Abstract The rear lane began to produce drill bits in the 1960s. In the 1990s, it extended to the steel needed for the production of drill bits. Now the output of tool steel reaches 90,000-100,000 tons a year. The steel used for the drill bit meets the needs of the rear lane enterprises. There are still 30,000 &...

The rear lane began to produce drill bits in the 1960s. In the 1990s, it extended to the steel needed for the production of drill bits. Now the output of tool steel reaches 90,000-100,000 tons a year. The steel used for the drill bit meets the needs of the rear-street enterprises. There are still 30,000-40,000 tons of exports every year, and the average profit rate of basic materials is about 20%.

In the early spring of Houxiang Town, Jiangyangyang City, some entrepreneurs of the “Hometown of Hardware Tools in China” still feel the “chill”. The US orders for a backbone enterprise's primary tool products have been cut in half. Another large company is because of coal and oil. Prices, electricity, etc., but local officials said that there have been no major bankruptcies, production stoppages, and no insolvency. From the industrial chain that began in the 1990s, the "eggs" were placed differently. The strategy in the basket makes Jiangsu's characteristic industrial cluster have strong strength to survive the "winter" of the Chinese economy.

There are about 300-400 enterprises in the back alley hardware tools. The entire annual output of Danyang City is nearly 3 billion twist drills and more than 60 million diamond saw blades. It is the largest diamond saw blade and drill bit production base in Asia. The high-speed tool steel required for drill bits accounts for one-half of the world's total. Since last year, foreign trade policy adjustments, rising raw material prices, and shrinking demand in the European and American markets have created an internal and external attack on local hardware exports.

A high-level exporter of hardware tools from Houxiang introduced: "The cost increase has been great since last year. The price of high-speed tool steel has increased by 8%%-12%, and the price of oil, grinding wheel and other accessories has increased by 40%-80. %%, after the promulgation and implementation of the new Labor Contract Law, labor expenditures increased by 18%-20%."

The export tax rebate rate for hardware tools has dropped from the original 13%% to the current 5%%. The rapid appreciation of the RMB has further lowered the profit margin of enterprises.

Although the situation is grim, Wang Tingkai, director of the Houxiang Town Economic Service Center, said: "So far, there have been no major closures and production stoppages in the back lanes. There is no insolvency, and the economy has maintained an appropriate rate of development. This year The town has achieved a total output value of 18 billion yuan, and a 30% increase is guaranteed."

Wang Tingkai's confidence comes from three aspects. The first is that the rear lane began to grow from the manufacturing of drill bits to the steel needed to produce drill bits in the 1990s, and entered the new field of production of basic materials.

The price increase of steel did not cause the hardware enterprises in the back lane to suffer too much. Wang Tangkai said: "The rear lane began to produce drill bits in the 1960s. In the 1990s, it extended to the steel needed for the production of drill bits. Now the output of tool steel reaches 90,000-100,000 tons a year. The steel used for the drill bit is satisfied. At the same time as the lane enterprises need, there are still 30,000-40,000 tons of exports every year, steel prices are rising, and the profit margin of this piece is increasing. The average profit rate of basic materials is about 20%."

Although steel prices have been rising since last year, the price of copper has been relatively stable. Electronic hardware tools with copper as the main material have become the new focus of economic development in the rear lane. Wang Tingkai introduced that Houxiang electronic hardware mainly provides support for the electronics industry in Suzhou and other places, mainly focusing on video, audio, military products and other products. Many enterprises have reached an annual output value of 100 million to 200 million yuan. The annual output value of the town's electronics industry is around 3 billion yuan.

Through the extension of the industrial chain, the current industrial composition of the back lane has changed significantly compared with four years ago. Wang Tingkai said: "Four years ago, hardware tools accounted for 60%-70% of the total output value of the town, and now only a little more than 30%%; high-speed steel, medium-board and other basic materials accounted for the total output value of the town four years ago. The proportion is less than 10%%, and now accounts for 40%%; electronic hardware now accounts for more than 20% of the total output of the town, and the proportion of four years ago is very small."

Wang Tingkai said: "The extension of the industrial chain has made the back lane more capable of resisting economic fluctuations, and the east is not bright in the west."

The extension of the industrial chain and the diversification of industrial composition cannot be ignored for the sustainable development of the regional economy. Wang Tingkai said: "Now there are 6-7 pieces of 10 twist drills produced in the rear lane. 70% of China's drills are exported from the rear lane. The drill bit can be 5 billion, and even 10 billion or 20 billion. But it can't reach 50 billion, because the market demand is limited. We have to expand the total economic output to other industries. In addition to the high-speed tool port and the medium board, we are still developing the paper industry and stainless steel. This is also very promising. industry."

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