On my 24th birthday, I was debugging a new punch press with my master in the workshop, and my face was covered with oil.
A Guizhou apprentice of the same age in the next work station had his fingers flattened and was still rushing to make stainless steel gaskets priced at only 0.032 yuan. He made a full 70,000 pieces that day and earned 2,240 yuan. We call this state “exploded.”
At that moment, I was suddenly stunned: This should be the age of dreaming, but here everyone has only one common wish – don’t stop the machine.
Four years ago, I came to Yongkang, Zhejiang Province, known as the “Hardware Capital of China” with a diploma in mechanical design. I originally thought that this place was a golden hotspot for manufacturing, full of opportunities.
I joined a local thermos cup factory as a technician and followed the master to learn the craftsmanship in the car. I originally thought that as long as I had strong skills and good product quality, business would naturally come to me. Until I participated in the quotation for the first time, my understanding was completely shattered.
At that time, a trader in Guangzhou sent an inquiry for 50,000 new thermos cups. I spent two days clearly calculating the costs of all links. The total cost was 25.8 yuan. Considering the profit margins of all parties, I quoted an ex-factory price of 31.5 yuan. Unexpectedly, the boss directly crossed out my quotation and wrote down the figure of 26.2.
I was so anxious that I could barely cover the cost at this price, but the boss sneered: “If you don’t do it, Lao Wang next door dares to take it for 26 yuan, and Xiao Zhang next door can do it for 25.8 yuan. The cost is dead, but people are still alive. Can 304 steel be replaced by 201? Spray paint
Can it be thinner?
Can customers see that there is one less polishing process?
“That fluttering quotation was the first “butcher’s knife” I encountered in Yongkang. It was not cutting metal, but profit, the bottom line, and all my naive fantasies about the manufacturing industry.
Many people think that e-commerce is the second spring of Yongkang factory, but in fact it is a more cruel traffic meat grinder.
Our factory later followed the trend and opened an e-commerce store. The burden of operation fell on me and I discovered the way: I paid tens of thousands of yuan in annual fees, deposits, and marketing tool fees before entering the market. After that, there was endless price comparison. If you sell it for 39.9, the system reminds you that 93% of similar products are cheaper than you, and it is recommended to lower it to 28.8. You just dropped to 28.8, and the exact same model from the factory next door sold for 26.8 and came with a cup brush.
If you don’t follow, there will be no traffic. If you follow, you will lose money and make money.
In order to improve our ranking, we placed additional orders and burned through trains. One click cost 1.5 yuan, and we burned 2,000 yuan in the morning to get only 3 orders, with a profit of 2 yuan per order. When encountering malicious customers who only refunded money, the platform will always favor consumers. We once had an order of 100 cups and we lost nearly 3,000 yuan.
What is even more powerless than the involution of orders is the change in the labor ecology.
When I first joined the company, I particularly respected Master Wang in the polishing workshop. He had been polishing all his life, and the cup would shine like a mirror after just a few turns in his hand. At that time, he was paid on a piece-rate basis and could earn three to four hundred a day. His craftsmanship was the foundation of his career.
However, profits have become thinner and thinner in recent years. The first thing the boss wants to cut is labor costs. He no longer hires long-term masters, but instead goes to the labor market to find daily temporary workers. Polishing costs 350 yuan a day, and the only requirement is “fast”.
Master Wang, who works slowly and meticulously, is no match for young people who work quickly. He resigned last year and returned to his hometown. Before leaving, he touched his calloused hands and said: “After working for ten years, in the end, I am not even as good as a machine. The machine will not grow old, I will.”
You may think that factory owners are black-hearted capitalists, but in fact they are also gamblers kidnapped by the times.
The boss of my factory, Hu, worked as an apprentice since he was a child. He said that more than ten years ago, a thermos cup could make more than a dozen yuan in profit, but now it is overwhelmed by three mountains: first, homogeneous competition. Within a week of new models being released, all Yongkang companies are making them, so they can only compete on price; second, costs continue to rise, with rents, raw materials, and environmental protection expenses all rising, and only ex-factory prices are falling; third, orders are unstable, and foreign trade orders have fallen off a cliff. To switch to domestic sales, you have to enter the meat grinder of e-commerce.
