The capital-driven supply wave: How China's manufacturing industry exhausts global channels through its homegrown steelmaking

In recent years, I have communicated with many friends in the industry, and I have increasingly felt a cruel reality: the market is not that there is no product to sell, but that it is filled with the wrong things . A large number of Chinese manufacturers have relied on low-interest loans and vague market signals to carry out product replication and price competition in a crude way. On the surface, it seems to be active, but in fact it is a consumption and destruction of the entire market value system.

1. Funding is not used to foster innovation, but to support mistakes

Many small and medium-sized manufacturers in China do not rely on customer orders to produce, but on loans. These funds should have been used to support innovation, optimize production efficiency, and expand the market, but in practice they have become fuel for "burning money to replicate hot products." They observe that a certain product is selling well or a certain category has suddenly become popular, so they immediately start production, make molds, and put it on the shelves.

No need to ask why, just because "someone is selling it, so I can do it too." This decision-making model does not require data or market understanding, but only a loan and a mold.

2. Decisions are based on wrong signals, leading to uncontrolled proliferation of production

These manufacturers do not make decisions based on real consumer demand, but on what is trending on Douyin, recommended by the platform, and what other sellers are selling. As a result, we often see a situation where a certain type of product is suddenly flooded in the market, and everyone claims to be a hit, and the price is slashed all the way, but in the end no one makes any money.

But they can still survive because as long as there are shipments, they can report to the lender, and as long as there is a little traffic on the platform, they can continue to raise funds. This is not market-driven, but the illusion of financial drive.

3. Online platforms become shortcuts to bypass channels

In the past, products had to go through distributors, agents, and after-sales service systems to enter the market. But now, Chinese manufacturers can sell directly on global e-commerce and social media platforms, bypassing the distribution relationships that have been established for many years.

The markets that many distributors have worked so hard to open up and the customer trust that they have accumulated are often destroyed within a few months by Chinese manufacturers selling their products at ultra-low prices online.

This is not just a price collapse, but also a relationship breakdown. When customers feel that the channel is just a middleman who adds price, the entire value chain collapses.

4. This is not just competition, it is a waste mechanism

This supply behavior driven by funds and lacking demand verification is essentially a waste. It is not just money that is wasted, but also:

• The market order that could have developed healthily

• The product lifecycle that could have accumulated brand value

• Distributors have invested many years in service network and education costs

• Consumers' trust in product quality and price

The result of all this waste is that "bad money drives out good money" - good products cannot survive, and serious manufacturers choose to withdraw, leaving behind a more chaotic, cheaper, and less trustworthy market.

5. Homegrown steelmaking is not a strategy, but the beginning of collapse

We often say that Chinese manufacturing is good at price wars, but I think that is not "good at price wars", but "only able to price wars". In the absence of market strategy, brand building ability, and customer management logic, the only thing they can do is "copy quickly and kill hard".

This is a game that no one can win. When such primitive steelmaking becomes the norm, not only will China's manufacturing collapse, but the global supply chain and market access will also be dragged down.

I wrote this article not to criticize Chinese manufacturers, but in the hope that we can understand more clearly: what is a truly healthy way to build a market?

What we need is:

• Product decisions based on real needs

• A channel partner that can grow together

• Sustainable pricing and brand trust mechanism

Otherwise, we just continue to struggle in waste, exhausting ourselves and the market.