Zhu Gaofeng, an academician of the Chinese Academy of Engineering, believes that "Made in China" is "large in physical quantity, but not high in value." For a long time, China's manufacturing industry is often treated differently by foreigners, and is often regarded as rough and low-grade products.
It is regarded as a rough, low-grade product, and of course it cannot be sold at a good price, so the only way to make it in China is to win by quantity. Why Chinese companies can only win by quantity? The root cause is that the concept of "small profits but quick turnover" has long been deeply ingrained in the hearts of Chinese people.
The idea of small profits but quick turnover is deeply rooted in China
Some scholars believe that the reason why the thinking of small profits but quick turnover is deeply rooted in the hearts of the Chinese people mainly stems from China's thousands of years of feudal rule.
As we all know, from the unification of the six kingdoms by Qin in 221 BC to the 1911 Revolution of 1911, feudal thought ruled China for more than 2,000 years. In the past 2,000 years, China has been dominated by small farmers.
What is the smallholder economy? The small-scale peasant economy is an economy that is self-sufficient and does not have too much commodity trading, which means that social productivity is very low.
According to statistics, China's labor productivity has only increased four times over the past 2,000 years. To give the simplest example, it has been used for thousands of years to cultivate the land with cattle, so there are basically no industrial products.
In other words, in feudal society, commodities were extremely homogenized. Your family sells steamed buns, and his family also sells steamed buns. There is almost no difference between steamed buns and steamed buns, so consumers basically buy whoever is cheaper.
Therefore, there is a price war between merchants and merchants, and in the end, they can only rely on the volume to obtain more profits. The end result is that the thinking of "small profits but quick turnover" is deeply ingrained in Chinese people's ideas.
How many Smart Lock companies have been harmed by small profits but quick turnover
The thinking of "small profits but quick turnover" is also very popular in the smart lock industry. If you don't believe that you open a certain treasure, there are many smart locks with a price of several hundred yuan. In many professional exhibitions, some companies even marked a low price of 299 yuan. price.
It is reported that the gross profit margin of smart lock manufacturers is controlled at about 20%, which is a normal range, but in fact, some manufacturers are taking orders with a gross profit margin of 5% in order to have a business, and some single gross profit is even as low as 2%.
Therefore, in order to increase shipments, major smart lock companies in the terminal market are competing to lower prices. You sell 800, and I will sell 300.
Of course, manufacturers who sell cheaply will naturally sell better than others. Therefore, low-priced smart locks can only profit from larger quantities.
However, the sales volume is large, and when the accounts are settled at the end of the year, there is not much profit left after workers` wages, rent, utilities, marketing, logistics, sanitation, internet, and telephone.
Besides, the domestic smart lock market has not yet reached the stage of volume, so those smart lock companies that operate with the thinking of "small profits but quick turnover" have only one final road, that is: closing down.
