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Hardware lock industry differentiation trend is obvious
In the article, it's highlighted that since 2009, the hardware lock industry has faced a prolonged downturn due to the global financial crisis and government property market controls. While traditional hardware sectors have struggled, the smart home industry, especially electronic locks, has seen rapid growth. Despite this shift, Zhongshan, once a major hub for hardware manufacturing, has been overshadowed by cities like Shenzhen in the smart home space.
Industry insiders suggest that the transformation of the home security sector presents both challenges and opportunities for traditional manufacturers. A survey from 2012 showed that Xiaolan Town’s hardware industry grew by just 5.41% in 2011, significantly lower than other industries like LED and food and beverage. This data reflects the growing divide between traditional and smart home products, with export-oriented companies struggling to adapt and smart home firms beginning to gain traction.
Rising labor costs, exchange rate fluctuations, and reduced export tax rebates have made it difficult for many export-focused hardware companies in Xiaolan. Some have resorted to renting out their unused facilities, creating an unusual situation where companies are leasing rather than producing. According to Zhang Xiaoguang, deputy general manager of Zhongshan Huafeng Lock, while output is increasing, profit margins remain stagnant, making transformation a long-term challenge.
Yan Wei, HR director at Zhongshan Yashanghelai, notes that rising labor costs have eroded China’s cost advantage compared to countries like Vietnam and the Philippines. As a result, many companies are phasing out low-value traditional products. Meanwhile, companies focusing on smart security solutions are gaining momentum.
One example is Yangge Locks, which started in 2007 and became a leader in the electronic lock industry. The company secured major contracts for events like the Nanning ASEAN Conference Center, the Shanghai World Expo, and the Guangzhou Asian Games, positioning itself as a key player in the new generation of lock manufacturers.
The smart home industry is expected to experience a major breakthrough soon. With smart locks having a 95% penetration rate in Europe and the U.S., but only 5% in China, there is significant room for growth. Yang Ge, president of Yangge Locks, believes the Chinese market is on the verge of a surge.
Many local companies agree. Yan Wei mentioned that high-end smart locks sold in South Korea can fetch up to 9,000 yuan, but selling them domestically for a few thousand is considered a success. He emphasized that the trend toward smart, electronic security products is clear, and if Xiaolan’s hardware companies don’t seize this opportunity, they risk becoming mere suppliers to larger brands.
However, transitioning from traditional manufacturing to tech-driven innovation is not easy. A well-known hardware company in Xiaolan tried producing smart locks a few years ago but found the market unresponsive and the returns too low. They eventually halted production. Yang Guangui, another industry leader, noted that the smart home market is still in its early stages and requires sustained investment over several years before profitability is achieved.
To stay competitive, Xiaolan must focus on professional division and regional branding. Industry leaders stress that the government should play a key role in building industrial platforms, optimizing the business environment, and strengthening supporting industries like software development, talent recruitment, and precision casting.
With the right strategies, Xiaolan can reclaim its position in the smart home industry and ensure long-term competitiveness. As one executive put it, "If we don’t act now, Zhongshan may become just a supplier." The time to act is now.