Many people have noticed such a phenomenon, the retail price of ordinary lighters does not seem to have changed, it has always been 1 yuan. Keeping it like this for decades, can producers make money?The reporter investigated the world's largest lighter production base - Shaodong City, Hunan Province, and found that the answer is that not only can they make money, but they also make the "1 yuan" business bigger and bigger.
How big can this seemingly small business of lighter manufacturing be?Shaodong, a county-level city in the hinterland of central Hunan Province, has now contracted a world-class "ignition business", covering 70% of the world's disposable lighter market. Lighters, a small object in the palm of your fingers, not only light up the way for local people to start a business and get rich, but also open up a world for the development of characteristic industries.
R&D of new products, procurement of raw materials, processing and production, packing and ......In Hunan Dongyi Electric Co., Ltd., all aspects of the production of lighters are running in an orderly manner. Since the beginning of this year, the company's export situation has continued to improve, and orders have been scheduled until April next year. Dongyi Electric, which has a booming business, is a microcosm of the lighter industry exhibition in Shaodong City, Hunan Province. In the list of 2023 national small and medium-sized enterprise characteristic industrial clusters recently announced by the Ministry of Industry and Information Technology, Shaodong Lighter Industry Cluster was successfully selected.
Shaodong lighter industry started in the 90s of the last century, after more than 30 years of development, the number of lighters produced every year is as high as 15 billion, and the retail price of 1 yuan has been maintained for 20 years. In the context of the continuous cost of labor, materials and the increasingly fierce competition in the industry, how did Shao Dong make the low-profit business of lighter manufacturing bigger and stronger?As a labor-intensive industry, how does Shaodong's lighter industry control costs and maintain no price increase for 20 years?
The wandering industry "takes root and grows."
Like many labor-intensive industries, the lighter industry is a "wandering industry" that transfers to the first place at a low cost. It originated in Spain, in Europe and the United States "everywhere", in the sixties and seventies of the last century and transferred to Japan and South Korea and other countries, in the 90s of the last century into China's Guangdong, Zhejiang and other places, the lighter industry with meager profits is constantly looking for a cost depression. In Shaodong City, the environment of less land and more people stimulates the business acumen of Shaodong people. A chance opportunity ignited the flame of Shaodong's development of the lighter industry.
In 1992, Yao Xiangyun and Fu Zaihua smelled a business opportunity while chatting with friends. "This friend came to my house to chat, and suddenly rushed back, saying that he was going to queue up to buy a lighter, and it was out of stock when it was late. Recalling the scene of that year, Fu Zaihua said that it was the phrase "you have to queue up to buy a lighter" that triggered their entrepreneurial passion.
In the 90s of the last century, most of the lighters on the market in Shaodong came from Shunde, Guangdong, Yao Shouyun and Fu Zaihua bought back dozens of lighters from the Shunde factory and repeatedly disassembled and assembled, taught themselves assembly methods, and soon opened the first lighter enterprise in Shaodong - Shunfa Industry We bought back accessories from Guangdong, recruited more than a dozen workers, and taught workers to assemble lighters by hand. Fu Zaihua said that the product was sold out as soon as it was launched. After some fame, the couple began to send ** accessories and teaching. "Shaodong's development model is to first solve the food and clothing of a person or a family, and then, the business makes a family and a village rich, and then gives birth to workshops and factories to form a market. ”
Since then, the lighter industry has spread out in Shaodong, the inland area that is not along the coast or along the river, and there are many lighter factories and family workshops of all sizes. "After more than 30 years of development, lighters in Shaodong have become a large industry with 114 enterprises, an annual output of more than 10 billion, an annual output value of 15 billion yuan, exported to 120 countries and regions, accounting for 70% of the global disposable lighter market share, forming a development pattern of 'the world's lighters look at China, China's lighters look at Hunan, and Hunan lighters in Shaodong'. Li **, deputy secretary of the Shaodong Municipal Party Committee and mayor, said that the lighter industry has taken root in Shaodong, which is inseparable from its cluster-based and export-oriented development model.
