China-Japan vs. Mould Industry's Whole Industry Chain Competition

China's rapid growth is the world's third mold manufacturing country, but some weaknesses in the overall industry chain may lead to China's molds being locked in the low end of the industry.

After 20 years of catching up, China's mold industry is at a critical point, and the mold-to-customer relationship model will play a decisive influence. Japanese mold companies are continually eroding the market share of Chinese mold companies through joint ventures with mold users.

At the end of 2005, a documentary called "China-Japan Duel - Attack and Defense of Manufacturing Craftsman" caused strong repercussions in Japan. The film described the impact of the Japanese mold industry in the rise of "Made in China". And measures taken by Japanese mold practitioners. The film's feedback in the Japanese mold industry said that Japanese counterparts compared the precision connectors and semiconductor manufacturing technologies of the two countries, and generally believe that Japan's level has lagged behind its Chinese counterparts.

A senior industry critic pointed out that the mold industry is the foundation of the manufacturing industry. The attitude of China and Japan towards the mold industry determines the future of the manufacturing industry in both countries. In this case, how will this contest of manufacturing fundamentals develop? What impact will the future of "Made in China" have?

Chinese mold catches up with Japan
Ota, Tokyo, Japan in 2005 is one of the important gathering places for small and medium-sized mold companies in Japan. Now, large-scale factories in Ota have moved to China to take advantage of the much cheaper local labor. By 2007, the signs of hollowing out of the industry began to show that more than one-third of the companies in the region were affected by cheap Chinese labor and had to choose to stop production or simply close down. Many closed factories are now the site of real estate development.

The decline of these Japanese mold industries is precisely due to the fact that Japanese mold consumer companies have turned to China to buy low-cost Chinese molds. According to statistics, since the peak of 187 billion yen in 1998, the sales of the Japanese mold industry has continued to decline. By 2006, this figure was only 410 billion yen, which was more than 1/5 in 1998. In addition, compared with the peak period, the number of Japanese mold makers decreased by 8.5% in 2006, the number of employees decreased by about 30%, and the decline in output value reached 11%. The dilemma of mold companies in Ota, Tokyo is a vivid portrayal of the current status of the Japanese mold industry.

In stark contrast to Japan, the Chinese mold industry has experienced unprecedented rapid growth since 20 years ago. Among them, between 1996 and 2002, the output value of China's mold manufacturing industry grew by an average of 14% annually. In 2003, this figure reached an astonishing 25%. Up to now, according to the output value, China's mold sales in 2006 was 72 billion yuan, which has become the world's third largest mold manufacturing country, second only to the United States and Japan. In the eastern coastal areas, especially in Jiangsu and Zhejiang, intensive mold companies have formed numerous enterprise clusters. Most of these companies have imported high-end mold-making machine tools, spacious workshops and hard-working employees. Compared with Japanese counterparts, China's mold factory is not worried about not getting orders, but is afraid of too many orders.

Although the absolute output value of the mold industry is not large, the mold industry has the ability to determine the overall level of manufacturing due to its special position in the product manufacturing system. Molds are the indispensable technological equipment of modern industry, especially automobiles, aviation, electronics, electrical appliances, instruments, instruments, weapons, daily necessities, etc. These industrial sectors produce 60% of the products - 90% of the parts are relied on Molded. Mold technology directly restricts the development of manufacturing, product upgrading and competitiveness.

According to statistics, the proportion of molds driving its related industries is about 1:100, that is, the development of molds is 100 million yuan, which can drive 10 billion yuan of related industries. According to this ratio, the output value of related industries driven by China's molds in 2006 was as high as 7 trillion yuan. Such a large driving capacity has given the mold industry a modern industrial cornerstone.

In the United States, the mold industry is considered to be "the cornerstone of American industry"; in Japan, the mold industry is highly regarded as a "high power" to enter the affluent society. If you want to understand the manufacturing level and development potential of a country, it is a good choice to study the mold manufacturing level.

For a country like Japan, where natural resources are scarce, human creativity is the only resource. Only by relying on people to constantly create new products can Japan survive and develop in this era of globalization. In this sense, it is appropriate to refer to manufacturing as the foundation of Japan. It is precisely because of this that the prosperity of China's mold industry will stimulate the nerves of the Japanese industry. If China, rich in resources, masters the essence of manufacturing and can continue to sublimate it, then the foundation of Japan’s survival will be shaken.

Made in Japan with a big heartache?

