Hardware industry's road to domestic sales is not smooth

In 2008, the global financial crisis hit many domestic hardware companies that relied heavily on foreign trade. These businesses were forced to reconsider their strategies and gradually shift their focus toward the domestic market, a sector they had previously overlooked. This transition was not easy—some companies did it out of necessity, while others saw it as an opportunity to restructure and build stronger brand presence. The path to domestic sales is complex and full of challenges. The Canton Fair has long been seen as a barometer for China’s foreign trade performance. Historical data suggest that its results often reflect broader export trends. However, during the 105th session, the decline in export value became evident, with a drop of 20.8% compared to the previous year. European and Japanese markets saw even steeper declines, exceeding 35%, while the U.S. and Australia experienced drops of 4.9% and 11.2%, respectively. At the same time, emerging markets also showed signs of instability. While some regions like Argentina, India, and ASEAN saw growth, others such as Russia and Brazil faced sharp declines of 42% and 35%. This trend reflects the broader impact of the financial crisis, which affected both developed and developing economies. As a result, Chinese exports to these markets have become increasingly risky, and companies must remain vigilant. For many foreign trade companies, entering the domestic market means starting from scratch. They lack strong brands, established channels, and marketing expertise. Many are struggling to build a presence in a highly competitive environment where consumers are more demanding and expectations are higher. The transition requires not just selling products, but redefining brand identity, building customer relationships, and creating effective distribution networks. Product innovation is another major hurdle. Most foreign trade companies are accustomed to producing according to client specifications, which limits their ability to develop new, consumer-driven products. Export-oriented designs often do not align with the needs of the Chinese market, which has different preferences, living conditions, and usage patterns. As a result, many products require significant redesign to meet local demand. Brand development is equally challenging. Many foreign trade firms operate under OEM models, relying on foreign brands for visibility and recognition. Without their own branding, they struggle to gain traction in a market where brand loyalty plays a key role. Building a strong brand requires consistent marketing, strategic positioning, and deep understanding of consumer behavior—areas in which many foreign trade companies lack experience. Furthermore, the absence of a dedicated marketing team makes it difficult to establish and manage sales channels. Foreign trade companies often focus solely on production and logistics, neglecting the importance of building relationships with retailers, distributors, and end-users. This lack of expertise becomes a major obstacle when trying to penetrate the vast and diverse Chinese market. Despite these challenges, there are opportunities. The Chinese market offers immense potential, with over 1.3 billion people and growing demand for quality products. Some companies are beginning to recognize this and are investing in brand building and market expansion. The government’s push for domestic consumption also provides a favorable environment for SMEs to grow. However, success depends on more than just capital. Many hardware SMEs face difficulties in using funds effectively, leading to overexpansion and poor resource allocation. Without a clear strategy and creative marketing, even well-funded companies can fail. Marketing creativity is now essential for survival, especially in times of economic uncertainty. In regions like Zhejiang and Guangdong, some companies have adapted by embracing innovative marketing strategies. Others, however, remain stuck in outdated methods and risk being left behind. The future belongs to those who can think creatively, adapt quickly, and build lasting relationships with customers. In the current climate, marketing is no longer just a function—it's a critical driver of growth and sustainability.

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