The power restriction theory has been debunked! ? It still brings benefits to cross-border e-commerce

Some time ago, news of power and production restrictions came out in major provinces. Major factories in Jiangsu, Guangdong and other places were restricted in production hours, requiring workers to work 5 days and rest 2 days, or even work 0 days and rest 7 days, directly going on holiday early.

At the same time, a "power restriction chess game theory" is sweeping the Internet. This argument holds that the country's power restriction strategy is not due to power shortages, but is the next big move to artificially control factory production capacity to prevent being ripped off by Europe and the United States in the future.

This argument was deeply loved by the majority of netizens, and it was a conclusion that was closely related to our foreign trade. Overnight, all sellers and media were talking about the connection between power outages and Sino-US trade until yesterday.

Last night, CCTV officially refuted the recently popular "power restriction theory", saying that there is not so much behind the power restriction, the reason is very simple, it is because of power shortage.

Because the price of thermal coal needed for power generation has skyrocketed several times and the supply is tight, thermal power companies are generally losing money. According to a survey, a thermal power plant in Guangdong loses 7-8 cents for every kilowatt-hour of electricity it generates. If all the generators in the plant are fully operational, it can lose millions of yuan a day , so it has no choice but to limit power generation. Power plants that are forced to reduce power generation are everywhere, causing a nationwide power shortage.

The epidemic has caused a sharp drop in overseas manufacturing capacity, and the demand for a large number of products has shifted to the domestic market. my country's industrial electricity consumption this year has also reached a record high. On the one hand, there is insufficient electricity, and on the other hand, industrial manufacturing has increased electricity consumption. In order to ensure the electricity consumption of residents, the supply of industrial production electricity has been restricted. This is the fundamental reason for the power restriction. Even such industrial power restriction is not enough. Northeast China has begun to restrict civilian electricity a few days ago, which shows the huge power gap in the country.

If we shut down our own power supply and stop production to prevent the US from cutting off our own profits, it is as absurd as cutting off our liver to prevent liver cancer. If we really want to restrict exports, we can just introduce policies such as export tax rebates. Cutting off power supply and forcing industrial upgrading is really putting the cart before the horse.

However, surprisingly, the power and production restrictions actually brought about a positive outcome. Many sellers were surprised to find that with the power and production restrictions, the shipping prices that had once skyrocketed actually began to be halved!

According to the news in the freight forwarding industry, the prices of Matson Shipping have plunged across the board, from 30 yuan/kg or even higher to less than 20 yuan, basically returning to around 17 yuan/kg at the beginning of this year, and even some last-minute orders have been quoted as low as 12 or 3 yuan/kg! It really returned to the price before the liberation overnight!

The plunge in sea freight prices this time is closely related to power and production restrictions. Because factories are unable to produce goods due to power restrictions, their production capacity has dropped sharply and product delivery time has been greatly delayed. Sellers who could originally ship several or even dozens of containers can now only ship in batches, as they simply don't have that much goods.

Regardless of whether the power cuts are to limit production and prevent profiteering, the fact is that the machines have stopped, the products are less, and there is not much cargo to transport by sea. We sellers don’t feel much, but shipping companies are different. A large number of empty ships are crowded at the port with no cargo to transport. They can make money by transporting empty containers from the United States to China, but they can’t make money the other way around. In desperation, they can only lower prices, hoping that more sellers with goods will ship. The price of sea freight has plummeted all the way, and now it has been cut in half.

(A large number of empty ships are crowded in the port with no cargo to carry)

We sellers have been paying sky-high freight for half a year, but it was lifted due to power restrictions. This was an unexpected result. However, although the shipping cost has been reduced, the power restrictions have also caused product costs to soar. The power restrictions have suppressed the production capacity of factories, so in order to maintain operations, they naturally have to raise the ex-factory price of products. With this increase and decrease, the sellers' profits are still difficult to guarantee. In the final analysis, the only way out is for us to raise the terminal price ourselves.

In June, we called on everyone to "raise prices for the country", which is definitely a grand strategy that benefits both the country and the people. Many sellers have begun to realize the importance of price increases. According to the latest data from Adobe, the price of online goods in August increased by 3.1% compared with the same period last year, and the price of groceries increased by 1.64%. The average annual price growth rate before 2019 was only 0.51%. It can be said that from last year to this year, the price increase of e-commerce products is 6 times that of the past!

Moreover, raising prices and refusing low prices does not mean that the products cannot be sold. Many small and medium-sized sellers can maintain a profit margin of about 15% to 30%. With a high profit margin, they can make money by doing a 10% or 20% discount event. It can be said that this is a very comfortable range. If you are willing to raise prices but don’t know how to do it, you can chat with me privately and I will give you free answers!