The Recent Surge In Auto Parts Prices Is Just Beginning, And Many Small Auto Parts Factories Will Be Closed Down

Environmental storm struck, many companies caught unprepared, stop production rectification, followed by rising prices tide. But perhaps the price surge is just a start, many small and medium-sized enterprises will face a shortage of raw materials, environmental capacity, trade environment is more complex, expansion, capital and product unsalable six crisis overseas construction strength of enterprises, small and medium-sized enterprises will eventually detonated closures.
The price surge is the third round of price inflation after the wave of the boom year ago. In the author's view, the most unpredictable tide of serial price inflation in the history is the more terrible is the collapse tide. Xiao Bian thought that although the title of the article sounds a little alarmist, but there are still some reasons for the author's analysis.

Crisis one: price difference
Due to the transmission of raw material prices, the market has been able to clearly feel the atmosphere of price rise is very strong. Arguably, the rise of raw materials affect every enterprise, to rise up as everyone, but why small and medium-sized enterprises and the prices of large enterprises to rise in price difference is so big?
There are three reasons:
(1) large enterprises of raw materials used in futures, small and medium-sized enterprises of raw materials are generally used are bought, because large enterprises demand for raw materials, single Jia Yuan is hard to meet the material suppliers of all raw materials supply of raw materials, so the general enterprise are used in futures. Futures trading can reverse the procedure of spot trading, that is, no commodity can be sold first, and no commodity can be purchased.

(2) large enterprises of raw materials and high added value, strong ability to resist price risk, ever since, large enterprises with advanced technology, high-end manufacturing holds in the high-end market, small and medium-sized enterprises can only with low prices to seize the low-end market.

(3) large enterprises have sufficient funds and good reputation. Large enterprises also have a large advantage in capital, the bank reputation is relatively high, there can be sufficient cash flow to deal with the tide of price rise. On the contrary, most of China's small and medium-sized enterprises are built by bank lending, and they are also burdened with huge repayment of principal and interest of banks, relatively less in liquidity.
Therefore, the negative impact of the price tide on small and medium-sized enterprises is very big, it is likely to become a small and medium-sized enterprises closed down tide ahead of time.
 Crisis two: shortage of raw materials
The Chinese government has shut down a large number of small and medium-sized raw material producers because of environmental protection pressure. After the Spring Festival this year, this price continues to hit the wind, raw materials soaring conduction, rising prices of all walks of life, the market is so abusive, many enterprises said that there is an order now also dare not connect! In the future, don't talk about the price, the shortage will be called normal, and your supplier has the goods to you, which is the biggest success!

Crisis three: environmental protection to capacity
Recently, environmental protection supervision to the eighth round, once again rush to the peak. From the beginning of the eighth round, strengthen supervision in the play. Ministry of environmental protection pointed out that, since July 21st, the Ministry of environmental protection will carry out special supervision for the implementation of "ten atmospheric" detailed plan for Hebei and Henan two provinces, and the special supervision will last 84 days.

Crisis four: small enterprises have no hope
Large enterprises in overseas factories is not only in order to avoid anti-dumping, or to the use of foreign production of raw materials, cheap labor, technology advantage and so on to increase production capacity, to seize the overseas market and obtain a more broad space for development. With some large enterprises China factories in Thailand, Vietnam, the United States and other countries, we can large foreign enterprises in the factory capacity will be able to meet the needs of foreign markets, and with foreign factories to keep the price of domestic small and medium-sized enterprises and policy advantage.

Crisis five: capital chain rupture
With the rising prices, small and medium enterprises in the future will face the risk of financial difficulties and unsalable products. Reasons are as follows:
1, with the rising price of raw materials, the purchase of the same raw materials, enterprises need to pay more money, has been part of small and medium-sized enterprises rely on bank lending to survive, in the company's liquidity, because the company lack of credibility and it is difficult to borrow from banks, financial difficulties is the key factor leading to the tide of business failures.
2, small and medium enterprises in the future will face the situation of unsalable products, because most of the small and medium-sized enterprises rely on the price advantage to win the market. But after the tide of price rise, small and medium-sized enterprises substantially increased prices, the highest rise in prices reached 45%, while the price of large enterprises and foreign brands remained at around 10%.