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Chemical companies in China always mention low costs when they talk about their own advantages. This is indeed an important basis for the survival of our chemical companies in the international market. However, since the beginning of this year, international oil prices have continued to rise. In particular, the recent oil prices are even more rampant along the way. The fact that the highest price exceeded US$71/barrel reminds us how long this kind of cost advantage can be maintained by chemical companies in China.
For a long time, Chinese chemical companies have occupied price advantages at low cost in market competition. This cost advantage is based on the premise of low-cost use of resources, labor, transportation, etc., even at the cost of large-scale debt owed on environmental protection and security. However, the fact is that international oil prices have not been able to return to the previous low levels, and the availability of domestic resources is also getting lower and lower. At the same time, with the return of people-oriented ideas in the entire society, the requirements faced by chemical companies in terms of environmental protection and safety will also become more and more stringent. These will allow chemical companies to quickly stand on the same starting line with foreign companies in this regard. The traditional low-cost advantage will disappear and its survival base will face serious threats. Since the beginning of this year, high oil prices have caused the production costs of chemical companies in China to increase substantially. Although the ex-factory prices of downstream chemical products have also risen to some extent, it is still difficult to resolve the impact of the former. It has been reported that high oil prices have caused the profits of chemical companies in some regions to drop more than double digits.
Although China's chemical companies rely on resources, manpower and extensive operating costs formed by the cost advantage will not completely disappear soon, but this will not be a long time. In this regard, chemical companies must cultivate new competitive advantages.
Some people divide the competitive advantage into two types. The first is a unique advantage, that is, a company or a country has the ability to produce products that are welcome in the market, but competitors do not produce. The second is the cost advantage. A certain product can be produced by everyone. Under the same quality, the cost of a person is obviously lower than that of a competitor. Then there is a price advantage in the market competition. Obviously, the former is more valuable, lasting, and more able to stand the test of the market.
Therefore, with the disappearance of cost advantages, chemical companies are faced with new options. Either relying on technological innovation, the cultivation of brand value, and the upgrading of management to form unique advantages to deal with this change, and create an advantage of international competitiveness; either rely on “bite†to live, let the cost rise to engulf profits, and gradually lose the competitive advantage. Finally was eliminated. The choices that Chinese chemical companies should have are self-evident.
For a long time, Chinese chemical companies have occupied price advantages at low cost in market competition. This cost advantage is based on the premise of low-cost use of resources, labor, transportation, etc., even at the cost of large-scale debt owed on environmental protection and security. However, the fact is that international oil prices have not been able to return to the previous low levels, and the availability of domestic resources is also getting lower and lower. At the same time, with the return of people-oriented ideas in the entire society, the requirements faced by chemical companies in terms of environmental protection and safety will also become more and more stringent. These will allow chemical companies to quickly stand on the same starting line with foreign companies in this regard. The traditional low-cost advantage will disappear and its survival base will face serious threats. Since the beginning of this year, high oil prices have caused the production costs of chemical companies in China to increase substantially. Although the ex-factory prices of downstream chemical products have also risen to some extent, it is still difficult to resolve the impact of the former. It has been reported that high oil prices have caused the profits of chemical companies in some regions to drop more than double digits.
Although China's chemical companies rely on resources, manpower and extensive operating costs formed by the cost advantage will not completely disappear soon, but this will not be a long time. In this regard, chemical companies must cultivate new competitive advantages.
Some people divide the competitive advantage into two types. The first is a unique advantage, that is, a company or a country has the ability to produce products that are welcome in the market, but competitors do not produce. The second is the cost advantage. A certain product can be produced by everyone. Under the same quality, the cost of a person is obviously lower than that of a competitor. Then there is a price advantage in the market competition. Obviously, the former is more valuable, lasting, and more able to stand the test of the market.
Therefore, with the disappearance of cost advantages, chemical companies are faced with new options. Either relying on technological innovation, the cultivation of brand value, and the upgrading of management to form unique advantages to deal with this change, and create an advantage of international competitiveness; either rely on “bite†to live, let the cost rise to engulf profits, and gradually lose the competitive advantage. Finally was eliminated. The choices that Chinese chemical companies should have are self-evident.
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