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Four Directions for the Transformation and Breakthrough of Door and Window Industry

Recently, the Central Economic Work Conference was held in Beijing. The meeting held that next year's economic and social development, especially structural reform, will be very arduous. Strategically, we should stick to steady progress, grasp the rhythm and strength. Tactically, we should focus on five major tasks: capacity removal, inventory removal, leverage removal, cost reduction and shortcomings compensation. These key points also provide four directions for the transformation and breakthrough of the door and window industry.

First, alleviating overcapacity is the top priority

As early as in the past few years, the contradiction of excess capacity has been placed in front of all window and door enterprises. In 2016, the contradiction of excess capacity of the whole window and door industry has become white-hot again. For all window and door enterprises, in the future, we must rely on the direction specified by this round of Central Economic Working Conference. On the one hand, we should eliminate a large number of "supply exceeds demand" of homogenized door and window production capacity; on the other hand, we should increase the supply of some middle and high-end production capacity through structural transformation.

In Industry 4. Under the "0" tide, Chinese door and window enterprises should use this round of "machine replacement" to release a large number of low added value and high labor productivity, and increase the production capacity supply guarantee for high-end door and window products. Over the past two or three years, a number of large enterprises have continuously promoted "machine replacement". Now, this layout needs to be spread rapidly throughout the industry. We should really solve the "contradiction between supply and demand" in the current market from the production and manufacturing links of doors and windows products, that is, a large number of low-end homogeneous products have serious excess demand, while some high-end doors and windows have not been met. China's doors and windows industry must be able to release ineffective production capacity as a grasp, in order to improve the efficiency of production and operation of enterprises and production quality.

2. Focus on Real Estate

At this central economic working conference, the central government first raised the issue of "housing price", and explicitly encouraged the development of housing release to reduce housing prices and de-inventory. Obviously, for the current Chinese door and window industry, it also has high commercial value and transformation value.

Firstly, windows and doors enterprises are facing the challenge of de-inventory. However, compared with the real estate industry, in the past three months, the door and window enterprises have initiated a round of active and positive changes to release inventory through price reduction. However, in addition to the terminal to increase shipment, solve inventory. In the upstream production and manufacturing links of doors and windows enterprises, we also need to take corresponding measures to reduce production and limit production, so as to avoid the embarrassment of inventory clearing this month and coming again next month. Secondly, the development of China's door and window industry has been affected by real estate. The fluctuation of the real estate industry, especially the developers'initiative to price to ease the inventory of commercial housing, and increasing the real estate shipment is actually a big policy to stimulate the whole downstream supporting industry of real estate. This will directly drive and stimulate the growth of household building materials industry such as doors and windows.

In the development process of 2017, window and door enterprises should also grasp two points: one is to de-inventory, speed up circulation and circulation, improve the efficiency of capital operation, and maximize profits on the premise of a certain scale; the other is to keep a close eye on the changes in the real estate market, adjust the corresponding product production and sales plans, and really achieve "targeted".

3. Improving the Business Structure by Loaning and Loading Costs

The central economic working conference put forward the idea of "raising the fiscal deficit rate by stages", the core of which is to allow the government's fiscal revenue to grow negatively and get rid of the past situation of "only increasing but not decreasing". This is precisely because the social economy as a whole is facing great pressure of transformation: on the one hand, to properly expand aggregate demand, we need to stimulate the total consumption; on the other hand, we need to focus on improving the supply side, so we must allow the overall revenue from the fiscal decline.

For window and door manufacturers, it should be very sensitive to realize that allowing fiscal deficit means that the government should open up tax reduction space for enterprises and reduce their daily operating costs. Therefore, manufacturers of doors and windows must seize this round of national fiscal tax cuts, make good use of this national inclusive new policy, and seek and promote the transformation and transformation of business models, means and institutions. In the past, we should gradually solve the problem of profit maximization under the pursuit of scale, and change it into profit maximization on the basis of a certain scale. Enhance the competitiveness and market share of high-end new products. From an early age, we should seek new changes in the ways and means of making profits. For windows and doors enterprises, we should improve the past "small quantity" and "small profit" model of door and window distributors, and really solve the habits formed over the past years from the management concept. Try and explore new business models, such as pursuing the profit maximization of subdividing groups and different needs, pursuing the value-added model of "from selling products to selling services" in regional markets and powerful regions, and really improving the business structure of enterprises.

IV. Solving the Problem of Homogeneity through Supply-side Reform

As for the problems of excess capacity and poor demand of traditional industries in the whole social economy, it was pointed out clearly that supply-side reform should be implemented and promoted as early as before the Central Economic Work Conference. And the important core content of the whole social economy in 2016 is also to expand the supply-side reform.

For the door and window industry, the demand for supply-side reform is also imminent. There are a lot of homogeneous doors and windows in the market of our country, but the products with differentiation and competitiveness are scarce. The technological innovation of the whole door and window industry, especially the product differentiation function and application innovation centering on users'needs, is imminent.