Export market could become cutthroat

The use of automatic production lines may intensify competition in the export market for fireworks, according to industry insiders.

Traditionally, the stricter standards overseas meant high-quality personnel were required to conduct business, so a large number of companies preferred to concentrate on the domestic market, according to Liu Yan, general manager of Xinghe Fireworks Manufacturing in Pingxiang, Jiangxi province. The company, which was founded in 1997, does not sell its products on the domestic market; instead, it exports goods worth more than 70 million yuan ($10.5 million) a year.

However, in 2013, the government began tightening both production safety and quality standards in the domestic market, which led to falling sales and prompted many companies to eye the lucrative export market, she said. The number of factories engaged in exports in Tongmu, the township in which the company is based, has risen to 15 in recent years.

That has seen the profit margin for exported fireworks fall from 30 to 40 percent in 1999 to about 10 percent, and automated production lines are now further intensifying competition.

"Each line's annual output value can reach about 100 million yuan, but small factories can't afford automated facilities so they have come under great pressure. They are now more likely to look overseas because the export business hasn't been affected by automatic lines. Different importers have different requirements and the orders are usually small, which makes the use of automatic lines difficult," Liu said.