Bathroom industry or change to disappear due to demographic dividend

With the reduction of the labor force, China’s demographic dividend tends to disappear. For labor-intensive industries, this will be a severe challenge. As an important part of the manufacturing industry, the sanitary ware industry is highly dependent on the labor force in the production process and will bear the brunt of it. In addition, given the current situation in the sanitary ware industry, the disappearance of China’s demographic dividend will have a greater impact on the industry, or will change the direction and pattern of future industrial development.

The data recently released by the National Bureau of Statistics shows that in 2012, the working-age population aged 15-59 years in China experienced an absolute decline for the first time in a relatively long period, which was a decrease of 3.45 million from the previous year. Member of the National Standing Committee of the Communist Party of China, member of the Academy of Social Sciences, and director of the Institute of Population and Labor Economics Cai Min indicated that the turning point of the disappearance of China’s demographic dividend has appeared in 2012. Since 2012, China’s working-age population will Gradually decreasing will have a significant impact on economic growth. The report released by the China Development Research Institute also believes that the working-age population will decrease by more than 29 million from 2010 to 2020.

Compared with other industries, sanitary ware industry does not have many advantages in terms of employment environment, salary and benefits, and professional demands. It must compete with other industries for labor resources. The disappearance of the demographic dividend will prompt the bathroom industry to face problems such as “labor shortage” and “recruitment difficulties”, which will also promote competition with other industries. With labor resources still diverting and new generations of workers having higher spiritual pursuits, the bathroom industry caught up in this dilemma will be forced to solve this problem through measures such as improving the employment environment and raising wages and benefits. Strengthening human resources management will be an important task in the development of sanitary ware industry in the first phase.

Secondly, with regard to mechanization and automation, the bathroom industry penetration rate is still very low, and it is still not possible to use large amounts of machinery and equipment to replace manual operations. The degree of dependence on workers remains high, and manual production is still dominant. On the one hand, due to the disappearance of the demographic dividend, powerful and large-scale sanitary ware companies will upgrade production equipment and will greatly promote the sanitary industry's production capacity. On the other hand, due to the high price of machinery and equipment, most small and medium-sized sanitary ware companies cannot afford to invest in equipment, which will widen the gap between them and large companies, and in turn accelerate the process of industrial reshuffling to some extent.

Third, as the demographic dividend tends to disappear, the wages of sanitary enterprises workers will inevitably increase, which in turn will lead to higher production costs, and profits will be diluted. Companies that have their own brand of sanitary wares may be able to offset the impact of cost increases due to the added value of the brands, but sanitary ware foundry companies, subject to their own model restrictions, will be caught in a development dilemma. In the context of low profits, orders or unmanned production, and an increase in unit prices that will lead to reductions in orders, sanitary ware foundry companies may appear to shut off waves and collectively operate their own brands. In the end, whether it is the closure of the tide or the branding boom, it will cause great changes in the industry.

Finally, the demographic dividend tends to disappear because of considerations such as production costs, recruitment difficulties, policies, and the environment. Whether it is a sanitary ware enterprise or a branded sanitary ware company, it will accelerate the transfer of industries. Or move the factory to labor-intensive regions in the country, or build factories directly in countries with low labor costs, such as Thailand and India. Undoubtedly, industrial transfer will change the current pattern of the bathroom industry.

It is worth mentioning that although the demographic dividend tends to disappear until it disappears for a long period of time, the impact on the sanitary ware industry is not drastic, but the sanitary ware companies should not be overly negligence, and care should be taken to avoid becoming a "warm boiled frog". Another example is that it should become passive and take the initiative to actively complete the transformation and upgrading before the demographic dividend disappears and harms the interests of the enterprise.