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At the end of the 19th century, the world's first thermos cup was born in Britain. Now Jinhua City, Zhejiang Province, is hiding the world's largest thermos cup industry belt. According to customs data, China's annual output of thermal insulation cups has reached 800 million, with more than 60% of them exported under the brand name.

With the upsurge of outdoor sports overseas in the past two years, the performance of the two listed thermal insulation cup manufacturers has increased significantly, while many other manufacturers in the industrial belt have also taken advantage of the wind to seek transformation.

01 Has the performance of the export agency doubled, and the industry entered a rising period?

It is not like energy storage is sought after by capital, nor is fast fashion at the center of public opinion. It is hard to believe that this insensitive category of thermal insulation cups still maintains rapid growth this year. According to customs data, China's exports of insulated cups in the first eight months of this year totaled $999 million, a year-on-year increase of 50.08%, far exceeding the 14.2% growth rate of total exports in the same period. From January to August, the export value of insulated cups to the United States totaled 405 million dollars, up 57.3% year on year.

The Matthew effect has played a full role in this "traditional" industry. Taking Hals, which accounts for more than 10% of the market in the export industry of thermal insulation cups, as an example, relying on outsourcing for overseas thermal insulation cup brands, the revenue in the first three quarters reached 1.898 billion yuan, with a net profit of 175 million yuan, up 14.28% and 106.69% year on year respectively. The data shows that the annual output of China's thermal insulation cups has reached 800 million, and more than 60% of them are exported under the brand name.

In contrast, Jiayi shares of the other listed company are slightly smaller, but the growth rate is even higher. The financial report shows that in the first three quarters of 2022, its revenue reached 836 million yuan, excluding 168 million yuan of non net profit, with year-on-year growth of 112.5% and 197.12% respectively.

Different from the traditional impression of small profits but quick turnover of the consignment factory, it can be found from the financial data that the net interest rate of the above two export consignment enterprises of insulated cup far exceeds the 5% hardware net interest rate ceiling set by Lei Jun for Xiaomi, and their customers cover overseas brands such as American PMI (Starbucks, STANLEY), American S' well, and YETI.

Behind the outstanding performance of insulated cup OEM enterprises is the steady growth of overseas demand. Different from the domestic demand for thermal insulation cups, the main demand of American consumers for thermal insulation cups is cold insulation. The use scenarios of thermal insulation cups overseas are mainly divided into four categories: daily office, commuting, outdoor sports, and school classrooms.

This year, the increase in demand for thermal cups in the United States mainly comes from the consumption demand for outdoor sports and back to school season. According to customs data, as of May 2022, the sales of water bottles and thermal insulation containers in the past year have increased by 30% year on year, the growth rate is only second to that of camping chairs.

On the other side of the high performance, the price of the raw material side of the insulation cup is down. Among them, stainless steel is the most important upstream raw material of the insulation cup, and the current average price is about 20% lower than the beginning of 2022. According to the customs data, the price of stainless steel will exceed 20000 yuan/ton in the first quarter of 2022, and will reach 16000 yuan/ton at present.

After time of washing, the gathering of categories often takes the form of industrial belts, such as fast fashion women's clothing in Panyu, Guangzhou, small household appliances in Shunde, and home textiles in Nantong. Insulating cup factories are clustered in Jinhua City, Zhejiang Province, with Yongkang and Wuyi being the most concentrated, while Hals and Jiayi are also from Yongkang and Wuyi respectively.

In the 1990s, China introduced overseas cup and pot production technology, and based on Yongkang's original stainless steel and other hardware industry chain, the insulation cup manufacturing industry began to sprout. Pipe making, water expansion, welding, vacuuming, polishing and spraying are part of more than 30 processes required to produce an insulating cup, and stainless steel and hardware manufacturing process is an important part of them.

By 2020, Yongkang Stainless Steel Products Industry Association will be renamed as Yongkang Cup and Pot Industry Association, and the insulated cup has now developed into a pillar industry of Yongkang. China Quality News once reported that at present, the output value of Yongkang cup and kettle industry exceeds 40 billion yuan, accounting for 60% of the country's total, while the export volume accounts for more than 80% of the country's total.

02 How to escape the "OEM dilemma"?

The gathering of industrial belts did not strongly promote the birth of brands. The enterprises around Yongkang are mainly OEM enterprises. "Big factories" such as Hals and Jiayi are mainly OEM enterprises for overseas brands, while more smaller OEM factories are generally involved.

A small insulated cup manufacturer said that there was no great barrier and difference in the technology of the insulated cup industry. The main difference between different brands and factories was the design of process fineness and style patterns. Brand and R&D investment were the key to subsequent development. "Even if we produce products with the craft like YETI and the magician, we cannot sell them because there is no brand".

The smaller OEM plants mainly produce classic insulation cups similar to black bullet heads, which are oriented to the domestic e-commerce market and wholesale market. The factory price is generally 10 to 25 yuan, and the terminal price is about 69 to 79 yuan.

In contrast, although the profits of export orders are fair, they still do not fully understand the dividends of categories, especially the brand premium. The financial report shows that the average ex factory prices of Hals and Jiayi are 34.51 yuan and 29.38 yuan respectively, and the unit gross profits are 9.12 yuan and 8.23 yuan respectively.

Taking YETI, Hals' largest brand customer, as an example, the price of its thermos cups in Amazon America is from $22.5 to $40, and the difference between OEM and overseas retail prices is almost the same as the exchange rate. The top 10 hot cups in Amazon North America are almost covered by overseas brands, among which YETI has four product links.

Wang Fan, the seller of outdoor sports category, told Hugo that the market space for insulated cups was OK, but the competition within the category was very fierce. In addition to brands with clear brand effects such as YETI, Amazon's proprietary links also had a place.

In addition, some head insulation cup manufacturers also began to try to launch their own brands overseas. Taking Hals as an example, it launched the fashionable outdoor brand SIGG for the overseas C-end market, whose product prices are concentrated between $20 and $35. Jiayi also launched its own brand ONE2Go for the United States. However, from the market feedback, the brand building of both companies is still in the initial stage.

From the thermal insulation cup factory to the C-end brand, a clear path is to start from the subdivided outdoor sports category and introduce sports water bottles and other items. Zhejiang Feijian Industry and Trade Co., Ltd. was also a OEM of overseas brands in the early days, but it was busy with the OEM business, and still did not give up the transformation to the C-end.

Xia Feijian, the chairman of Feijian, once said, "It is easier to become a big customer once the foreign trade order is made. The order volume is large and the output value is also large. But what makes me more entangled and difficult to choose is to become a brand in Yongkang and also a high-end brand, which is a very difficult way to go".

One year after entering Amazon and launching its own sports water bottle brand, its cross-border department sales will increase to US $6 million in 2021. "This kind of product is not only scratch resistant and light, but also very suitable for the use habits of European and American outdoor consumers. Most importantly, it avoids direct competition with international brands".

As the black horse category exported this year, the export of insulated cups remained high in September. According to customs data, the export volume of stainless steel vacuum insulation vessels in September was 157 million US dollars, up 19.01% month on month.

However, the transformation of brands has never been accomplished overnight. How to use social media and channels to tap differentiated competitive opportunities is a problem that needs to be considered by enterprises exporting insulated cups.