China produces an overwhelming 2 billion mechanical door locks annually, more than half of which are shipped overseas. The country exported close to US$713 million worth of mechanical door locks in the 11 months to November 2004, which is 36 percent higher than shipments in the same time frame in 2003.
Exports are largely OEM-driven, with business from industry giants such as Hampton Products Int'l Corp. (United States), Viro (Italy), Innohaus (Southeast Asia) and Union (United Kingdom), accounting for as much as 80 percent of total outbound shipments. This situation is not about to change in the next five years as makers are benefiting largely from OEM partnerships, gaining the much needed technological advancements that will allow them to automate production processes in the future.
The following are some of the key trends we see in China's mechanical door locks export industry:
• Prices will stabilize in the next 12 months and will remain at 2004 levels as makers find more ways to better manage internal manufacturing systems and raw-material sourcing strategies.
• Double-digit growth in exports will continue throughout 2005 as China suppliers offer a wide array of mechanical door locks covering about 8,000 varieties.
• Mechanical door locks set for release in 2005 will sport improved looks. Streamlined and easy-to-grip levers, knobs and handles will give products a more contemporary feel while new finishings and coatings will further improve products' resistance to rust and corrosion.
• Confident that efforts to keep prices at 2004 levels will pay off in the form of more export orders, most suppliers will be increasing capacity by as much as 50 percent in the next 12 months.
Suppliers in China make a broad selection of mechanical door locks. However, four basic types — bored, mortise, rim and sliding — are the key export products and are therefore the scope of this report.
Bored locks are the main export item, accounting for more than 40 percent of annual total outbound shipments. Mortise locks are the second-largest export product and the fastest growing in the line. Rim locks are third in terms of exports followed by sliding locks. Only a small amount of the latter is exported, primarily because there is little demand for the product.
The Products & Prices section of this report discusses the main features of each type of lock and highlights the factors that determine if the products are for the low-end, midrange or high-end segments of the market.
The major raw materials and their distinct characteristics are discussed in detail in the Materials & Components section.
Although China-made mechanical door locks come in several types, processes to produce them are basically the same. These processes are described in the Manufacturing section of the report where critical QC aspects are also discussed.
The two provinces in China leading exports of mechanical door locks are Guangdong and Zhejiang. Two cities in these provinces, in particular, stand out. Zhongshan in Guangdong is known for midrange to high-end products and 13 of the suppliers in this report are based in the city.
Industry Overview
Exports of mechanical door locks from China are on an upswing despite the fact that the industry is not wholly export-oriented. The country currently produces a staggering 2 billion mechanical door locks annually, about half of which are shipped overseas.
Exports increased to about US$713 million in the 11-month period covering January to November 2004 from US$524 million in the same period in 2003. The 36 percent increase in value is significantly higher than the 20 percent growth rate China's exports of mechanical door locks have registered since 2001.
In terms of volume however, exports registered a lower growth rate of 21 percent, from 213 million kilograms in the period January to November 2003 to 258 million kilograms in the corresponding period in 2004.
The difference in volume and value growth rates indicates an increase in overall export prices as costs of raw materials rose significantly last year. And although price adjustments were on a limited scale, about 10 percent maximum, they proved to be a major area of concern for China suppliers of mechanical door locks.
Pricing will continue to be a challenge for makers this year, but they are optimistic that they can maintain prices at current levels as they become more adept in coping with the effects of rising raw material costs. In fact, makers are so confident that most are predicting 20 to 50 percent growth in export business in the next 12 months. This is in stark contrast to the situation in 2004 when most suppliers were finding it difficult to cope with soaring material costs, and companies were compelled to work on lower profit margins. In some cases, profit margins dropped by as much as 18 percent. Some small makers were even forced to cease production or close down operations altogether.
Suppliers of mechanical door locks in China are better equipped to manage price adjustments as the abundant supply of metals both domestically and abroad gives them more purchasing options. Makers can choose to either source materials from within China or import them, depending on which setup is more cost-efficient.
Imported materials sometimes cost less than those sourced domestically. This situation is particularly true for metal, as strong domestic demand for the material is keeping costs high in China, while metal costs from a few other regions such as South America have in fact decreased.
Suppliers are also finding more alternative materials that they can use, especially for low-end and midrange mechanical door locks. Iron, for example, is typically used to make lock parts but suppliers have started using the material on lock bodies.
Aluminum alloy, another inexpensive material that is easy to mold and ideal for low-cost, mass-produced door locks, is gaining ground despite being less durable than other materials.
Suppliers will also be streamlining internal operations to improve efficiency. Machinery imported from Taiwan, Italy and Switzerland is used on key processes to help cut down on labor cost, speed up production and improve precision. Tighter QC measures include tests specifically targeted at reducing wastage of materials.
The presence of a strong network of door lock parts suppliers in the key manufacturing hubs of Guangdong and Zhejiang has helped makers keep production costs down further.
Supplier Profile
Cixi City Wangtong Industry Co. Ltd
Cixi City Wangtong opened in 1979 as a manufacturer of steel office furniture, filing cabinets, safes, tables and desks, screens, extrusion parts, hardware fittings and plastic bearings. In 1998, the company started producing door locks, which now account for more than 75 percent of total annual sales.
The supplier has already cornered a 40 percent share in the domestic market for locks used in steel office furniture. Exports started in early 2004 and reached a value of US$200,000. Key markets are Southeast Asia and Europe. OEM clients are Ikea for the domestic market and Heracles of Singapore.
Products
Cixi City Wangtong's door locks selection includes sliding, cam, archival, blocking and electronic cipher locks. In 2004, the company produced 800,000 sliding door locks against an annual capacity of 1.6 million pieces, plus 500,000 blocking locks. Including sliding and blocking door locks, the supplier can produce about 30 million door locks yearly. Total output in 2004 is about 20 million pieces.
Unpatented midrange models account for 80 percent of output. Precision processed door locks for the high-end market make up 10 percent. Featuring stainless steel surface treatment, these models are priced at least 15 percent more than midrange door locks.
Mechanical locks range from US$0.22 to US$1.50 while electronic locks are about 14.50. After inflating prices by about 10 percent, Cixi City Wangtong forecasts steady prices in the next six months as material costs stabilize or decrease slightly. The main materials are copper and zinc alloy although stainless steel and aluminum are also used.
As part of its new product research efforts, Cixi City Wangtong set up its own die/mold center, which is equipped with seven wire cutting machines, a milling machine, two grinding machines, two lathes and a puncher.
Although only two members of the staff are solely responsible for designwork, the maker can introduce more than 10 new lock styles every year. Up for release in 2005 are a series of easy-to-grip and install door locks and four series of products with colored open/close indicators.
Manufacturing
Except for electroplating, which Cixi City Wangtong subcontracts to local factories, most production processes are done in-house at the supplier's 25,000sqm, 670-worker factory in Zhejiang.
Workshops are equipped with 80 punching machines, seven casting machines that are used for the manufacture of lock bodies and cores and 40 key-making machines. The machining workshop has 60 drilling machines and 40 lathes. The maker purchased a laser-marking machine from Shenzhen-based Han's Laser Technology Co. Ltd to print codes on its locks.
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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