After the start, there is no winner.
“The adverse effect of the epidemic situation on the entire industry is on the whole the same, regardless of the size of enterprises.” Xie Yuerong, chairman and general manager of ARROW Home Group said sincerely.
With the spread of the COVID, China’s economy has been suspended for nearly one month. Most of real estate enterprises in different parts of the country have delayed in work resumption until March or even later. For fitment enterprises, it will be delayed accordingly, which has a direct effect on the sales for the first quarter.
Due to the difference in an enterprise’s strength and ability to resist risks, the impact of the epidemic situation differs to them. However, without exception, profits in enterprises will be directly affected. As fixed costs and expenses, and salaries for employees, etc must be paid, and sales are suspended, benefits of enterprises must be affected.
Xie Yuerong noted that the epidemic situation would be finally controlled, but whether the epidemic influence would be left is still unknown. Everyone is focusing on the progress of the epidemic situation. From the perspective of the year, sales will certainly decline, but how much it will decline is still hard to be evaluated.
With the outbreak of the COVID, there will be more demands for smart products in respect of health and perception. Therefore, in product research, development and production, the mainstream consumption trend of intelligence, health and youthfulness will not change on the whole.
From now until the end of the epidemic situation, our Government will strengthen investment in the construction of medical and health infrastructure on a large scale. Not only in Hubei, but also in other places, there will be an increase in the construction of medical and health infrastructure. Therefore, the engineering works about hospitals will be increased.
Xie Yuerong, chairman and general manager of ARROW Home Group
However, bathrooms sever as durable consumables with “low focus but high involvement”. During emergencies, they will be set aside or even pushed backward. If it is unnecessary, there will be no fitment. Therefore, if an enterprise wants to pass through the epidemic difficulties, the key lies in steady operation to decrease liabilities.
How will an enterprise carry out steady operation? The following aspects must be considered:
The first is to control productivity: After work resumption, not all production lines will be started, and it will depend on actual conditions. It is required to control productivity, reduce inventory, shorten production lines, and decrease product varieties with less profit, and it is also necessary to focus on advantageous products, to perform activities in cost reduction and efficiency increase in the enterprise and to control product costs and operating costs.
From the perspective of long-term development strategy of an enterprise, the bathroom industry mainly consists of heavy assets, and self-built plants, so it is required to attach importance to the integration of production, sales, installation and service. However, can an enterprise appropriately control its fixed asset investment like household electric appliance industry following the path to light assets? Will the future development of enterprises be vertical, upstream or downstream or horizontal? These are problems to be considered by our leading enterprises.
The second is to integrate supply chains: The integration management of supply chains must be based on mutual collaboration in the industry, including how to work together by several leading enterprises in the industry, how to promote virtuous competition, for example, not to win bids at lowest prices. Now, for either purchasing or sales, there will be one problem, to win bids at the lowest prices and to bid for real estate, purchase materials and even win bids at the lowest prices. Doing this for long will finally lead to bad money driving away good money.
Then how will we advocate that bid winning at properly low prices? Sanitary ware enterprises have no cost advantages, so they will be in the disadvantageous position during competition. Xie Yuerong advocates top quality and favorable prices and work well in products, and not to do profit-losing business.”Some bids for engineering works were made, even if there was profit loss, but now, it is unnecessary, we cannot allow bad money to drive away good money.
The third is legal and standardized operation: In the epidemic situation, many media appeal to the Government to support enterprises, including burden reduction, delay in payment of social security, delay in tax payment, etc, but these are temporary actions, for they must be paid finally. If an enterprise is developed continuously and healthily, standardized operation will be required. Tax payment, social security payment, housing reserve, annual holidays with pay and employees’ benefits must be paid if they should be made. If there are still profits after accurate calculation of costs, the business operation will be developed in a virtuous and healthy manner. National allowances or subsidies can help an enterprise to go through short-term difficulties only, but they cannot solve long-term operation problems.
To be an enterprise that is respected by the society, there must be legal and standardized operation. Good business operation will win respect. If there is some difficulty, there will be random reduction of staff and workers. Such enterprises will be the ones without responsibility. Developed countries are rather rational, they will not be involved in frequent plant building, recruitment, productivity surplus and reduce employees. Therefore, if an enterprise is developed in a steady and virtuous manner, it must not expand production blindly at the times of good sales, and it can endure difficulties at the time of bad sales. He said that several leading enterprises would set such an industrial benchmark to run everlasting business before they win social respect.
Like the SARS in the past, difficulties would be passed through. There will be not so long a time. Three months or a half year later, the COVID will be ended. Enterprises must still need confidence, self-discipline and cooperation. In this way, there will be fine days, and the industry can greet a better future.