Abstract: China is a big manufacturer of home hardware products, China's home hardware enterprise products are exported to foreign countries or for foreign capital as OEM, OEM, so it is also a big export of home hardware products. In recent years, the export value of China's home hardware products has been growing, and by 2022, the export value of China's home hardware products will reach 14.494 billion US dollars. In 2023, the export value of China's home hardware products will be 13.199 billion US dollars, a decrease from the previous year. China's home hardware market is currently in the early stage of brand centralized development, most of the home hardware enterprises are small, the market as a whole is relatively scattered, and the industry concentration is relatively low. In the future, China's home hardware industry will develop towards the digitalization of the production process, the high-end of home hardware products, and the trend of intelligent products.

1. Definitions and Classification

Hardware is an important metal device used in daily life and industrial production, and the hardware manufacturing industry is one of the important parts of China's light industry. Home hardware refers to all kinds of hardware products widely used in kitchens, bathrooms, bedrooms and other home scenes, and is an important part of modern household products, with durable, rust-proof, moisture-proof and other characteristics, which can be divided into storage hardware, basic hardware, kitchen and bathroom hardware, etc., as follows:

Second, the business model

1. Procurement mode

The supply chain department of a large furniture and hardware enterprise also has a purchasing department. The supply chain department of the group is responsible for formulating the rules and regulations on the material procurement process, supplier management, price review, etc., and the procurement department implements the daily specific procurement work according to the unified system documents of the group and the procurement characteristics of their respective business divisions.

Raw material procurement. The procurement of raw materials is mainly iron profiles, aluminum profiles and stainless steel and other basic materials for further processing and production, enterprises to implement on-demand procurement, and establish an appropriate safety stock procurement model, the procurement process is mainly divided into procurement needs, evaluation of procurement needs, purchase price determination, ordering, incoming quality inspection, inspection of the warehouse and other links

OEM & Finished Product Procurement. The products purchased by OEM and finished products are mainly products manufactured by the manufacturer in accordance with the design and production standards provided by the enterprise or confirmed by the enterprise, as well as the finished products purchased from the brand by the enterprise as an agent, including hinges, guide rails, stretch discs, faucets, bathroom products, etc.

2. Production mode

The product production mode of home hardware enterprises is mainly divided into three modes: independent production, OEM production and outsourcing processing, of which independent production is the mainstay. According to the market sales forecast, orders in hand and inventory, etc., the company formulates a fine production plan based on the workshop capacity, product structure ratio, process flow, material supply, etc., and assigns the production task list to each production line and related employees, and the production workshop receives raw materials and uses its own production site and production equipment to organize production personnel. In the process of production implementation, the company implements total quality management, through the qualification evaluation of raw and auxiliary material suppliers, on-site random sampling, raw and auxiliary materials arrival inspection, product inspection of each section of the production process, key step sealing, and key link full inspection to ensure the product quality of the whole production process.

OEM production mode. Home hardware enterprises in order to consider factors such as product strategic layout, production economy and making up for insufficient production capacity, entrust high-quality foundries to carry out OEM production in accordance with the agreed product types, specifications and models, materials, etc. In order to ensure product quality, the company will fully understand the qualifications and market evaluation of the foundry and conduct strict screening to ensure that the entrusted foundry is from the qualified supplier system, and strictly control the raw materials, product quality, production process and delivery time of the OEM products.

Consignment processing. Some products of home hardware in the production process will involve electroplating, electrolysis, spraying and other processes, out of environmental protection and cost-effective factors and other factors, home hardware enterprises will entrust the above processing processes to the outsourcing processing manufacturers with relevant professional qualifications to complete.

3. Sales model

The sales model of home hardware enterprises is mainly based on the combination of distribution and direct sales, online and offline complementary ways to carry out the sales of independent brand products and OEM products at home and abroad, and the specific sales model includes domestic offline distribution, domestic offline direct sales, e-commerce model, cloud business model, export direct sales, export distribution and export trade.

3. Industry policy

1. Competent departments and regulatory systems

The National Development and Reform Commission is the macroeconomic regulation and control department of the national economy, responsible for formulating and organizing the implementation of national economic development strategies and plans, guiding the overall economic reform, carrying out total balance, formulating and organizing the implementation of industry policies.

The Ministry of Industry and Information Technology is responsible for formulating the development strategy of the home hardware industry, putting forward development ideas and policy construction, and proposing and organizing the implementation of industry planning, key special planning, industrial policies, industry planning conditions, technical specifications and standards. The home hardware industry is mainly supervised by the Consumer Goods Industry Department under the Ministry of Industry and Information Technology, and the Consumer Goods Industry Department is responsible for the management of light industry, textile, food, medicine, home appliances and other industries.

