Talking about the cause of the big landslide in the domestic dryer industry this year

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Looking back on the sales trend of China's dryer market in recent years, from the national sales of less than 1,500 units in 2010 to the national sales of 28,000 units in 2017, after 7 years of spurt development, the national annual sales growth has nearly 19 times. In the past seven years, although the market growth has been ups and downs, the growth rate of more than 10% has not changed. On the one hand, it reflects that the domestic grain dryer base is weak, and on the other hand, it reflects that the domestic market driving force and rigid demand are very strong. In 2017, domestic agricultural machinery related media gave a forecast, and the dryer market will continue to grow in 2018.
But after entering this year, the dryer market did not look as good as expected. The dryer industry seems to have suffered from Waterloo overnight. Some domestic companies still did not break through the “zero curse” in April and May. The most frightening thing is that with the continuous increase in sales over the past seven years, almost all dryer companies in the second half of 2017 are blindly stocking. In 2018, in addition to facing tough markets, these companies have to face huge inventory pressures. “Destocking – price war – cost reduction – quality decline – sales difficulties – continuing price wars...” a series of vicious cycles . On July 10th, the Agricultural Machinery Experimental Identification Station of the Ministry of Agriculture and Rural Affairs convened dozens of dryer manufacturers in China to hold a grain dryer quality analysis meeting in Beijing. At the meeting, the entrepreneurs complained about the problem of the dryer market. The sales volume has fallen sharply. In the past years, the amount of receivables was huge, and the business operations were extremely difficult. The industry as a whole entered the cold winter period. As of September 30, according to the statistics of the relevant units of the agricultural machinery industry, the sales volume of many well-known domestic dryer enterprises has dropped by 50%-70% in different degrees compared with the same period of last year.
According to the statistics of the agricultural machinery department of the Ministry of Agriculture and Rural Affairs, the degree of mechanization of grain drying in China is currently less than 30%. The dryer market is far from being saturated, and the demand space is still very large. What is the cause of the dryer industry becoming a market crash in 2018? disaster area? After visiting and investigating, the reasons for the difficulties in operating the dryer business and the large landslide in the dryer industry are summarized as follows:
The perfect subsidy policy will send non-standard enterprises to the non-returning grain dryer. Just after being listed in the national agricultural machinery purchase subsidy catalogue, the agricultural machinery authorities, purchase customers and dryer enterprises are all happy, and also to the dryer industry. Development has brought about a policy of the east. Initially, the agricultural machinery purchase subsidy was directly subsidized to the dryer enterprise. The capital flow of the enterprise was fast, there was no financial pressure; the customers enjoyed the benefits; the agricultural mechanization was improved. However, the good-looking situation is not long. This one-stop subsidy method allows many lawless elements to have the opportunity to drill, use the convenience of subsidies, and maliciously take the state financial subsidies, and the more they become more and more fierce, they are out of control. In 2012, in order to regulate the purchase subsidies for dryers, the former Ministry of Agriculture changed the subsidy method for agricultural machinery purchase subsidies. The state financial subsidies were directly subsidized to users and no longer subsidized to dryer manufacturers. Because there is an early stage of preparation, it has become a habit for users to purchase machines to deduct subsidies. Dryer companies need to pay the full subsidy before they can sell the dryers, and slowly evolve into the rules of the industry. Since the adjustment of the national dryer purchase subsidy policy, because the agricultural machinery purchase subsidy has a lag, and the amount is limited, the annual dryer enterprises must bear the subsidy of about 30% of the total output value as the receivable. This huge amount of receivables, like chronic poisons, has sent a large number of companies to the road of no return. 2018 may be the most obvious year for the "poison" effect.
What are the constraints of corporate development? Chairman Mao said that the fundamental way out for agriculture lies in mechanization. In recent years, the No. 1 Document of the Central Committee has mentioned the mechanization of agriculture and the mechanization of grain drying. It also reflects the importance attached by the state to mechanization of agriculture and mechanization of grain drying. However, when agricultural machinery encounters other major policies, it will often become a "paper tiger", and only a part of the retreat.
The construction of grain drying facilities can be built without “land”, which has become an increasingly prominent problem in the development of agricultural mechanization. A group of dryers (calculated according to 3 sets/set) needs to occupy an area of ​​about 1000 square meters. Although the national drying machinery land has been included in the agricultural facility land, its conversion procedures are too complicated, and there are also scale indicators for land use. The special restrictions have caused the construction of land for grain drying centers to become a major problem. On the one hand, the national policy encourages the promotion of mechanization of grain drying, and on the other hand, it tries to limit the land for drying facilities, resulting in many customers who are interested in purchasing but cannot use it.
As we all know, since ancient times, food has not been considered an "expensive" commodity, and it is not a high value-added commodity in the grain processing and circulation industry. For grain drying, fuel costs have become the primary consideration for users. Before 2015, most of the heat sources used in grain drying machinery in the country were mainly coal. The coal price was cheap, the heat value was high, the purchase was convenient, and the transportation was convenient. However, with the continuous improvement of China's environmental protection requirements, coal containing sulfur and nitrogen-containing gas after combustion is included in the list of banned use. On the one hand, many users have previously purchased equipment that cannot be used according to current environmental requirements. The cost of retrofitting or purchasing new equipment is high, resulting in excessive cost. On the other hand, even with the replacement of new environmentally friendly fuels, the cost of the cost is prohibitive for the majority of users. At present, the chain effect has already been triggered. For example, the “gas shortage” that occurred at the end of 2017, some dryer users also contributed a lot of power. All of this also affects the enthusiasm of users to use and purchase dryers.