Although the lighter is small, the industrial chain is not short. Luo Li, member of the Standing Committee of the Shaodong Municipal Party Committee and Minister of the Propaganda Department, and head of the Shaodong lighter industry chain, said that the process of producing an ordinary plastic lighter integrates more than 20 parts such as fire rings and airbox valves, involving a number of precision processes such as flame control and ignition intensity. There are 8 product lines of lighters, including windbreakers, straight punching machines, grinders, etc. Different types of lighters are superimposed on different links, and the total number of accessories is more than 200 kinds.
Among the 114 lighter enterprises in Shaodong, there are 30 manufacturers, of which 12 are export enterprises, and the remaining 84 are supporting enterprises. More than 200 kinds of spare parts and 14 processing technologies, in addition to plastic particles, can achieve localized matching, and the supporting enterprises are in the area with a radius of 20 kilometers. Luo Li showed reporters a newly compiled Shaodong lighter industry map, 10 towns (streets) to undertake different industrial supporting links in the lighter industry chain, the formation of the international market high-end machine, domestic machine, design and development, packaging and printing and other industrial clusters.
The strength of the local ** chain makes the speed of material transmission and product iteration between factories continue to accelerate, and the cost is continuously reduced while improving efficiency. In order to make the industry bigger and stronger, Shaodong City established the Lighter Industry Association in 2002. "On the one hand, it is necessary to avoid vicious competition between enterprises, and on the other hand, it is necessary to keep warm by holding together. Lv Xinghua, president of the Shaodong Lighter Industry Association, introduced that the association guided enterprises not to engage in first-class wars and avoid vicious competition through measures such as issuing guidance and integrating industry resources. In Shaodong City, the Lighter Industry Association has a new product database, which preserves various styles of lighters. The company's new products need to be sent here for the record during the development and proofing period, and if they are similar products, they will be returned by the association. Lv Xinghua believes that this method not only encourages enterprise innovation, but also effectively prevents industry involution.
The lighter industry association has also set up a special lighter enterprise for the transportation of dangerous goods in Jida Automobile to invest in the purchase of transport vehicles, unified testing, customs declaration, cabinet distribution, and transportation. It not only solves the problem of difficult transportation of lighters as hazardous chemicals, but also promotes the agglomeration, integration and sharing of cluster resources, and promotes the cluster development of lighter industries.
Set your sights on overseas markets.
Since 2000, Shaodong has been engaged in export business, and the lighter industry in Shaodong has achieved better development. At that time, Yao Zhaoyun and Fu Zaihua became the "first batch of people to eat crabs".
If you do domestic sales, you have to wholesale one by one, which is relatively piecemeal. The volume of foreign trade orders is relatively large, and an ordinary container container is 1 million, and as long as it meets the quality standards of customers, there will generally be no returns. Speaking of the original intention of doing export business, Fu Zaihua bluntly said that in order to make the business bigger, the first way to get customers was to participate in the exhibition.
In 2002, we participated in the Canton Fair, and a businessman from Indonesia placed an order for 1 million lighters. But in Shaodong at that time, no one knew how to go through the procedure for the export of lighters. Fu Zaihua said that the inspection and supervision of export lighters need to pass the type test, and there are no local conditions, so the association took them to Tianjin, and after several times of running around to get the lighter export qualification.
At that time, the conditions were not very mature in all aspects, so I could only bite the bullet. Lu Xinghua still remembers that in 2008, he could not speak a foreign language and participated in the 26th Panama International Exposition with more than 2,000 lighters. "At that time, the lighter I brought was snatched up, **as high as $2 a piece, and I also got to know a lot of customers. Lv Xinghua said that more than 10 years have passed, and the Shaodong Lighter Industry Association has established a global direct sales network through continuous "going out".
Among the 12 lighter export enterprises in Shaodong, the largest is Hunan Dongyi Electric Co., Ltd., and the company's output in 2022 will be about 3 billion. In the showcase of Dongyi Electric, the reporter saw hundreds of lighters with different styles and functions. "Customers in different countries have different preferences for lighters. Europeans and Americans have larger palms, and lighters are 5 mm wider than the usual ones, while Koreans like to pack fancy lighters. Bai Jiabao, deputy general manager of Dongyi Electric, has a lot of preferences for customers from all over the world.
