The prices of raw materials fluctuate wildly, and the cost pressure is all shouldered by connector enterprises? The delivery cycle is constantly being shortened, and despite working overtime and increasing production, reasonable compensation is hard to come by? Technical collaboration often runs into obstacles, and the investment in joint development is never recognized?
The current connectors are caught up in a series of supply chain problems. The upstream materials are constantly changing prices, and the downstream power supply enterprises are continuously lowering prices. The connector enterprises are caught in the middle and are under pressure from both sides. The game mentality between supply and demand is becoming more and more intense, which has put the entire industry chain in a dilemma of being unable to advance or retreat.
How can this long-lasting game of strategy be broken through?
01
Industry Pain Points
Caught in a Double Bind, the Game of Strategy has Turned into an Illness.
The supply-demand contradiction in the connector industry is particularly prominent in the energy storage sector, and the entire chain is under pressure as a matter of course.
On the cost side, the prices of core raw materials such as copper and silver have soared and fluctuated sharply. The general manager of a storage connector enterprise frankly stated, “Raw material supply and electroplating processes are the most troublesome issues for the company.” However, downstream customers still set hard annual price reduction KPIs, and the general manager added, “The connector industry can no longer afford to lower prices.” The rising costs of raw materials cannot be passed on, and the company can only bear them itself. Even with an increase in orders, the profit margin continues to decline, and the company is facing the situation of “a significant increase in orders but a marked decline in profit margin,” which is a common problem in the industry.
On the delivery end, the energy storage industry is highly influenced by policies, with order fluctuations far greater than those in the traditional industrial control sector. Moreover, high-demand customers often require silver plating processes, significantly raising production thresholds. The frequent rush orders, last-minute changes, and shortened delivery periods from downstream clients have completely disrupted the production plans of enterprises. Coupled with extended payment terms, manufacturers are simultaneously facing the dual pressures of production disorder and cash flow strain.
On the technical side, the customization requirements for connectors are high, and large upfront investments are needed for molds and R&D. However, frequent changes in downstream demand make the initial investment highly uncertain. The general manager stated that although there have been no contract breaches by core customers, “order changes do occur frequently,” and the additional costs for R&D and material preparation continue to rise. The mindset of purchasers focusing on short-term costs rather than long-term collaboration has led both supply and demand sides into a vicious cycle of mutual depletion, severely weakening the industry’s innovation drive.
02
The Tragedy of the Game
A Lose-Lose Dilemma: Mutual Existence Is the Essence
The game-playing mentality in the supply chain, which seems to give purchasers a short-term cost advantage, actually traps both the supply and demand sides as well as the entire industry in a “lose-lose” predicament.
For suppliers, profits are constantly being squeezed. Small and medium-sized enterprises are struggling on the verge of profit and loss, lacking the ability to invest in technological research and development. Eventually, they fall into a predicament of product homogenization and stagnation in technological upgrading.
For purchasers, excessive price cutting may force suppliers to cut corners, leading to a decline in product reliability. This, in turn, could increase production and after-sales costs, and the stability of the supply chain would also be hard to guarantee.
For the industry, the competition has downgraded the entire industrial chain, failing to respond to the policy orientation of high-quality development in manufacturing and weakening the core competitiveness of connectors in the power supply industry.
In fact, a good supplier and customer relationship should not be a zero-sum game but a symbiotic ecosystem. The general manager emphasized, “The current decline in industry profits is the result of the overall environment’s internal competition. The competitive pressure at the whole machine end has been passed on to the component part, and it is not the case that one side sacrifices the interests of the other.” Unilateral exploitation and compromise have never been a long-term solution for industry development. Only by sharing costs, risks, technologies and benefits can a real breakthrough be achieved.
03
The Path to Win-Win:
Three Criteria Outline the Profile of Quality Purchasers
Who is the ideal power supply purchaser in the minds of connector enterprises? Based on the first-hand observations of the general manager, the profile of an ideal power supply purchaser for enterprises can be depicted from three dimensions.
Costs are shared, and risks are not unilaterally passed on. In the face of fluctuations in raw material prices, outstanding purchasers will establish transparent and implementable cost-sharing mechanisms, such as copper price-linked pricing in the photovoltaic and energy storage sectors, where the increase is shared based on the proportion of costs, allowing both the purchaser and the supplier to jointly cope with cost pressures instead of passing all the risks to the upstream.
Stable planning and respect for production laws. Exchange stable demand plans for stable deliveries. Share forecasts in advance, do not change orders at will, and do not blindly compress delivery periods. Respect the objective cycles of production links such as electroplating and material preparation. This is the basic respect for suppliers.
Technical collaboration and recognition of R&D value. Abandon the one-way model of “I make demands, you deliver goods”, and regard suppliers as partners in technological co-creation. High-quality purchasers fully adopt the suggestions of suppliers, adjust their own product plans based on the design of connectors, and make R&D investment truly generate value.
In addition, high-quality purchasers need to be in line with the product positioning of the enterprise, clearly define the quality and demand standards, rather than simply pursue low prices, to avoid internal friction in cooperation.
04
Industry Lighthouse
Proven by Word-of-Mouth, Achieving Win-Win Results on the Ground
To make the win-win concept the mainstream in the industry, it requires not only leading examples but also long-term mechanisms to provide protection. In response to this need, the “Power Industry Outstanding Purchaser Lighthouse Award”, which focuses on the reputation of supply chain cooperation in the connector industry, has emerged. This is not a simple selection but a reshaping action of the supply chain ecosystem.
This selection closely adheres to three core dimensions: cost sharing, plan stability, and technological synergy. It does not prioritize scale or order volume, but takes genuine cooperative reputation and collaborative value as the sole criteria for judgment. The selection adopts a fully transparent model of “industry nomination + reputation voting + expert review”, with a traceable and supervisable process.
The pressure of rising raw material prices needs to be shared by both supply and demand sides; breakthroughs in technological innovation require the joint efforts of the entire industrial chain. Currently, the selection of the “Lighthouse Award for Outstanding Purchasers in the Power Supply Industry” has officially kicked off. We sincerely invite all connector manufacturers to actively participate in the nomination and voting process and cast your precious vote for the outstanding purchasers in your mind.
With the light of the lighthouse, illuminate the path forward for the connector supply chain; break the industry’s dilemma of pressure from both sides, bid farewell to zero-sum games, and jointly build a new ecosystem of win-win supply and demand, promoting the connector industry to embark on a new journey of high-quality development!