In the face of various "later-occupied" national policies, agricultural mechanization appears pale and powerless, and any new policy can make it feel helpless. The policy has been hindered, and the sales and purchase of dryers have naturally been negatively affected. Prospective customers have become wait-and-see customers, and the sales cycle has been greatly extended, greatly increasing the cost and burden of dryer enterprises.
The macro-control of the national grain price is to release the grain purchase price after the double-edged sword country, which led to a sharp drop in grain prices. The grain drying center of the grain-growing household and the food cooperative owner has experienced widespread losses. On the one hand, the loss-making operation of the drying center allows other prospective customers to dispel the idea of ​​buying and staying on the sidelines; on the other hand, the old customers who are preparing to expand are also discouraged and watched. If the food price continues to be sluggish, and the customers who operate the grain-based industry have no profit to make, then the promotion of drying machinery cannot be discussed.
Mixed fish, vicious competition On June 26, 2016, Premier Li Keqiang pointed out during his inspection in Tianjin that Chinese enterprises should carry forward the entrepreneurial spirit of innovation, pursue the spirit of craftsmanship of excellence, and build China's “hundred years of enterprise”. But looking at it, how many of our century-old enterprises are there? The product is not focused, the quality is not respected, the customer is not honest, and the pursuit of immediate interests, this common disease is also common in the dryer industry.
Compared with other large agricultural machinery, grain dryers have lower basic principles and lower production technologies. In the face of the huge potential of the Chinese market and the preferential policies for subsidies for the purchase of agricultural machinery, in early 2012, grain dryer enterprises were everywhere, and large, medium and small-sized production enterprises rushed to each other, plagiarized and dismantled each other. Due to the lack of industry standards, the market entry threshold is too low, the price of customers is not heavy, and the lack of effective supervision by the market and the competent authorities has led to a large number of inferior brands entering the market, and the quality is uneven. Some manufacturers do not have the corresponding technical and equipment production and processing conditions, and the manufacturing process level is low, resulting in short life of the dryer, poor reliability, poor safety, uneven drying and so on. 2012-2017 is the most confusing five-year period in the domestic dryer market. Customers pay attention to prices and companies to pursue profits, but quality is left behind. Vicious competition has led to serious polarization in the dryer industry. Some companies that insist on quality and technological innovation have no sales, and they are at stake. Other unscrupulous companies have no R&D and innovation, blindly copying their peers, and eager to benefit, shoddy, and sold. The dryers had quality problems in a wide range and sent themselves to the guillotine. The dryer industry started late, and the majority of users lacked the ability to distinguish between the quality of the dryer and the above chaos. Good enterprises are not encouraged and supported. Poor enterprises can't get supervision and rectification when they fish in troubled waters. The whole industry of the dryers is chaotic and difficult.
"Low-price winning bid" buried time bomb for "food post-production integration" In October 2017, the National Grain and Material Reserve Bureau issued the "Food Post-Service Service Center Service Point (Trial)", stating that the construction of the post-harvest service center aims to fully mobilize and Protect farmers' enthusiasm for growing grain and solve a series of problems such as farmers' grain collection, grain storage, grain sales, cleaning and drying under market-based acquisition conditions. Its function is to provide farmers with five generations of paid services of “cleaning, generation drying, generation of storage, generation processing, and sales generation”, developing “food banks”, promoting grain allocation, reducing food losses, and enhancing farmers’ bargaining power. Protecting food security.
To this end, the National Grain and Material Reserve Bureau of the United Nations Department of Finance allocated 30 billion yuan to support the construction of food post-production service centers, for food processing and distribution enterprises that meet the project conditions of food post-production integration, the state financial subsidies 60% (central finance) 30% subsidy, 30% of county and county support) Support the construction of modern grain drying center. The big policy of the country is good, but what does it look like when it comes to the grassroots?
Through a six-month visit and research, the author found that 60%-70% of the counties in the country use low-cost bidding to purchase drying center equipment. An average cost price requires 1 million grain drying production lines, and the final price is only 600,000 yuan; an average cost price requires 3 million grain drying production lines, and the final price is only 2.1 million. These successful bidders are small companies that are not well-known. They win the bid at a price several times lower than the market price. How can they guarantee the quality of the products? At the beginning of 2018, there were already many cases in which the drying machinery of the grain post-production service center could not be used nationwide. The food post-production service center supported by the national flower money has become a flower shelf. This phenomenon will certainly become more common in 2019. The country has launched such a good and powerful policy of benefiting the people, but it has buried countless time bombs across the country. The harm caused by the low price of winning the bid is constantly being reported by the major media, but the incident is still going on. In 2017, the country began to promote the implementation of the "food post-production integration" project, the phenomenon of low-cost bidding, the quality can not enter, a lot of defective products, which further promoted the dryer industry to the direction of morbid malformation.
The economic downturn, the grain processing and grain circulation enterprises will not go through the true and false of the economic crisis "every 8" curse, but in 2018 most industries are not good, but it is a fact, in such a big environment, the grain processing and circulation industry Also affected. The circulation of food requires a lot of money. When the funds are tight, users choose to develop conservatively, and the willingness to purchase naturally declines. The decline in user purchasing power is also one of the important reasons for the difficulty of dryer companies.
In view of the above-mentioned abnormal phenomena, it is hoped that the government and enterprises will work together to find more reasonable methods and countermeasures. While regulating the dryer industry, it will not affect the development of agricultural mechanization.

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