Academic Research学术研究连载

走进中国工业品牌管理与竞争的新常态

Entering into the “IB and HB branding management Era”

                               by Dr. Yang XiaoTong

 Edited by Eric and authorized for release

OVERVIEW

In this part, we will go further to take the coal-mining sector in china as a typical example to explain how the landscape of business competitions across our domestic  equipment-manufacturing industry as a whole has been transformed massively and profoundly since the growing involvements over the most recent decades by many of the overseas manufacturers or suppliers of some critical component products.              

Traditionally, coal mining industry had been a strategically important part of our national economy, as a result of which upstream industries concerning equipment manufacturing was playing a vital role in the whole manufacturing sector nationwide. In China, coal is the most abundant mineral resource making us the third largest country in terms of coal reserves with the aggregate output ranking first worldwide. Domestically, coal accounts for over 70 percent of our daily production and consumption of all sorts of non-renewable resources. In terms of producing it, selection of suitable coal-mining equipment is of incredibly significant meanings to bring down the cost of production and more importantly to reduce the likelihood of accident to happen. In the mean time, both the output and the rate of recovery will be increased as well. As an estimate published from a second national survey of coal fields shows, in contrast to other coal-producing nations around the world, coal seam in China is relatively deeper with many coal fields being of quite low or medium thickness. Meanwhile, extremely thick coal seam is very rare to find out. From technical point of view, the thickness of coal seam dictates coal-mining techniques and coal-mining equipment. The thicker a particular coal seam is, the harder coal-mining operation is to carry out, and equally the higher standards we will need to have for those coal-mining techniques and equipment to comply with. Over quite a long period of time, therefore, we had witnessed a fast-growing market demand here in China for those advanced coal-mining machines which are highly productive and efficient. In that case, almost all of the overseas manufacturers of coal-mining machinery along with those associated ingredient suppliers had been drawn into our domestic market, making competition in this sector much stiffer than before. With more new market entrants emerging, those foreign suppliers of high-end ingredient products won a massive base of customers’ trust.

In a broader sense, coal-mining machinery include a variety of different equipment that cover the entire process of coal mining from start to finish, inclusive of exploration, excavation, hoisting, washing, as well as safety management. Besides, other similar equipment used for surface mining are also falling into this category. In a narrow sense, however, coal-mining machinery refer only to the complete excavating equipment, which comprises of heading machine, mining machine, armored face conveyor and hydraulic support.

As proposed by the official 12^th five-year plan for domestic coal-mining industry, a target had been set that by 2015, our national coal-producing capacity will be raised to totally 4.1 billion tones per year with ten (10) half billion ton classed coal producers and another ten (10) billion ton classed giant coal producers, which combined will be accounting for over 60% of the aggregate output nationwide. In the mean time, degree of mechanization among all coal-mining enterprises will be also increased to over 75% on average, with 95% to large ones, 70% to medium ones and 55% to small ones.

In the past, domestically made coal-mining machines were popular because of their relatively low price, improved quality, raised standard of manufacturing and easily available after-sales services. According to the official figures released by China Coal Mining Machinery Association in July 2009, imported coal-mining machines accounted for merely 3% of all coal-mining machines that were used for domestic coal production, which indicates home enterprises are able to manufacture mining machines as well to replace in scale what were imported. However, they are still reliant on import of some critical components, which are often characterized with apparent technical edge. As a result of that, market competition among various host brand manufacturers is directed to the contention among those manufacturers of key ingredient products under independent ingredient brand names. In this case, host brand owners get increasingly reliant on those foreign suppliers of key ingredient products to satisfy customers’ demand to the most. Eventually, to increase customer satisfaction and customer loyalty, host brands are considerably weakened to lose their dominance in the market as customer demand has shifted its focus to ingredient brand (Kotler and Pfoertsch, 2010). We call it excessively homogeneous competitions among host brands. In the mean time, Fiesco-Effect arises.

Thank you awaiting our next release…..