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From Ant to Elephant ! Top 3 Power Tools Manufacturers in China. How do they get it?

From Ant to Elephant ! Top 3 Power Tools Manufacturers in China. How do they get it?

  • Wednesday, 19 January 2022
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Top3 Chinese Tools Manufacturers

Top 3! Fast grown up from Ant to Elephant -How they do it?

Top 3 Chinese Power tools Manufacturers?
Chervon focuses on innovation (especially lithium-ion battery system technology), offering a comprehensive range of products under a portfolio of well-recognized brands, which are tailored to address the diverse needs of our end-users around the world. The Company currently owns five differentiated and well-recognized brands that cover key geographies and segments, namely EGO, FLEX, SKIL, DEVON, and X-TRON. The EGO brand has gained strong recognition in the global electric OPE market since its establishment in 2013, covering mowers, string trimmers, chainsaws, and leaf/snow blowers categories. In 2020, the Company ranked the 9th and accounted for approximately 1.7% of the global power tool market, and ranked the 10th and accounted for approximately 2.1% of the global OPE market, and ranked the 13th and accounted for approximately 1.9% of the combined global power tool and OPE markets, in each case by revenue. 
Lots of Chinese Traditional Trading Companies are finding that the Business Environment is no longer as friendly as before.
On the one hand, the Chinese factory suppliers developing fast and are strong enough to cooperate with worldwide importers directly. 
On another hand, thanks to big data, it is easy for importers to collect rich information from Supply Chains. There is no margin space left there...
And many of them have fallen into a trouble Circle: orders rises but profits do not rise, or even orders falls and profits also fall.
But why Chervon, which also started from trade, can develop rapidly and achieve remarkable results in an environment unfavorable to trade, and how did they do it?
Can we get any inspiration from it and then do a more in-depth discussion. What is the future for the trading companies?

1. Development trajectory of industry giants

In order to understand the reasons behind the rapid development of Chervon, let us first review the development history of Chervon. 

Story  Of Chrvon

In 1994, Chervon was established, starting from trade,
In 1997, a factory named Desuo was established and began to develop its own products lines, supplying OEM to various international brands, and then at the same year, BOSCH invest money and help them build a partnership new plant with name Bofeng.
In 2007, launched new brand DEVON in China.
In 2013, it acquired FLEX, a famous German electric company.
In 2016, it acquired SKIL brand from BOSCH. 
In 2014, a high-end garden tools brand EGO is launched.
In 2019, Hammerhead is launched to sell online and expand business to Auto Parts with "Chervon Auto". 
In 2020, Chervon launched strategic cooperation with LOWES, the second-largest hardware and building materials supermarket in the United States. It submits a listing application
1-Chervon is developing step by step and expend their hands to the whole industry chain
2-Simultaneously, Chervon is moving in to OPE market and expanding their sales channels to the end-user consumer market.

Other well-known companies in the China tool industry

Positech, the Power tools Manufacturer Behind Dewalt and Home Depot

Positech, SUZHOU also started from trade, gradually established factories, established R&D teams, independently developed products, created its own brands, and established domestic and foreign self-owned brands. There are brand channels, and in the past two years, it has gradually developed an online shopping platform, which have created a whole industry chain of power tools.

GreatStar-The domestic hand tool giant, GreatStar Hangzhou,is the owner behind SHOP.VAC USA

Greatstar is also developing along this route. It also started from trade, and slowly established R&D, self-built, acquired factories and many foreign brands, and established strategic alliances with several foreign building materials supermarkets. 
And the online shopping platform has achieved excellent results.
Now it is vigorously developing markets in developing countries, and it is also a whole industry chain of manual tools.

INGCO-Big Boss in Third-World

When trip to third-world developing in Asia, Africa...  you would shake by how popular Ingco is there
INGCO Suzhou switched the battlefield to start with the brand, after a short period of trade, and gradually extended to quality control. From cooperating with suppliers to develop products, establish R&D, self-developed products, establish global sales channels and the factory. (The three major manufacturing bases in Suzhou, Taicang, and Nantong will be established in the future.) It is also investing in developing the online market, and a tool industry chain with a longer product line.

2. The Complete Industry Chain Development road of Chinese Trading Companies

We will introduce some of the representative power tools trading companies you may meet in China and what we’ve come to understand about them.

A. Small Size Import&Export Trading Company

Buy cheap resell cheap.
There are large numbers of this kinds company in China and they got very few number employees which can help them survive with just 3%-5%  service fee. 
This kind of companies focus on certain professional field has been deeply involved in a certain industry for many years. And it relies on the supply chain and customer resources that have been familiar for many years. Even if there are few employees, it relays on rich experience , and also provide customers with very nice service. and keep good personal relationships with customers. 
The boss is always the most core personnel there. They hold several positions, and other personnel basically serve as assistants. The overall number of employees is small, and the total company expenses are low. The boss’s income is better and the vitality is also strong. The sales for most of such companies are in the range of 500 to 200 million US dollars a year. (only a few companies are more than this range.) 
Representative enterprise: SOHO class
Number of employees: fewer than 5 people
Annual sales: 1 to 5 million US dollars
Advantages: 
The boss has strong ability. One person can manage many things, and the efficiency is high.
Disadvantages: 
The boss is in charge of everything and determines the future of the enterprise.