Although the sales of medium and high-end products such as ignition guns and cigar lighters are good, the largest proportion of Dongyi Electric's sales is plastic lighters, and ordinary plastic lighters are mainly in Southeast Asia, India, South America and Africa. The sales of Dongyi Electric also represent the general situation of Shaodong's lighter industry.
Today, Shaodong lighter products have been sold in 120 countries and regions. In 2022, Shao Dong exported a total of 35 lighters200 million, accounting for 50 percent of the country's total lighter exports in the same period1%, ranking first in the country. In addition to the help of the association, Shaodong lighters are also inseparable from the support of financial institutions and customs all the way to the world.
After this year's Canton Fair, our orders have increased significantly, and the demand for raw material procurement and other operating funds of enterprises is larger. Bai Jiabao told reporters that after understanding the situation, the Shaoyang branch of the Agricultural Bank of China took the initiative to reduce costs and increase efficiency for enterprises, tailored financing plans for "one household, one policy", and sent the preferential policies of "export credit insurance financing" to the door for the first time, and completed the business processes such as online financing acceptance, review and loan registration within 5 working days, which solved the problem of tight funds for enterprises.
In recent years, the Shaoyang Branch of the Agricultural Bank of China has continued to increase credit investment in lighter enterprises, actively used policies to include most of the Shaodong lighter export enterprises into the "Xianghui Loan" white list, lowered the financing access threshold, expanded the scope of collateral such as intellectual property rights and accounts receivable, and adopted flexible and diverse guarantee methods such as microcredit, credit enhancement, and export credit insurance to cover large, medium and small enterprises of various sizes in the lighter industry chain. At the same time, we will promote the "first-chain" loan model for the core enterprises of the industrial chain and support their upstream first-class business loans. According to statistics, since the beginning of this year, the Shaoyang Branch of the Agricultural Bank of China has issued a total of 10 loans to 73 enterprises in the industrial chain of the lighter industry600 million yuan.
In terms of customs, since 2001, when the export of lighters was included in the legal inspection catalog, Shaoyang Customs has helped the high-quality development of lighter exports by supporting lighter enterprises to make good use of processing policies, optimizing laboratory layouts, optimizing measures to benefit enterprises, and building functional platforms. In order to further facilitate the export of lighters, Shaoyang Customs has built a regional testing laboratory for lighters, and the overall testing time has been reduced by 30%. Shaoyang Customs, market supervision departments and industry associations jointly carried out research on lighter standards at home and abroad, and promoted independent brands to obtain two customs intellectual property records.
On August 23, the Shaodong Customs Service Station was inaugurated, which has guided 1 export lighter enterprise to complete the customs consignee and consignor filing, and guided the lighter company to complete 3128 batches of goods and packaging inspection, 1386 origin visas, and an amount of 743730,000 US dollars, it is expected to reduce the tariffs of importing countries for enterprises by more than 2,600 yuan.
In 2022, the self-owned brand created by Dongyi Electric will be recorded by the customs for intellectual property rights, and the export volume of lighters will increase by 20% over the previous year. "With this filing, it will be easier for customs to detect infringing products, take proactive protective measures, and also form a deterrent effect on enterprises that want to counterfeit designs. Bai Jiabao said.
The pursuit of high added value is non-stop.
In the past 20 years, a bowl of Shaoyang rice noodles has risen from 1 yuan to 10 yuan, but the disposable lighters produced by our Shaodong sold for 1 yuan 20 years ago, and they still sell for 1 yuan today, which I think is an 'industrial miracle'. Lu Xinghua proudly said that the 1 yuan lighter has created a record of 20 years without price increase, and the automatic transformation of the machine instead of manual labor is an important reason.
Walking into the production workshop of Dongyi Electric, the machine roared on the automated production line, and the iron head, spring, and plastic parts were pressed and assembled into batches of finished lighters step by step. As the world's largest lighter manufacturer, Dongyi Electric has more than 3,000 workers, producing eight series and more than 500 varieties of lighters, and nearly 10 million lighters are brought to the market from the automated production line every day.
When I first came to Dongyi Electric in 2014, the company had not yet implemented automation transformationMore than 40,000 workers 'sit in rows', but the daily output of lighters is only 1 million. Bai Jiabao told reporters that at that time, orders for lighters soared, labor costs were also rising, and the traditional production model could no longer meet the demand for orders.
