1. The threat of new entrants
Pin headers and female headers, board-to-board connectors are indispensable and important accessories in products and equipment, and the proportion of procurement in many product application fields has exceeded 8% of the total procurement cost. And compared with other key devices, the selection of connector products is wider, and its local procurement space is larger, so its industry entry barrier is not high. Entry barriers mainly exist in product differentiation advantages and economies of scale, while there are no special requirements for sales channels, capital requirements, switching costs, and cost advantages. However, the dynamism of the connector market and the high growth potential in communications in the railway, energy industry, and machinery industry are attracting more and more new entrants.
2. The threat of substitutes
The main alternative to the connector is the terminal block. In the mid-to-high-end market, the connector is not threatened by substitutes. This is mainly because the connector itself is developed from the terminal block, which is for the convenient and fast error-free plugging and unplugging of the cable. In the low-end market, connectors are more threatened by substitutes. When buyers are under cost pressure, they will choose terminals with average quality and low cost.
3. The bargaining power of buyers
The buyer of the connector is a product and equipment manufacturer, and the buyer's concentration is high: the product purchased by the buyer from the industry accounts for about 10% of its total cost; the standardization degree of the buyer's purchase from the industry is increasing: the buyer's profit There is a tendency for the power to decrease; the buyer has the ability to carry out backward integration; the information on both sides is more transparent; so all these make the bargaining power of the buyer higher and higher.
4. The bargaining power of suppliers
The suppliers of connectors are suppliers of aluminum, copper, silver, gold, etc.; suppliers of raw materials such as engineering plastics. The concentration and standardization of the seller's industry are high; the transaction volume of buying houses is very large; the degree of product differentiation is small; the cost of switching sellers is relatively small; the possibility of forward integration is not large; the information of both parties is quite transparent; The bargaining power of sellers is relatively low, and existing companies can still maintain considerable profit margins between buyers and sellers.