B. Middle-Size Trading company with QC system.

Based on trade, developing towards quality control
On the basis of purely trade, it not only helps customers find sources of goods but also further helps customers with product testing and quality control. So customers can purchase products with confidence. Now basically trading companies with more than 5 people are basically equipped with quality personnel. The sales revenue of such companies is in the range of $3 million to $20 million. (a few companies are more than this range.)
Representative enterprises: most of the trading companies 
Number of employees: 5 to 20 people
Annual sales: 3 to 20 million US dollars
Advantages: 
The scale is initially formed, and there are specific responsible persons for sales, procurement and quality.
Disadvantages: 
Nice for importers
With a certain scale, the company's management costs will also rise. 

C.Trading Company With Full-Range Products line


One-Stop Power Tools solution for your private labels.
Based on trade and quality control, developing towards the products. Have the ability to supply full chains branding power tools. 
Thanks to the full range of power tools products with the new design style they had built,  It ensures the consistency of the product line, the stability of product quality, and competitive price. Which also helped importers win higher margins in competition.
Representative enterprises:
Hangzhou Weitu, Ningbo Jiemei, Zhenjiang Fanhua, etc.
Number of employees: 20 to 50 people
Annual sales: 20 to 50 million US dollars
Advantages:
It enhances the company's competitiveness and the company's profitability.
Disadvantages:
Need to build a suitable professional team, the personnel management of new projects will also increase management costs and increase the cost of molds for new product development.

D.One-Stop Power Tools Sation

Offline Distribution Channel
First of all, I will introduce the one-stop shopping model that has prevailed in recent years. Simply speaking, it is to plan a brand and plan a series of product lines: power tools, hand tools, garden tools, pneumatic tools, generators, electric welding machines, water pumps, small construction machinery and other hardware tools, electromechanical and other product lines. And then they will unify the image by unifying the brand, color, packaging, and etc.. It establishes product inventory in China, then develops and sells products to global customers. 
Several features of this model
1. Unified image: The unified brand, color, and packaging style, gives the brand a high-end feeling similar to the international brands.
2. There are many varieties of products, almost covering the commonly used hardware tools and equipment.
3. There is no requirement for MOQ, because there is inventory in China. So it can support this delivery method, which is very favorable for the development of small and medium-sized customers.
4. The delivery speed is fast. Because of the inventory, it can be delivered at any time.
This model is very suitable for Chinese companies. One company that I know once developed rapidly based on this model, which has also opened up a development path for trading companies that is different from the traditional trade. Some trading companies rely on the supply chain accumulated and product resources in previous trade, referring to the models and product lines of successful companies and brands. They integrated a batch of products, designed a brand image, established inventory, and began to build their own brand. 
Besides INGCO, TOTAL. there are some other Chinese brands  getting rapidly developing in third-world markets, such as P.I.T, TOLSEN , FIXTEC, MPT, COOFIX, HOTECHE.DONGCHENG,DCA...
Refer Power tools are based on Semi-Professional Segment. If you are target to sourcing power tools for Euro or American Market. Make sure it matches your customers.
How to choose tool manufacturers nice for your business? It depends on the customer segment you are business.
  1. DIY users generally want a capable, reliable tool at a reasonable price.
  2. Professionals who depend on tools for their livelihood will generally spend a little more for a tool that will withstand the often harsh environment of the job site while maximizing performance.

Advantage: 80% of BOSCH quality, with 50% BOSCH PRICE.
When Chinese companies start distributing quality tools in the same retail markets with lower prices and nice service,  it is no doubt that, Chinese brands such as INGCO, TOTAL, become hot sales in the Third-World market.
Bosch was very popular in Asia countries, but the turnover last year is 10% down because of the rise up of Chinese brands there.
Disadvantages:
50% Of BOSCH prices are too high for DIY customers. which makes them unable to succeed in USA and EURO.
And these kinds of suppliers are unable to help you compete with Other famous brands, such as Black&Decker, Ryobi, Einhell, Ozito... who supply nice design power tools at low prices.

E. Online Power Tools Company

Years of OEM experience have made trading companies very familiar with foreign markets, and they have a good understanding of the sales needs of foreign customers, especially European and American countries. With the vigorous development of domestic and foreign e-commerce markets, trading companies have also expanded their business online. The understanding of foreign markets and the familiarity with the supply chain side make it relatively easy for trading companies to enter this market and achieve some good results.
Well-developed online platforms include domestic Taobao, JD.com, Pinduoduo, Tiktok, etc., and foreign ones such as AliExpress, Amazon, eBay, Lazada, and Shopee.
Compared with offline brand product lines, online brands will have shorter product lines and focus more on creating explosive products. In terms of marketing, more emphasis is placed on the introduction of product selling points and features, as well as the investment in advertising on the platform, which is relatively easy to be achieved.

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