In response to the threat from China, Japanese mold companies racked their brains. Due to its technical advantages, it has become a common consensus to give full play to the high, precise and sophisticated technical characteristics of Japanese mold companies.

Professor Hashimoto of the Japan Policy Research Institute believes that in general, Chinese molds are “1/3 cost, 1/2 quality” compared to Japanese molds. That is to say, according to the quality requirements, some users will be satisfied with "1/3 cost, 1/2 quality", and the other part will not. This is the basis for the Japanese mold industry to be confident in the face of competition from Chinese counterparts.

In the competition with Chinese mold companies, Japanese companies spare no effort to enhance their competitive edge in the high-end mold field. First, strictly control the links that may lead to the outflow of intellectual property rights, such as personally maintaining products around the world, and avoiding the risk of technical leakage that may result from handing over drawings to users. Secondly, it shifts to areas with cheap labor such as China and Southeast Asia, and enhances the cost competitiveness of Japanese molds by using local labor. Finally, and most importantly, it is to enhance the inherent competitive advantages of Japanese mold companies in the high-end mold market.

Due to the high frequency of modern product replacement, the mold design and processing technology are highly demanded. The competition focus of the mold industry has gradually shifted to the fields of mold design, process innovation and standardization. The Japanese mold companies have accumulated rich experience and High-quality human resources have strengthened their competitive advantage in these areas.

In 2006, Chinese companies spent $2 billion on imported molds, and auto parts, electronic processing fixtures and other molds were completely dependent on imports. In addition, many Japanese mold users have completely handed over high-end molds to Japan.

Taking advantage of the fact that the overall technical level of China's mold industry is still at a low level, Japanese mold companies are launching tit-for-tat competition.

However, the competition between Chinese and Japanese mold companies is not limited to the industry, and the competition in the entire industry chain is in full swing.
Whole industry chain competition
At the end of 2005, at the Product Manufacturing Partner Forum held in Japan, Japanese mold makers who participated in the conference generally believed that perhaps foreign mold companies could learn Japanese mold making technology, but they could not imitate Japanese product manufacturers, forming and mold manufacturers, and material manufacturers. A product manufacturing system that is closely developed jointly. In their view, this "product manufacturing culture" is a unique competitiveness of Japanese manufacturing. Looking closely at the three links in the middle and lower reaches of the mold industry chain in the Chinese market, it is not difficult to find that the above statement is quite convincing.

In the field of mold steel in the upstream part of mold manufacturing, Japanese companies such as “Datong Special Steel” and “Hitachi Metal” occupy a near monopoly position. Many Chinese mold companies use the two major Japanese brands on their external publicity materials. Special steel. In order to meet the needs of the strong development of the Chinese mold market, Datong and Hitachi have established many “divisions” in China. With the accelerated growth of the mold industry, China's demand for die steel has also grown rapidly. In recent years, only 10,000 mold manufacturing enterprises in East China have consumed more than 500,000 tons of mold steel per year, and the demand is still growing. In contrast, China's domestic mold steel is difficult to meet the rapid development of the mold industry, mold companies have to choose imported steel. Although imported steel is generally four times to five times more expensive than domestic steel, but for the quality of molds, domestic mold companies have no choice.

Similar to mold steel, it also exists in the field of mold copper. In the field of mold materials, these two materials are highly representative. A detailed examination of the membership of the Japan Copper Association, it is not difficult to find that most of the member companies have established subsidiaries in China to produce copper materials locally. Among them, quite a few member companies have close ties with the three largest Japanese consortiums such as Mitsui, Mitsubishi and Sumitomo. In terms of funds, shares, etc., most of these member companies have a certain consortium background. In this way, under the coordination of the consortium, Japanese copper companies will establish close ties with downstream mold companies in terms of business and organization.

The upstream of the mold industry mainly involves two industries, namely materials and mold processing tools. Like in the field of materials, in the field of mold processing tools, the external dependence of Chinese mold companies is also very serious. The level of China's mold production process equipment is low, and the demand for advanced processing tools in recent years is very urgent. The ratio of fixed asset investment to mold output growth in the mold industry averaged 1:1.2 in the whole industry. In 2005, China's mold industry sales increased by 8 billion yuan, which also means that the demand for mold processing equipment reached 10 billion yuan. It is worth mentioning that this demand will continue for a long time. Since Japan is one of the leading producers of mold processing tools, the revitalization of China's mold industry has also brought considerable benefits to these Japanese companies.

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