The hardware industry belt is undergoing transformation

New Course for Hardware Industry Belt in Change Waves

     Hardware items, from small parts like screws and hinges to large products such as power tools and kitchen/bathroom fixtures, are widely used in construction, daily life, and industrial production. They have become a vital component of China's light industry sector. As the world's most important hardware producer and exporter, China's hardware industry has long enjoyed a trade surplus.

    However, 2023 saw its total export drop by 9.3% due to global market swings, the first sign of weakening performance. Amid this industrial shift, hardware industry belts nationwide are actively harnessing their accumulated expertise to seek breakthroughs, thereby pioneering a transformative new era.

    China's hardware industry didn't rise by accident; it emerged from continuous innovation and decades of iterative advancement. In the 1990s, the global shift in manufacturing division of labor brought development opportunities to China's hardware industry. Previously scattered workshops began large-scale transformation due to surging external demand, gradually forming centralized and modernized industrial clusters. These industry belts, relying on their respective resource endowments and locational advantages, have woven a nationwide hardware industry network.

     Yongkang, known as the "Hardware Capital of China," is a prime example. As early as the 1960s, it was home to China's first electric drill and first angle grinder. Today, it boasts over 100,000 related businesses and more than 40,000 hardware factories, accounting for 40% of the nation's electric hardware tool production and 80% of its thermos cup production, generating an industrial output value exceeding 100 billion yuan and forming a distinctive industrial ecosystem centered on power tools and stainless steel kitchenware.

     Next to Yongkang, Zhangjiagang in Jiangsu Province uses its natural benefits from Yangtze River shipping. This helps develop its port economy. It has become an important center for importing and exporting hardware products. Foshan in Guangdong Province, relying on the Pearl River Delta's complete industrial chain and strong manufacturing base, firmly holds its position as the largest stainless steel products production base in China.

     Linyi in Shandong Province utilizes its well-developed logistics network to become a core hardware distribution center radiating throughout northern China. China's hardware industry stretches from Foshan in the south to Linyi in the north. It also reaches from Zhangjiagang in the east to industrial areas in the west. This industry has developed a unique pattern with clear features and benefits that work well together.

     However, this once thriving industrial land now faces multiple challenges. Global economic pressures and rising raw material and labor costs are squeezing profit margins for businesses. The complex and volatile international trade environment, with its trade barriers, compliance challenges, and exchange rate fluctuations, further exacerbates export pressures—RMB appreciation weakens product price competitiveness, while depreciation may increase cost burdens. Concurrently, homogeneous competition and limited brand impact pose critical challenges to the industry, rendering the traditional passive "OEM" model incompatible with contemporary market dynamics.

      Faced with these difficulties, companies in the hardware industry are proactively seeking change, shifting from a "workshop mindset" to a "market mindset," embarking on a path of transformation and upgrading.

      Brand development is now a strategic focus, as growing numbers of companies shift from OEM reliance to independent branding. This enables direct consumer engagement, boosting both product value and market impact. Digital transformation is injecting new momentum into the industry, with companies leveraging the internet and e-commerce platforms to broaden sales channels, achieve integrated online and offline development, and break geographical limitations to explore international markets.

    Throughout this transformation, support from various parties has safeguarded the hardware companies. Ant International's Worldwide has launched a one-stop cross-border payment solution, helping businesses mitigate exchange rate risks through forward exchange rate hedging services (supporting up to 3 months of designated target exchange rate conversion). It also covers local currency collection services in 13 minor currencies across emerging markets in Africa, the Middle East, and Southeast Asia, reducing currency exchange fees and helping businesses cultivate potential markets.

      E-commerce platforms are also increasing their investment. During October 2024, 1688 launched a hardware procurement center in Yongkang. It integrates functions such as a digital showroom, a sourcing hall, and a live streaming room, forming an all-in-one platform for supply chain and e-commerce solutions. This effort supports the digital upgrade of cluster-based businesses.