Hubei Yuli: Make Breakthrough out of Difficulty in "Post-processing Trade"

"Brand innovation is the fundamental thing. Perhaps it is not easy to do this, but we at least can devoted to produce high-quality products."

Interviewee: Li Shanyu
Title: Board of director
Comapny: Hubei Yuli Abrasive Belts Group Co., Ltd.
Site on iAbrasive: http://www.iabrasive.com/shop/?sid=689

Since China adjusted "export tax rebate policy" two months ago, processing trade has gone through a significant adjustment. A new set of processing trade product catalogue restriction was published. Up till now, China processing trade has suffered heavy strike. Insiders claim that China has entered "Post-processing Trade" era. Consequent international trade pattern, construction pattern and company developing pattern have witnessed great change.

There exists challenge as well as opportunity for China processing trade. Learning from experienced companies is an effective way to do reasonable planning for one's own company. Therefore, iAbrasive recently had an interview with Li Shanyu, board of director of Hubei Yuli Abrasive Belts Group Co., Ltd.

Company Developing Pattern

According to Li, compared to the situation last year, foreign trade has shrinked in 2014. The reasons are manifold. Since the opening and reform, China economy has developed for 30 years. At present, global economy slow down is bound to influence China.

"Companies doing foreign trade are extremely sensitive to RMB exchange rate. Integration of world economy calls for each country to connect with the world. Export rebate rate decline and PPI increase have made it extremely difficult for export sales." Li continued.

Li holds that there is great potential in China foreign trade market. In the first half year of 2014, Yuli has witnessed an 19.5% increase in export sales. "As long as industrial demand goes on, we shall not be pessimistic about foreign trade prospect." Li said.

Strategy Implementation Goal

iAbrasive has learned that Yuli sanding belts have been targeting at Europe and America, and begin to develop new markets in fast-growing Southeast Asia and Africa. The company also attended several exhibitions, but the results were not pleasant. Li put great emphasis on Southeast Asia market, such as Malaysia that is rich in wood. Wood processing industry is developing rapidly, which needs plenty of coated abrasives. So it is a key market that deserves attention.

Product Structure Adjustment

Li analyzed that at present raw materials price remained high, the only thing to do is improve production efficiency, save energy and reduce costs. Although the industry is labor-intensive, compared to developing countries like India and Bangladesh, China's advantage in labor force is outshone. The basic method to make a difference is to increase product added value. "Take Mercedes Benz for example, its revenue does not come from raw materials, but from brand awareness, product quality and technological content."

Li concluded, "Brand innovation is the fundamental thing. Perhaps it is not easy to do this, but we at least can devoted to produce high-quality products. Trade barriers and dumping have been common in international trade. We have to face the situation and improve competitive force. In addition, environmental protection is on schedule."

"Processing trade reform" was put forward the 3rd Plenary Session of 15th Party. At that time many people thought it as a general concept; with China joining WTO, China shall abide by the rule to protect the environment. To adjust industry structure is the very thing for China processing trade industry.