China shipped 661,000 tons of hardware fasteners in the first quarter of 2006, registering an almost 30 percent increase over export volume in the same period last year. Growth projections show outbound shipments will reach 3 million tons by the end of the year, further boosting the country's position as the largest exporter of hardware fasteners in the world.
China ships more than 60 percent of its hardware fastener output overseas. In 2005, this translated to more than 2.4 million tons with a value that exceeded US$2.5 billion.
From January to March this year, export value reached US$649 million, 22 percent higher than shipments in the first quarter of 2005. All signs show that the double-digit growth will continue for the rest of 2006.
The following are some of the key trends we see in China's hardware fasteners industry:
• Prices will rise in coming months as raw material costs continue to soar. Most suppliers, however, will limit adjustments to 10 percent to remain competitive.
• Factory expansion and upgrades are top priorities for many suppliers as they prepare for increased orders from the construction and automotive industries.
• In line with plans to upgrade facilities, a large number of manufacturers will be automating their production lines to reduce costs and improve product quality.
• More suppliers in China will be moving up market by developing high grade or specialty fasteners.
Anchors, screws and bolts, nuts, nails, rivets and washers are the main types of hardware fasteners produced in China. These are also the scope of this report.
Fasteners are available in standard and non-standard designs, the main characteristics of which are described in the Products & Prices section of this report. The section also discusses the major factors determining the pricing and market positioning of hardware fasteners in China.
The Manufacturing section compares small, midsize and large suppliers in terms of production capability, especially when it comes to key processes such as mold making, forming and machining.
The Industry Overview elaborates on the composition of the hardware fasteners industry in China, highlighting the key characteristics and capability of the different types of suppliers.
China has about 7,000 hardware fastener makers. Ninety percent, or 6,300, are small while the remaining10 percent consist of midsize and small suppliers. In terms of ownership, almost all are privately owned, with state-owned enterprises accounting for less than 5 percent of the supplier base.
Zhejiang is the biggest hardware fastener-exporting province in China. A strong network of raw material suppliers, support facilities and trading companies enable the 2,700 makers in the province to ship almost 35 percent of China's fastener exports annually, despite the fact that 80 percent of them do not have direct export rights.
To produce this report, Global Sources surveyed a wide range of suppliers, reflecting closely the composition of the industry. Rather than focus simply on high-profile makers, we selected a representative sample of large, midsize and emerging manufacturers.
Industry Overview
China's exports of hardware fasteners are growing steadily, even as suppliers cope with numerous challenges including fluctuating raw material costs and increasing wages.
In the past couple of years, the country's overseas shipments of hardware fasteners have risen more than 30 percent annually. In 2005,export volume grew 33 percent to exceed 2.4 million tons, generating about US$2.5 billion in revenue, a year on-year increase of almost 39 percent.
Exports are forecast to continue their double-digit growth in the next 12 months.
Figures for the first quarter of 2006 show China exported almost 661,000 tons of hardware fasteners, about 30 percent more than in the same period last year. If this growth trend continues, exports will exceed 3 million tons by the end of the year.
North America is the leading market for China-made hardware fasteners. Exports to the region exceeded 919,000 tons last year, constituting 33 percent of China's total overseas shipments of the product. More than 90 percent of the fasteners went to the US, which imported close to 877,000 tons of the product worth about US$810 million.
The EU is the next major destination, absorbing 29 percent of China's hardware fastener exports. Germany, the UK, the Netherlands, Italy and Spain are the top importers in the region, accounting for 67 percent of shipments sent to the EU.
Asia is another market where China sends a substantial portion of its hardware fastener exports, constituting 16 percent of overseas shipments last year. Japan is the region's leading importer, absorbing about 40 percent of exports, and is second only to the US as the largest single-country importer of hardware fasteners.
Other major importers of China made hardware fasteners in Asia are South Korea and Singapore. Together, these two markets absorb about 19 percent of products exported to the region.
China's advantages
The ability of China makers to offer hardware fasteners at prices at least 20 percent less than companies manufacturing in other countries continues to be the industry's primary competitive advantage.
One of the main factors enabling suppliers to keep prices low is the availability of most raw materials locally. The country is home to many processing plants and factories that can provide iron, steel and other metals at costs that are about 20 percent lower than imported materials.
Low labor costs are another major factor. Wages in China are only about one-third of those in Brazil and Mexico, and less than 10 percent of what workers in the US and the EU are making.
Most suppliers are confident they will be able to retain their price advantage and continue increasing export sales through 2006. It is, however, becoming more difficult for makers to compete solely on price. The rising cost of raw materials is consuming a bigger portion of margins despite the fact that the cost of inputs remains relatively low when compared with those of makers in other countries.
Many makers have also become wary of fluctuations in the cost of certain materials such as steel. These have resulted in losses as they forced manufacturers to offer disproportionately low prices because of the depreciation of the cost of material between the time it was purchased and processed.
Supplier Profile
Beeantah Hardware (Dongguan) Co. Ltd
First established as Beeantah Industrial Co. Ltd in Taiwan in 1975, Beeantah relocated to Dongguan, Guangdong province, in 1995. This Taiwan invested company is a subsidiary of the Beeantah Industrial International Group, which has its head office in Taipei, Taiwan, sales office in Hong Kong and another factory in Malaysia.
The company boasts 30 years of experience in the production of specialized fasteners. Beeantah's factory has a total monthly capacity of 250 million pieces and in 2005, produced 2.34 billion fasteners, averaging 195 million pieces per month.
Beeantah currently exports 20 percent of its output, or 39 million pieces per month, to more than 70countries. All exports are shipped under OEM/ODM contracts, mostly with large international companies.
In March 2006, the company purchased one automatic screws elector machine and two five-die, five-blow screw-heading machines. Beeantah is already ISO 9000-certified and plans to apply for ISO 140001 and 18000 certification by 2009.
Products
Screws are Beeantah's main export product, and the company's selection includes self-tapping styles and models that can be used with wood and plastic.
Specialty screws, bolts, nuts and washers are available as well. These are usually designed for the housings or cases of electronic products such as computers. The company also makes blind rivets for the domestic market.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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