The quality and technical supervision department of the home hardware industry is the Department of Product Quality and Safety Supervision and Management of the State Administration for Market Regulation. Responsible for the comprehensive supervision and management of the home hardware market, drafting the draft laws and regulations related to the supervision and management of the home hardware market, formulating relevant rules, policies and standards, organizing the implementation of the strategy of strengthening the country with quality and the strategy of standardization, formulating and organizing the implementation of relevant plans, standardizing and maintaining the order of the home hardware market, and creating an honest and trustworthy market environment of fair competition.

The self-regulatory organization of the home hardware industry is mainly for the China Hardware Products Association, the China Hardware Products Association is based on the development of the home hardware industry, and actively implements the national industrial policy, puts forward the planning and policies for the development of the home hardware industry, assists in the formulation of home hardware industry standards, and actively promotes the innovation, technological progress, product and industrial upgrading of the home hardware industry, and cooperates with relevant departments to carry out the quality certification and quality supervision of home hardware industry products, and carries out brand review and brand promotion work.

2. Relevant policies

In recent years, China has introduced a series of policies to promote the innovation and development of the home hardware industry, and the implementation of relevant policies has laid a good policy environment for the development of the home hardware industry, which is conducive to industry integration and standardization, and promotes the overall healthy and rapid development of the home hardware industry. For example, in March 2022, the China Hardware Products Association issued the "Guiding Opinions on the Development of the Hardware Products Industry in the 14th Five-Year Plan", which proposes that the hardware products industry during the "14th Five-Year Plan" period should adhere to the concept of innovation and high-quality development, implement strong foundation projects to make up for shortcomings, and strive to promote the development from a hardware manufacturing country to a hardware manufacturing power. In July 2023, the Ministry of Industry and Information Technology and other three ministries and commissions issued the "Work Plan for the Steady Growth of Light Industry (2023-2024)", which proposes to implement the action plan for the high-quality development of the home furnishing industry, carry out the development of smart home interconnection, strengthen standard guidance and platform construction, and promote the integrated development of household appliances, furniture, hardware products, lighting appliances and other industries. The policy is favorable to the market and will promote the sustainable and stable development of the home hardware industry.

Fourth, industry barriers

1. R&D and design barriers

With the continuous development of the economy, consumers' demand for household products in terms of function and appearance is also increasing, and higher requirements are put forward for the function and design of hardware products. At the same time, with the development of the home hardware industry, the home hardware industry has gradually transformed from the original basic hardware OEM model to a systematic home hardware overall solution provider. Therefore, the perfect design and development system and the ability to keep pace with the times are an important guarantee for home hardware enterprises to provide better home hardware functional solutions and a richer range of product choices, which is an important competitiveness of enterprises in the hardware industry. The design and development capabilities of enterprises require a long period of precipitation and accumulation, as well as a large amount of research and development capital investment, and it is usually difficult for new entrants in the industry to achieve rapid improvement in design and development capabilities in the short term, therefore, one of the barriers to entry in the home hardware industry.

2. Brand barriers

Consumers put forward higher requirements for price, appearance, function and service, and the popularity and reputation of the brand condense the appearance design, product quality, user reputation, supporting services and other information, well-known brands have gradually become a symbol of high quality, high grade and quality service. The formation of brand awareness and reputation is a long-term accumulation process, and enterprises can gradually establish a higher brand awareness and reputation in the hearts of consumers through years of continuous and good management. Building a professional hardware brand is an important means to improve the influence of enterprises, enhance their competitiveness and gain a larger market share. With the development of the hardware industry becoming more and more mature and the consumption upgrading needs of end customers, domestic home hardware enterprises have realized the importance of branding, and gradually formed a domestic home hardware brand represented by Dongtai Hardware, Higold Group, Tute Shares, Xinghui Shares and Dinggu Jichuang. It is usually difficult for new entrants in the industry to establish a brand advantage in a short period of time, so brand awareness has become one of the barriers in the home hardware industry.

3. Sales channel barriers

The coverage and sinking degree of sales channels of home hardware enterprises directly affect the sales scale of products, sales channels are an important means to open up the market, achieve sales and business goals, and the common sales model of the home hardware industry includes direct sales, distribution and e-commerce models. Among them, the direct sales model directly faces home furnishing manufacturers, home hardware brands, etc., and the above-mentioned enterprises have strict requirements for product quality, quality stability and brand, and often have a stable supplier cooperation list. In recent years, with the increase in the concentration of the home hardware industry, the procurement of large home furnishing enterprises is mainly concentrated in the head home hardware enterprises, and it is difficult for new entrants to enter the supplier system of the above-mentioned home furnishing enterprises in a short time.