In the current landscape, the relationship between domestic sanitary hardware companies and their upstream and downstream partners is increasingly competitive. Suppliers often gain advantages by raising input prices or compromising on the quality of materials. For manufacturers, raw material costs make up a significant portion of overall expenses, giving suppliers considerable bargaining power. What compounds the issue is that many raw material providers are state-owned large-scale metallurgical enterprises, which enjoy stable market positions and numerous buyers. As a result, when the prices of copper and aluminum have risen in recent years, most of these increased costs have been passed on to manufacturers.
The gap between mid-market brands and low-end manufacturers is shrinking, making it difficult for small and medium-sized enterprises to enter the mid-range segment. Price competition has become their primary strategy. Even though top-tier domestic brands are striving to move toward the high-end market, they face challenges due to weak design and R&D capabilities, as well as insufficient patent protection. This has led to widespread imitation and plagiarism, dragging even leading brands into price wars. With rising raw material costs and stagnant retail prices, profit margins for sanitary hardware manufacturers are under pressure.
Online, the most common retail channel for hardware and sanitary products is the building materials market. Retailers authorized by brand dealers directly serve consumers in these markets. By December 2012, the number of such markets across the country had surpassed 10,000. These markets often feature similar product displays and multiple stores selling the same brand, highlighting intense competition and market confusion. Recently, hypermarkets like Red Star Meikailong and Home Furnishings have started offering bathroom hardware, leveraging their strong sales networks to exert significant pricing pressure on brand owners.
However, the growth of e-commerce channels is bringing some positive changes to the supply chain of sanitary hardware companies. With more direct access to consumers, some cost savings from reduced channel expenses benefit both producers and customers. Nevertheless, the share of online sales in the overall industry remains relatively small. Additionally, online price competition is fierce, and high delivery and marketing costs may soon erode these benefits. Despite this, e-commerce continues to offer new opportunities for innovation and customer engagement in the sector.
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