Recently, the Political Bureau of the Central Committee of the Communist Party of China held a meeting, pointing out that industry self-discipline should be strengthened to prevent "involution" vicious competition. Market economy encourages competition, which is an important driving force to promote technological progress and improve production efficiency. However, when the competition turns into a vicious involution, its negative impact can not be ignored.
Take the cement industry as an example, this year, the cement industry suffered a "cold winter once in 30 years".
From January to June, the road transport industry and public facilities management industry, which are important sub-sectors of infrastructure investment, grew negatively, and the new construction of real estate declined sharply. The overall demand for cement was weak, and the output of cement declined sharply. From January to June of 2024, the national cement output was 85047 million tons, down 10% year-on-year, and the total caliber was down 10.76% year-on-year, and the cement output hit a new low since 2011.
Some cement enterprises face the decline in demand, lack of determination and thinking, blindly implement radical market strategies, and fight a price war. Including the Yangtze River Delta, Pearl River Delta and other domestic hot markets, there have been cement prices below 200 yuan/ton. The result of market chaos is that the overall interests of the industry are damaged. Relevant data show that the industry lost about 1.2 billion yuan in the first half of the year, with sales falling by 11%. Zhao Xinjun, the Standing Committee of the Party Committee of
China Building Materials Co., Ltd., the Secretary and President of the Party Committee of Tianshan Materials Co., Ltd., also pointed out recently that in the face of the challenges of overcapacity and the downturn of the industry, we should unite all forces in the industry and actively respond to the call of the state to "strengthen industry self-discipline and prevent vicious competition of" involution ", and make every effort to maintain the industry ecology. Maintain reasonable profits in the industry.
As we all know, cement is a resource consumption industry, the price should reflect the value of resources, low-price vicious competition is a waste of resources. Reasonable profit margin is necessary, with profits to give employees better welfare, to promote energy conservation, environmental protection and intelligent upgrading, the industry can achieve healthy and sustainable development.
Recently, cement associations in Zhejiang, Shaanxi, Shandong, Guizhou and other provinces have issued initiatives to prevent "involution" vicious competition, improve the level of high-quality development of the industry, jointly help the cement industry return to the correct development track of benign competition, oppose "involution" vicious competition, and promote the development of the industry. It is becoming the consensus of more and more practitioners in the industry.
"Involution" vicious competition is a game without winners, endless involution, simple and crude price war, and ultimately will only distort the market mechanism, damage the interests of consumers, and destroy the overall market environment.
At present, insufficient demand for cement is the general trend of the economic cycle. Faced with the problem of insufficient demand, cement enterprises should maintain their strategic strength, strengthen their confidence in development, jointly build a benign competitive ecology, and further strengthen industry self-discipline.
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