He has to pay back a car loan of 20,000 yuan a month for his BMW 7 Series, and his two children go to private schools for more than 100,000 yuan a year. He doesn’t dare to stop, so he can only bet on the next big hit, the next big customer, and bet on himself to last longer than the factory next door.
Many people ask why they don’t do research and development or upgrade and build brands?
People who have never been to Yongkang will not know how difficult it is to upgrade here: it costs hundreds of thousands to open a new mold, but 90% of the new products cannot be sold. As soon as the popular model comes out, it is copied by the entire industry, and even the mold fee cannot be recovered; to build a brand, you have to spend advertising expenses and establish channels, and small factories with tight cash flow cannot wait until the day when the brand becomes profitable; the entire industry chain revolves around low cost.
Boss Hu’s friend invested 3 million in a few years ago to make a high-end oven. The quality was several times that of ordinary models and the price was five times. In the end, no one showed interest in the Canton Fair, and the factory went bankrupt. It is still dodging debt to this day.
I submitted my resignation in my fourth year in Yongkang. On the day I packed my luggage, I met the Guizhou guy who made gaskets in the labor market. He said that his mother was sick and had sent back all the money he had saved. He still lacked more than 40,000 yuan to build a house and marry a wife. “Where can I go if I don’t work? At least I can get money here every day.”
Watching him join the crowd of people looking for jobs, I suddenly canceled the train ticket back to my hometown, used all my savings to rent the smallest stall, bought two second-hand laser marking machines, and took small batch custom orders, making cups for niche brands and metal nameplates for design studios. The orders were only a few hundred yuan each, but the profit was 30%. I didn’t have to compete on price or burn through trains. I relied on patience and craftsmanship that was a little more meticulous than others.
I don’t know how long this road will last, and I may close my shop next month and start looking for a job again, but I understand that the biggest difference between people and machines is the right to choose: you can choose not to make a cup that only costs 26.2 yuan and cut corners, or you can choose not to make 70,000 repeated gaskets. Even if this choice is as small as a grain of dust in front of the huge Yongkang manufacturing machine, I also want to find some possibility in the gaps between the gears not to be crushed.
Practical advice for working in Yongkang
- Don’t believe in the myth that “there are bosses everywhere”: There are many bosses in Yongkang, but even more have fallen. 90% of factories are hovering at the break-even line. Before starting a business, it is best to stay in the factory for a full year to understand all hidden risks.
- Cash flow is more important than profit: It is normal for the local accounting period to be 3 months, and 6 months is not uncommon. Many factories either did not make money or closed down because their cash flow was cut off. They must have at least enough funds on hand to sustain no income for 6 months.
- Don’t try low-priced hot products: Unless there are hundreds of millions of capital to support them, low-priced hot products are the way to go. They will never be able to compete with the big manufacturers that can lose money and make a profit. Differentiation and market segmentation are the way out for small businesses.
- Maintain good supplier relationships: Reliable suppliers can notify you in advance before the price of raw materials increases and help you jump in the queue when you need materials urgently. This is much more useful than the few cents you cut off the price difference.
- Pay attention to hidden compliance costs: Environmental protection inspections, fire protection rectification, and labor arbitration can directly shut down the factory. Don’t take chances and achieve compliance from the beginning.
- Accept high labor mobility: Don’t expect to recruit young workers with stable skills. If you want to retain them, you either have to pay them a salary much higher than the market, or you can become the core technology yourself.
- Don’t blindly chase the trend: From thermos cups to scooters, fascia guns, and camping equipment, the trends in Yongkang come and go quickly. Most of those who chase the trends become cannon fodder. Doing a solid job in familiar fields is better than anything else.
- Pay attention to physical health: The factory has a lot of dust, noise, and chemical pollution. It costs 1,000 yuan a year to get a physical examination for occupational diseases. Your lungs are more valuable than any order.
