The key to solving the pains of China fireworks industry

- May 21, 2018-

Fireworks and firecracker production began in the 1990s. After more than 20 years of development, it has grown from home-fabricated workshop production to present factory, mechanization and standardization. Fireworks and firecrackers have a very high quality in terms of product quality, process flow, and management level. Great progress has been made, but the major issues that have constrained the sustainable development of the industry, such as “small, chaotic, and bad”, have not been fundamentally changed. We will do some analysis and reflection below.

Main problems in the industry

1.small

According to the statistics of the State Administration of Work Safety in 2016 and 2017, the fireworks and firecrackers in the country have a market size of about 70 billion yuan. By the end of 2017, there were more than 2,220 manufacturing enterprises in the country and more than 3,700 wholesale enterprises. The production companies did not have an annual output value. With more than 2 billion yuan, no wholesale company has annual sales of more than 500 million yuan. From the data, we can see that compared with the big industry, our industry is too small, and ours is too small compared to ours.

2. chaos

Illegal production and business operations continue to be banned. Counterfeit and shoddy products flood the market, and bad money drives good money. It is mainly manifested in the fact that production enterprises are exceeding the standard of overproduction, sublease and subcontract production lines, operating companies renting warehouses, transferring operating rights, illegal transportation, and illegal storage.

3. Poor

Poor social image. As people’s demands for the environment and quality of life have increased, the government and media have made a lot of negative publicity. Nowadays, more and more people think that setting off fireworks and firecrackers is not only environmentally friendly but also prone to accidents. It also causes property damage and personal injury. The call for restrictions on the ban on the country is getting louder and louder, and the government's ban has been increasing.

The main cause of the problem

(I) Constraints of administrative regulations

Article 20 of the “Fireworks and Firecrackers Safety Management Regulations” stipulates: “An enterprise engaging in the wholesale of fireworks and fireworks shall purchase fireworks and firecrackers from the enterprises that produce fireworks and firecrackers, and provide fireworks and firecrackers to the retailers engaged in fireworks and firecrackers, and engage in the operation of retailing fireworks and firecrackers. Anyone who purchases fireworks and firecrackers should purchase fireworks." The meaning of this sentence is understood from the point of view of a production company. Fireworks and firecrackers of production companies can only be sold to wholesale companies, and they cannot directly sell to retail operators or consumers.

Article 4 of the “Implementation Measures for Fireworks and Firecrackers Business Permits” stipulates: “The layout of fireworks and firecrackers shall be examined and approved in accordance with the principle of ensuring safety, unified planning, reasonable layout, total control, and moderate competition”. According to this provision, many provinces can have one or two points in a county. The reality is that a company in a county uses this county as its own operating site. There are two companies in each county that have several towns and villages as their own. In the construction site, other people’s sites cannot enter and others’ sites cannot enter. With these two provisions, manufacturers want to be constrained by wholesale companies, and wholesale companies want to be geographically restricted, so everyone does not do much, unless the cuts, bans, bans, otherwise we all do Not dead, because the production companies have their own few customers regardless of size, and the operating companies have their own site regardless of size.

(II) Low barriers to entry

As we all know, the fireworks and firecrackers industry is generally low in technological content, and the input is not great, especially in firecracker production. A few million yuan can be used to build a decent factory, plus the above-mentioned first factor, and some underdevelopment. The lack of leading industries in the region, and the construction of fireworks and firecrackers for local companies, are still of great significance.

(III) Vigorous maintenance of vested interest groups

There are existing wholesale companies with stable sites, small manufacturing companies with stable customers, and relevant functional departments in some regions. They are vested interest groups. They are afraid to break the existing system because they know that once they break the existing system, they They will face enormous competitive pressures and they will even be eliminated. Therefore, they must fully maintain them. From the perspective of the entire industry, this force is very powerful.

(IIII) The temptation of profits

As the market for fireworks and firecrackers is divided, closed, and monopolized, monopolistic profits will inevitably exist, and high profits will inevitably entail illicit production and management and fake and shoddy products.

The main measures to solve the problem

(I) Breaking down administrative monopoly

For the first time, the party’s Nineteenth Congress has written “The decisive role of the market in resource allocation” in the Party’s Chapter and the “Opinions of the State Council on Establishing a Fair Competition Review System in the Construction of the Market System” clearly stating that “fair competition is the basic principle of the market economy. Is an important basis for the efficient operation of the market mechanism." The core of the economic system reform is to make the market play a decisive role in the allocation of resources and better play the role of the government.

A unified, open, competitive and orderly market system is the basis for the market to play a decisive role in the allocation of resources." The provisions of Article 20 of the "Fireworks and Firecrackers Management Ordinance" and Article 4 of the "Measures for the Implementation of Firecrackers and Firecrackers Operation Permit" Is a clear violation of the spirit of the Nineteenth Congress and the relevant provisions of the "State Council's Opinions on Establishing a Fair Competition Review System in the Establishment of a Market System," the "Law of the People's Republic of China on Administrative Licensing," and the "Anti-Monopoly Law of the People's Republic of China," and should be deleted. Therefore, fireworks and firecrackers will move from monopoly to competition, from closed to open to allow production companies to independently sell their own products, so that wholesale companies can expand their sales market without regional restrictions.

(II) Cancellation of Road Transportation Licenses for Class C and D Products

C and D products are not dangerous road transport, in the actual transport of more than one vehicle license, unlicensed transport phenomenon is also very common, and now the flow of fireworks and management information management system has been established, there is no need to spend a lot of police and corporate Financial resources to open road transport permits and to cancel fireworks and road transport permits for Class C and Class D products are conducive to the free circulation and trade of personally-discharged C and D products throughout the country, which is conducive to the formation of a unified national market.

(III) National and Related Local Governments Introduce Policies to Support Enterprises to Become Big and Strong

Support corporate grouping, intensive, chain, brand development;

Support production enterprises as the leading factor, develop the whole industry chain, and establish the leading position of the production enterprises in the industry;

It is forbidden for upstream raw material suppliers and downstream sales companies to set obstacles for production enterprises;

It is forbidden to implement local protection, regional blockade, setting barriers, and monopoly operations in the name of security;

Support small enterprises to switch production and give preferential policies, so that small businesses will not lose when they withdraw.

At present, the entire nation is implementing the spirit of the Nineteenth National Congress of the Communist Party of China and is deeply studying and understanding the socialist ideology of Chinese characteristics with a new era of Xi Jinping. As long as we firmly grasp the decisive role of the market in the allocation of resources and better play the role of the government and speed up the supply-side structural reforms, we must resolutely eliminate various barriers and glass doors that hinder the fireworks industry from forming a unified national market. , Unleash the endogenous driving force of enterprise development to promote the integration of industry-leading resources, accelerate the elimination of backward production capacity, and the fireworks and firecracker industry will develop towards large companies and big brands, and a group of influential large companies will emerge, with the guidance of large enterprises. , driving, investment, the industry's level of science and technology will be greatly enhanced, fireworks will be more secure, more environmentally friendly, the market will be more orderly and people will be more like it, plagued the industry's "small, chaotic, poor" problem will be solved.

“Without fearing the clouds, we can only hide our eyes, and only our bodies are at the highest level.” Fireworks, a Chinese traditional culture with a history of more than 1300 years, has irreplaceable and unique values, and will surely be better with the great rejuvenation of the Chinese nation. Inheritance and development, fireworks will be more brilliant tomorrow.