Many foreign trade companies have relied on low prices for a long time to seize the market. On the surface, they seem to have obtained orders, but in fact they are constantly compressing their profit margins, and they frequently encounter overseas trade barriers and various investigations.
In response to this situation, the country has promptly adjusted its policies. For export industries that have established a firm foothold in the global market and have leading advantages and no longer require policy support, the gradual elimination of export-related subsidies is a necessary measure to adapt to industry development and guide the industry to move forward in a healthy manner.
Blinally relying on low prices for export may seem to be grabbing market share, but in fact it is consuming its own foundation.
This phenomenon also deserves serious reflection by the majority of entrepreneurs.
Vicious competition has occurred within some industries, with peers lowering prices and engaging in disorder. Everyone is pushing prices to extremely low levels, and ultimately no one can make reasonable profits.
If a company has normal profits, it can increase wages and improve welfare benefits for employees. When employees’ income increases, their spending power will also increase, and the domestic consumer market will naturally be stimulated.
Nowadays, the anti-unfair competition investigation is launched against the domestic factories’ low-price dumping and disorderly competition behavior, precisely to rectify the chaos in the industry.
Only by promoting the unified selling price of export commodities and domestic commodities, and at the same time gradually canceling export tax rebates for advantageous industries, can we create a more fair and reasonable market environment.
Taking the photovoltaic industry chain as an example, my country’s photovoltaic industry is now in a leading position in the world. The cancellation of export tax rebates will cause some companies to feel operating pressure in the short term, but in the long term, it will further enhance the overall competitiveness of the entire industry.
1. Low-price exports may appear to be profitable but are actually full of hidden dangers
For a long time, low-price competition has become the main way of survival for many foreign trade companies. Coupled with the support of the export tax rebate policy, many companies are accustomed to operating with small or even low profits.
Everyone is focused on price, rather than product quality and technological innovation.
The problems brought about by this model are very prominent.
First of all, corporate profits have been severely compressed.
The price is low, and after deducting various costs, very little profit actually falls into the hands of the company.
Without sufficient funds, it is difficult for enterprises to invest in new technology research and development, equipment updates and product upgrades. They can only stay at the level of low-end processing and manufacturing, and industrial development has stagnated.
At the same time, due to meager profits, companies are unable to increase the salaries of front-line workers, and employees’ incomes will not increase for a long time.
Secondly, the involution within the industry continues to intensify.
Instead of trying to make the industry bigger and stronger together, peers in the industry have lowered their prices to grab customers, forming a bad culture of “your price is lower, and mine is lower than yours.”
This kind of internal consumption makes life difficult for the entire industry, making it difficult for high-quality companies to stand out, and the overall development level of the industry has not been improved.
Finally, low-price exports can easily attract overseas targeting.
A large number of low-priced goods flood into the international market, which can easily be deemed as dumping overseas. This will be followed by anti-dumping and countervailing investigations and the imposition of high tariffs.
The overseas markets that we have worked so hard to build have frequently encountered obstacles, which not only damaged individual companies, but also lowered the overall reputation of “Made in China”.
2. Timely adjustment of policies to rectify chaos and protect the healthy development of the industry
When low-price involution and disorderly competition have become common problems in the industry, relying on market self-regulation has had little effect. It is particularly critical for the state to issue corresponding policies to guide and regulate.
On the one hand, export tax rebates are canceled for mature advantageous industries, cutting off the “hotbed” of low-price competition.
Industries such as photovoltaics, which have already led the world, have strong advantages in technology, production capacity and market, and no longer need to rely on tax rebate subsidies to maintain operations.
After the tax rebate is cancelled, those backward production capacities that rely solely on low prices and subsidies to survive will be gradually eliminated by the market. Industry resources will gradually be concentrated on stronger companies with better technology, and the industry structure will become healthier.
On the other hand, we must strictly investigate unfair low-price sales and standardize the order of market competition.
Selling goods below cost and maliciously lowering prices to grab orders are all unfair competition.
Relevant departments have launched special investigations and rectifications to stop this kind of “fighting” behavior and guide enterprises back to the track of fair competition.
Everyone no longer competes with who has the lower price, but competes with whether the product is good, whether the technology is new, and whether the service is adequate.
In addition, promoting the sales of export goods and domestic goods at the same price is also an important measure to take into account both domestic and foreign markets.
In the past, many products were “cheap on the outside but expensive on the inside”, and domestic consumers did not get any benefits.
After the unified selling price, market rules will be more fair, and companies will pay more attention to the domestic market, deeply explore the local consumer market, and help the development of the domestic cycle.
3. The photovoltaic industry is undergoing transformation and its competitiveness has been steadily improved
As my country’s most representative advantageous export industry, the changes in the photovoltaic industry policy adjustment are of great reference significance.
The cancellation of export tax rebates does not “add problems” to the industry, but is an opportunity to force the industry to upgrade.
After the implementation of the policy, small enterprises that relied on low prices and high volume in the past lost their survival advantage and slowly exited the market, while the industry’s production capacity structure was optimized.
The remaining companies no longer regard low prices as their core competitiveness, but instead increase investment in technology research and development and delve into more efficient and advanced photovoltaic products.
The added value of products continues to increase, and companies can also earn reasonable profits.
With stable profits, companies can not only continue to innovate and expand production capacity, but also have the conditions to increase employee salaries and improve benefits.
As employees’ incomes rise, consumption enthusiasm is stimulated, which in turn drives the domestic consumer market, forming a virtuous cycle.
At the same time, leading companies have also begun to change their thinking about going overseas. They no longer rely solely on exporting products at low prices. Instead, they have deployed globally through overseas construction of factories and localized operations, effectively avoiding overseas trade barriers and gaining a firm foothold in the international market.
Looking into the long term, the photovoltaic industry, which has lost its reliance on subsidies and bid farewell to low-price involution, has seen its overall strength rise instead of falling, and its voice in the global market has grown.
4. Only when enterprises change their thinking can they move forward steadily and far
The market environment and policy trends have changed, and all foreign trade companies should calm down and seriously think about the direction of development.
The road of low-price competition is getting narrower and narrower, and after all, it is not a long-term solution.
When doing business, reasonable profits are the foundation for the survival and development of an enterprise.
Without profits, all development is empty talk.
Enterprises must completely abandon the old thinking of “low price only” and focus on polishing products, studying technology, and building brands.
Peers in the industry must abandon the idea of vicious competition, develop as a team, complement each other’s advantages, make the industrial pie bigger together, and unanimously expand markets externally, rather than internal friction with each other.
At the same time, enterprises must also consider both domestic and foreign markets.
Relying on a fair market environment and carefully improving products and services, we must not only defend overseas markets, but also tap into domestic consumption potential.
Only when the internal and external markets work together can an enterprise’s ability to resist risks be stronger.
Relying on low prices and subsidy to seize the market is like walking a tightrope. It seems stable at the moment, but in fact it is full of dangers.
Nowadays, the country uses policy guidance to rectify industry chaos and promote the transformation and upgrading of advantageous industries, which has pointed out the direction for the entire foreign trade industry.
For the majority of enterprises, only by proactively seeking change, saying goodbye to low-price competition, relying on technology, quality and brand to win the market, earning reasonable profits, and taking into account employee income and market development can they achieve long-term operations.
When the entire industry embarks on the path of high-quality development, Chinese manufacturing can truly win respect in the global market and achieve steady and long-term development.