Lighters have meager profits, and every penny of cost must be strictly controlled. In order to remain competitive, it is necessary to introduce automated production and modern management. Chen Shuqi, chairman of Dongyi Electric, has calculated an account: the profit of a lighter is only 2 cents to 4 cents, and if you want to maintain the retail price of lighters at 1 yuan and the profit is not reduced, then the labor cost must be controlled below 7%. At that time, the monthly salary of workers had increased from the initial 1,000 yuan to 4,000 yuan or more, but even so, it was particularly difficult to recruit workers.
Faced with a series of problems such as low production capacity, expensive labor, and difficulty in recruitment, Shaodong lighter enterprises represented by Dongyi Electric took the initiative to embark on the road of automation transformation. Since 2016, Dongyi Electric has invested 20 million yuan in research and development and 20 million yuan in updating automation equipment every year. "In the past four years, Dongyi Electric has automated all production links and processes, reduced labor by 80%, increased production capacity by 9 times, and reduced the labor cost of each lighter from 1 cent to 1 cent and 5 cents. Lighters can not only continue to maintain a retail price of 1 yuan, but also make a profit. Chen Shuqi said that at present, more than 10 leading lighter enterprises in Shaodong have basically completed the automation transformation.
The establishment of Shaodong Intelligent Manufacturing Technology Research Institute has added wings to the automation transformation of Shaodong lighter industry. In order to "empower wisdom" for traditional industries such as lighters, Shaodong City invested 200 million yuan in 2017 to establish Shao Zhi Institute, which specializes in customized industrial upgrading for small and medium-sized enterprises, including hundreds of lighter companies in Shaodong.
So far, the institute has developed more than 30 sets of new equipment and new products, authorized 276 intellectual property rights, including 47 invention patents, and formed more than 50 scientific and technological innovation achievements. Fei Mingfu, vice president of Shao Zhi Institute, introduced that the institute also focuses on the development needs of Shaodong lighter industry, provides platform support in talent introduction, technology research and development, achievement transformation, etc., introduces experts and professors into enterprises, and deeply participates in enterprise product research and development, technology upgrading, process improvement and other links.
Today, Shaodong lighter industry is promoting a new round of automation transformation, the goal is to transition from "automation of a single machine" to "automation of the entire production line", and enterprises have begun to take the first step in digital transformation, they put smart meters on the production line, optimize factory operation through data monitoring, and are expected to save 10% of energy costs for enterprises every year.
Automation and digitalization can help companies reduce costs, but it also means that there are not many profit margins to be tapped. How to achieve sustainable growth?Shaodong's lighter industry has turned its attention to another market with higher added value. "In recent years, the export volume of our lighters has been basically stable, but the export value has increased by about 20% per year, which is the value growth brought about by the optimization of product structure. Lv Xinghua said that although Shaodong occupies 70% of the global disposable lighter market, from the perspective of export product structure, the development potential is still very large.
Now, we are in the product drainage phase. It is hoped that in the future, in the entire product structure, 1 yuan lighter will account for 30%, and continue to expand to high value-added products such as 3 yuan machine, 5 yuan machine, and 10 yuan machine. Lv Xinghua introduced that in order to optimize and upgrade the product structure, in recent years, Shaodong lighter enterprises have focused on new product development and brand upgrading. According to statistics, at present, Shaodong lighter enterprises have 296 design patents, 226 independent brands, 16 famous brands in Hunan Province, 18 provincial famous trademarks, 146 overseas registered trademarks, and 48 overseas certifications.
We are using green, informational, and intelligent means to transform the lighter industry to build intelligent sections, intelligent production lines, intelligent workshops, and intelligent factories to enhance product added value and industrial competitiveness. Zhou Yufan, secretary of the Shaodong Municipal Party Committee, introduced that through the deep integration of advanced technology and traditional manufacturing industry, Shaodong's lighter industry is being built into a 10 billion yuan characteristic advantage industry. For future development, Shao Dong also put forward a new goal: by 2025, the total output value of the lighter industry will be more than 30 billion yuan, and the proportion of domestic sales in the national market will increase to more than 85%.
*:Economy**.