China's wardrobe companies are facing challenges

With the general rise in various costs of raw materials, hardware, paint, labor, etc., many closet companies are facing more severe survival and development pressures. In this context, the prices of wardrobes in different grades on the market have also risen to varying degrees. However, for consumers, the increase in wardrobe prices will inevitably affect their purchasing desires to some extent. From this perspective, regardless of whether the wardrobe companies are willing or not, it is an inevitable trend to amortize high costs through transformation and upgrading.

Rising raw material prices

In the next 10 years, the tight supply of timber and rising prices will be the overall trend of the industry. The domestic wardrobe companies are faced with continuous and huge cost pressures. Shortage of resources, rising prices of raw materials, and prices of furniture products, including wardrobes, are major trends in the future. Looking at the furniture province of Guangdong, compared with the same period of last year, the price increase of wooden furniture this year has exceeded 10%. With regard to the issue of rising and not rising or rising, the furniture manufacturers may feel deeper than the circulation companies. Many furniture manufacturers in the Pearl River Delta have stated that they will continue to adjust prices in September and October to cope with rising raw material prices, which will increase by 10% to 15%. Wang Ying, executive secretary of the Dongguan Furniture Club, revealed that “some small furniture companies have closed down under the pressure of rising costs.”

Rising labor costs

If the price increase of raw materials is the main reason for the increase in the price of furniture such as wardrobes, then the increase in labor prices is also a factor that affects the price of wardrobes. As a labor-intensive industry, labor costs are one of the major components of the overall price of the wardrobe industry. The new "Labor Contract Law" has been formally implemented since January 1 this year. Enterprises must pay five insurances for their employees, including pension, unemployment, work-related injury, maternity, and medical care. This will undoubtedly increase the labor cost of the closet companies. The originally very meager profits will be forced to “shrink” due to the increase in labor costs.

Wardrobe enterprise transformation and upgrading into an inevitable trend

In the new environment, wardrobe enterprises, as China's traditional manufacturing industry, especially labor-intensive enterprises, must accelerate the transition to technology-intensive. If the old road of high energy consumption, high pollution, and low added value is taken, enterprises will become increasingly competitive in the market. The background will be lost in competitiveness. A well-known wardrobe brand official said: "The rapid rise in production and operating costs will force companies to take innovative approaches and increase R & D investment. The rising labor costs must be digested through technological innovation." Professionals also believe that "enterprises Internal and external cost pressures have increased, and the solution lies in industrial upgrading. Through investment, we will increase the proportion of capital composition and the upgrading of related products, and accelerate the transformation of production methods.”