(News from fireworkstown.com) This year has produced unimagined problems for the China fireworks manufacturing industry. Now another round of shock waves, both inside and outside China, have made the old way of doing business so very difficult. Even perennially optimistic Mr. Ye Jinsheng board chairman of Jinsheng Fireworks Group, admits that the fireworks industry is in a very bad period.
The latest shocks occurred with the warehouse explosion at Guangdong’s port of Sanshui on February 14. Now, this port, the largest for loading fireworks containers in China, has been completely closed for such containers. Then the port of Shanghai, another main channel for fireworks containers, has imposed a series of new restrictions. Nansha, a port which was just inaugurated last year, refused to accept fireworks, and that leaves only Beihai, which has a transportation capacity that is seriously short of meeting our requirements.And if this isn’t enough, developments in QIC, Commodity Inspection, Fire Protection and other government departments have resulted in a further increase in powerful supervision, peaking the difficulties of fireworks transportation.
Of course we have the fireworks businessmen, the fireworks association and various government departments appealing to the transportation channels and working to break the predicament. And just as everyone is reeling from these blows, another, probably worse thing appears: the price of raw materials is rapidly increasing.
Huang Wenhui, general chairman of Flying EagleFireworks Group is very depressed. He told this reporter that the price of raw materials for fireworks has been increasing, with sharp increases in the period February-March. For instance, the price of potassium chlorate has increased to RMB 10,000/ton from 9,600/ton. Copper oxide has increased and corrugated paper is up to RMB 2,600/ton from 1,900/ton. Even the cost of sulfur, which at RMB 1000/ton was a negligible cost figure, has increased to over RMB 5,000/ton. The chairman adds, “The worse thing is that the price of paper was sharply increased as soon as the rumor that 65 fireworks factories would close in Liuyang. Now many dealers are unwilling to sell their paper, even if you pay them in cash.”
This is not the end of the nerve-wracking problems. With the Yuan/Dollar exchange rate hitting new highs beginning in 2005, and the pace of appreciation unceasing, the rapid appreciation of the RMB not only worsens the export situation, but actually lessens the value of payments received.
We must also reckon in the lack of a full labor force, and how the increases in workers’ pay eliminates such a big portion of the factories’ profits. Many of the fireworks businessmen are puzzled as to how they can accept export orders with these increases in raw materials and labor. If they accept the order as things stand now, they will probably lose money, and then there are the questions about transportation for the products they do produce.
Indeed, the fireworks industry is in crisis. As an example, there are nearly a hundred fireworks factories in Liuyang alone that have not started working, and about half the factories are sitting on the fence, unsure to go either way. A direct result is that the government’s revenue goal will be difficult to achieve. And the local governments, especially in Liuyang, are also vexatious.
Zhang Jianzhong, director general of the Liuyang Municipal Administration of Work Safety and Supervision had this to say: “It is really a difficult time for both the internal and overseas fireworks industry but I believe that the future will be better and brighter when the fireworks industry can overcome these obstacles. I am still full of confidence for their development.”
Other government officials also have positive viewpoints. Xu Qiangguo, director general of the Liuyang Fireworks Administration Bureau said, “As a matter of fact, there are only two ways to solve the current problems. First, fireworks factories must do their best to improve the safety of products and ensure that every element is safe. Second, the entire industry must learn to get along and to practice self-discipline, keep competition healthy and not begin a price war.”
The Liuyang municipal government is leaving no stone unturned in finding solutions. The Department of Safety Administration will supervise every element, lower the rate of safety violations, ensure legal production, and work toward decreasing the possibility of a price war. Moreover, they have promised to eliminate some of the small, sporadic and not good businesses.
Of course, relying on government departments to solve all of our problems is unrealistic and the industry must work harder. Li Zhongliang, the principal of Liuyang Wenhuasha Fireworks & Firecrackers Group summed it when he offered this advice: “Solving the transportation problem is the responsibility of government, but improving product quality is the responsibility of the fireworks companies. The urgent thing for us is to improve product quality, guaranteeing that every element is safe. We can’t have any more accidents.”
Other fireworks leaders agree and some stress that strict self-discipline and enhanced administrative oversight are needed. Other industry leaders point out that in order to keep stability in the manufacturing process, it is wrong to blindly change procedures or create “new” products, especially if these result in lowering product quality just to get the customer’s order. Another solution is brand consciousness; He Jirong, general manager of Liuyang Celebration Fireworks Corp. says, “It should be basic for a company to build up an excellent brand which is well known.”
What lies in the future for the China fireworks industry? We must do all these things and then wait and see what happens, hoping for a rapid solution.
(By Victor Wu, fireworkstown.com)
This article is embodied by the magazine "Fireworks Business" of American Fireworks News, please don't download or reprint the content without permission.
