development technology and design and even molded products. Customers who buy the products then use their own brands to sell them; OBM is the manufacturer's independent operation, production and sales. For branded products, some people believe that acquiring existing brands and acquiring brands through franchising can also be regarded as OBM.
In a sense, OEM, ODM, and OBM are different business methods and profit models. They are a division of labor between different enterprises at different stages of development. They are also the inevitable choice of capital after weighing profits and risks. For manufacturing enterprises, the model transformation from OEM to ODM to OBM is the only way for enterprises to continue to develop and progress. It is worth mentioning that there are many manufacturing companies in China that started as OEMs and eventually successfully went public.
For example, Delma in the electrical appliance industry plans to be listed on the Shenzhen Stock Exchange GEM in the near future. This company used to do OEM business for JD.com and Xiaomi, and then gradually started doing ODM business for Xiaomi. In 2019, ODM business accounted for 7.76% of Delma's overall revenue. By 2021, its ODM business accounted for 22.11%. In terms of the mature ODM model, Delma continues to explore the OBM model and has won the brand trademarks of Philips and Vantage for public leasing cooperation. Today, the revenue of the two brands Philips and Vantage has accounted for 38.92% of Delma's overall revenue.
There are similar cases in the ceramic industry. Chen Gaozhao, the founder of Ferona Cement Tile, once revealed to Zhongtaojun that when he first entered the industry, he worked for a large ceramic company in the industry. In 2004, the company received Malachi’s first overseas OEM order, and subsequently exported business Thriving. Chen Gaozhao said that it is precisely because of undertaking OEM business from major overseas customers that Chinese ceramic companies have learned advanced international experience, standards and models, thereby gradually building well-known brands at home and abroad. The same goes for ceramic tile manufacturers in production areas such as Jiangxi and Shandong. They started out as OEMs for well-known brands in Guangdong, gradually honed their ODM capabilities, accumulated the foundation to move towards OBM, and finally achieved a leapfrog development from "OEM" to "brand creation".
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Looking squarely at OEM/OEM, you will find that it is actually not a "god, ghost or snake", but one of the inevitable models for every industry to develop towards high quality. There is no need for ceramic tile manufacturers to be secretive about OEM/OEM. , there is no need for terminal dealers and consumers to talk about "posting".
Then the problem arises. As industry concentration continues to rise,, is OEM for well-known brands the only way out for manufacturing ceramic companies in the future? History has actually told us the answer. There are only stagnant companies and no stagnant industries. Whoever has the strength has the right to speak.
