What is killing chemical traders?

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There are thousands of chemical traders in China – how many of them truly thrive? Most are struggling to survive in narrow margins. Whenever these topics come up, many of my friends who work in the chemical trading industry end up with tears in their eyes as they tell me about all the difficulties they’ve faced. The sentence that sticks with me the most is, \"How could I have been so foolish back then as to invest all my money in the chemical industry?\" ! ”So what exactly makes working as a chemical trader difficult? I. Intense competition in the trade sector forces lower prices. Due to the special nature of the chemical industry, end-users need to rely on intermediate traders in order to purchase products from upstream manufacturers, which highlights the essential role of chemical traders. However, as more and more traders join the market, the chemical trading sector has become a highly competitive arena; the intensity of competition is evident, and the problems that arise make it extremely difficult to operate in this industry. For example, in order to attract downstream customers, price wars are waged, forcing other traders who already operated with thin margins to join these price battles by reducing costs or even incurring losses; those who used to be able to earn one million per year now consider it lucky to make fifty thousand per year. Of course, you can also choose the old approach. By the time you realize it, you’ll find that there’s no increase in new customers, and your existing customers have gone to competitors. After all, in business, profit is paramount; there’s no reason for customers to pay more at your place when it’s cheaper elsewhere. II. The troubles caused by price transparency: With the explosion of the Internet era, prices have become increasingly transparent; both the production costs at the upstream level and the prices at the downstream level are well known. Traders, found in between, end up with increasingly strained relationships with their downstream partners. Why? This is because end-users downstream always desire to purchase goods directly from upstream suppliers. However, large enterprises like Sinopec do not sell directly to downstream parties, forcing them to turn to traders instead. If prices used to be opaque, that might have been acceptable, but now they are becoming increasingly transparent. It’s easy to estimate how much profit a trader makes; those at the downstream end can figure it out roughly, which naturally leads to dissatisfaction, and as a result, the relationship with such a trader cannot improve! III. Difficulties in obtaining payment terms: Although chemical traders are \"detested\" by many downstream end-users because they make profits by charging price differences, this is not the case in all situations; many small and medium-sized downstream customers face issues such as funding problems that prevent them from purchasing goods. The payment terms offered by traders help solve these problems and enable them to retain many of these downstream customers, but they also bring their own set of difficulties. Many downstream customers often fail to keep their promises after making them, keeping delaying things, and since traders cannot nor want to offend their clients, they are forced to accept their delays, which may ultimately ruin them. IV. The countless hardships of transportation: When it comes to transportation, many traders can list them all throughout China’s 5,000-year history! Only one can know the bitterness involved! 1. Instead of finishing unloading the cargo in two hours as it should, they take an entire day to do it slowly. Over time, this causes transportation companies that could normally serve three or four clients per day to stop working with you, forcing you to raise the shipping costs. 2. It can be seen from the shipping process that when dogs are used to make customers treat traders like dogs. For example, a friend of mine often encounters such customers: they place orders without specifying a delivery time, and then call in the evening after work to ask that the goods be delivered to XXX by 9 a.m. the next day. Or, if a delivery for Thursday afternoon has been agreed upon, they call on Thursday morning and say that it should be delivered on Friday instead, as they have something to attend to and cannot pick up the goods today. In response to this, traders are at a loss as to what to do; the highly competitive market prevents them from offending their clients, which in turn leads to those clients treating them more and more harshly. Meanwhile, their costs keep rising quietly. V. Crying for three months over one return – Many traders have experienced returns, right? Why was it returned? In short: the quality is substandard. 1. Improper storage leads to the deterioration of the goods. 2. The expiration dates of the goods are not checked carefully. 3. Improper transportation results in problems with the goods. 4. Overconfidence is misplaced; quality control for manufactured products requires investment, and when traders spend money only to have their goods returned due to substandard quality, it undoubtedly adds a burden to them and affects their reputation. VI. Poor management and declining morale: Some of my friends, not long after starting their chemical trading companies, shifted from dreaming about future growth to complaining about their employees, believing that they were simply \"too stupid!\" ”To change the situation, they tried many methods, from continuous hiring and layoffs to poaching employees, but in most cases they were unsuccessful; in fact, some of the departing employees even took their company’s clients to their new employers. This is undoubtedly another blow to traders. The difficulties faced by chemical traders go far beyond these; I am simply sharing what I have seen and heard with everyone. If there are any shortcomings, please feel free to add to them. Well, once a problem arises, a solution is needed. So how to solve it? Please check the explanation next time!