The related article:
APA Updates Port Situation - EX Number Problems
http://www.fireworkstown.com/NewsDtls.asp?Id=2783
The latest shocks occurred with the warehouse explosion at Guangdong’s port of Sanshui on February 14. Now, this port, the largest for loading fireworks containers in China, has been completely closed for such containers. Then the port of Shanghai, another main channel for fireworks containers, has imposed a series of new restrictions. Nansha, a port which was just inaugurated last year, refused to accept fireworks, and that leaves only Beihai, which has a transportation capacity that is seriously short of meeting our requirements.And if this isn’t enough, developments in QIC, Commodity Inspection, Fire Protection and other government departments have resulted in a further increase in powerful supervision, peaking the difficulties of fireworks transportation.
Of course we have the fireworks businessmen, the fireworks association and various government departments appealing to the transportation channels and working to break the predicament. And just as everyone is reeling from these blows, another, probably worse thing appears: the price of raw materials is rapidly increasing.
Huang Wenhui, general chairman of Flying EagleFireworks Group is very depressed. He told this reporter that the price of raw materials for fireworks has been increasing, with sharp increases in the period February-March. For instance, the price of potassium chlorate has increased to RMB 10,000/ton from 9,600/ton. Copper oxide has increased and corrugated paper is up to RMB 2,600/ton from 1,900/ton. Even the cost of sulfur, which at RMB 1000/ton was a negligible cost figure, has increased to over RMB 5,000/ton. The chairman adds, “The worse thing is that the price of paper was sharply increased as soon as the rumor that 65 fireworks factories would close in Liuyang. Now many dealers are unwilling to sell their paper, even if you pay them in cash.”
This is not the end of the nerve-wracking problems. With the Yuan/Dollar exchange rate hitting new highs beginning in 2005, and the pace of appreciation unceasing, the rapid appreciation of the RMB not only worsens the export situation, but actually lessens the value of payments received.
We must also reckon in the lack of a full labor force, and how the increases in workers’ pay eliminates such a big portion of the factories’ profits. Many of the fireworks businessmen are puzzled as to how they can accept export orders with these increases in raw materials and labor. If they accept the order as things stand now, they will probably lose money, and then there are the questions about transportation for the products they do produce.
Indeed, the fireworks industry is in crisis. As an example, there are nearly a hundred fireworks factories in Liuyang alone that have not started working, and about half the factories are sitting on the fence, unsure to go either way. A direct result is that the government’s revenue goal will be difficult to achieve. And the local governments, especially in Liuyang, are also vexatious.
Zhang Jianzhong, director general of the Liuyang Municipal Administration of Work Safety and Supervision had this to say: “It is really a difficult time for both the internal and overseas fireworks industry but I believe that the future will be better and brighter when the fireworks industry can overcome these obstacles. I am still full of confidence for their development.”
Other government officials also have positive viewpoints. Xu Qiangguo, director general of the Liuyang Fireworks Administration Bureau said, “As a matter of fact, there are only two ways to solve the current problems. First, fireworks factories must do their best to improve the safety of products and ensure that every element is safe. Second, the entire industry must learn to get along and to practice self-discipline, keep competition healthy and not begin a price war.”
The Liuyang municipal government is leaving no stone unturned in finding solutions. The Department of Safety Administration will supervise every element, lower the rate of safety violations, ensure legal production, and work toward decreasing the possibility of a price war. Moreover, they have promised to eliminate some of the small, sporadic and not good businesses.
Of course, relying on government departments to solve all of our problems is unrealistic and the industry must work harder. Li Zhongliang, the principal of Liuyang Wenhuasha Fireworks & Firecrackers Group summed it when he offered this advice: “Solving the transportation problem is the responsibility of government, but improving product quality is the responsibility of the fireworks companies. The urgent thing for us is to improve product quality, guaranteeing that every element is safe. We can’t have any more accidents.”
Other fireworks leaders agree and some stress that strict self-discipline and enhanced administrative oversight are needed. Other industry leaders point out that in order to keep stability in the manufacturing process, it is wrong to blindly change procedures or create “new” products, especially if these result in lowering product quality just to get the customer’s order. Another solution is brand consciousness; He Jirong, general manager of Liuyang Celebration Fireworks Corp. says, “It should be basic for a company to build up an excellent brand which is well known.”
What lies in the future for the China fireworks industry? We must do all these things and then wait and see what happens, hoping for a rapid solution.
(By Victor Wu, fireworkstown.com)
This article is embodied by the magazine "Fireworks Business" of American Fireworks News, please don't download or reprint the content without permission.
The related article:
APA Updates Port Situation - EX Number Problems
http://www.fireworkstown.com/NewsDtls.asp?Id=2783
