At present, the majority of fasteners exported from China are products with relatively low technical content. These items face strong competition and are easily replaced by cheaper alternatives. If we fail to enhance the technological value of our products and reduce production costs, we risk being outcompeted by countries with lower labor expenses in the near future.
In recent years, multinational corporations from the U.S., Japan, South Korea, India, and Germany have been setting up manufacturing facilities in China. Over 100 fastener factories based in Hong Kong have either relocated or established new operations in Shenzhen and Dongguan. Similarly, many Taiwanese fastener companies have concentrated their production in coastal areas such as the Yangtze River Delta, Pearl River Delta, and Jiaozhou Peninsula. Currently, there are over 200 high-value-added, high-precision, and high-strength automotive fastener manufacturers in China, accounting for approximately 25% of the national fastener industry. This development is expected to significantly elevate the overall standards and competitiveness of the sector.
To date, more than 7,000 fastener companies of varying sizes operate in China. According to export data from the first half of this year, foreign-invested enterprises dominate the market, with foreign-owned firms and joint ventures contributing roughly 30% of total export value. Although China’s fastener exports are growing rapidly, it is important to note that a significant portion of these exports comes from production bases located in mainland China operated by foreign partners. This situation introduces uncertainty into the future of Chinese fastener exports. On one hand, most of the profits from these exports go to multinational corporations. On the other hand, China continues to gain market share globally. However, foreign countries may impose anti-dumping measures at any time, potentially restricting Chinese fastener exports.
Currently, the majority of fasteners exported from China are of low technical value. These products are highly substitutable. Without increasing product innovation and reducing costs, China risks being replaced by countries with even lower production costs.
Multinational companies occupy the high end of the fastener industry chain, while local companies remain at the low end, allowing foreign firms to reap large profits while Chinese producers make only small margins. This is a reality that has persisted for some time. Previously, China was on the periphery of the global industrial chain. Now, we have entered the world's fastest-growing fastener production network. Even though we are currently operating mainly in the low-end and mid-end segments, this represents a significant historical advancement. Some other developing nations have struggled, becoming like black holes that absorb foreign investment that should have gone to them. We should not overlook the progress we have made. Chinese fastener companies must not stop at just entering the low-end of the global supply chain. They should aim to move up to mid-range and high-end products. Therefore, China’s fastener exports must follow the direction of local production. This means we can take advantage of market adjustments, improve product quality, strengthen R&D, and gradually move into sectors like automotive and steel construction. In doing so, we can reduce the influence and control of foreign enterprises, building a more independent industry and forging our own path. Indeed, a group of Chinese companies have already begun this new phase of growth.
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