Opportunities and Challenges for China's Bearing Industry Amid the Middle East Conflict: A Case Study of Ningbo DAZ Precision Machinery Co., Ltd.
Bearings, as the "joints" of industrial machinery, are core components supporting the operation of global manufacturing. China, as a major global producer and exporter of bearings, holds a dominant position in the global low-to-mid-end bearing market. Ningbo DAZ Precision Machinery Co., Ltd. (hereinafter referred to as "Ningbo DAZ") has deep roots in the precision bearing field, specializing in high-speed precision heavy-duty bearings, general-purpose bearings, and bearing transmission components. It also possesses import and export qualifications. Its products are widely used in generators, electromechanical equipment, and household appliances, making it a typical representative of Chinese small and medium-sized bearing enterprises expanding overseas. The ongoing conflict in the Middle East is not only disrupting the global energy and shipping landscape but also bringing multi-dimensional impacts to China's bearing industry's export trade, supply chain layout, and market competition. This presents both survival challenges and opportunities for transformation. This article takes Ningbo DAZ's product layout and overseas expansion practices as a starting point to analyze the profound impact of the Middle East conflict on China's bearing industry and explore pathways for the industry and enterprises to overcome these challenges.
I. Logistics Disruptions: Soaring Shipping Costs Pressure Export Chains
The Middle East is one of China's important export markets for bearings, especially the six Gulf states and Iraq. Driven by energy-based infrastructure construction and industrial upgrading, these countries have a strong demand for bearings, and maritime transport is the core channel for Chinese bearing exports to the Middle East. The current Middle East conflict has disrupted shipping through the Strait of Hormuz. This vital waterway, carrying 20% of global crude oil and 35% of methanol trade, has become a key node affecting global trade, directly impacting the logistics chain of Chinese bearing exports and directly affecting Ningbo DAZ, a company primarily engaged in import and export business.
Firstly, shipping costs have risen sharply, squeezing profit margins.
With Iran announcing the blockade of the Strait of Hormuz, major global shipping companies such as Maersk and MSC have suspended new bookings on related routes or opted to detour around the Cape of Good Hope, extending voyages by 10-14 days and significantly increasing fuel and vessel operating costs. Taking Ningbo DAZ's exports of precision bearings to the Middle East as an example, its main products, such as high-speed precision heavy-duty bearings and deep groove ball bearings, are mostly shipped from Ningbo Port to various Middle Eastern ports. Previously, the freight cost for a 20GP container from Ningbo to Dubai and Jeddah was approximately $2,200; currently, it has skyrocketed to $7,000. Adding to this are war surcharges and detour surcharges ranging from $1,500 to $3,000, more than tripling the logistics cost per container. Furthermore, the risk of war has caused marine insurance premiums to soar, with rates rising from approximately 0.2% of the ship's hull value before the conflict to over 1%, and in some cases even reaching 3%, further increasing export costs for companies. The bearing industry itself has limited profit margins, especially for small and medium-sized bearing enterprises, making it difficult to pass on all cost pressures through price increases. Companies like Ningbo DAZ, whose core competitiveness lies in cost-effectiveness, are particularly under pressure on their profits.
Secondly, shipping route disruptions and cargo delays have disrupted companies' delivery plans.
Currently, over a hundred container ships are stranded in the Persian Gulf region, representing approximately 2% of the global fleet. Some shipping companies have even implemented contingency measures such as "unloading cargo at safe ports ahead of schedule," leading to delays and backlogs of bearing shipments from Ningbo DAZ to the Middle East. For downstream customers, bearings are core components in production, and delivery delays can cause production line shutdowns, leading to customer claims and increasing the company's contract fulfillment risks. Simultaneously, the uncertainty of the logistics chain makes it difficult for Ningbo DAZ to accurately plan production and inventory, resulting in a dilemma of "not daring to stock up for fear of inventory buildup, and not stocking up for fear of stock outs." This is especially true for its main product, generator and generator set bearings, which are mostly customized orders; delays in delivery could lead to customer loss.
Furthermore, declining port operating efficiency exacerbates the logistical difficulties.
Due to the impact of conflict in some Middle Eastern ports, staff shortages and cumbersome customs clearance procedures have significantly extended the time for cargo to dock, unload, and clear customs, further lengthening the delivery cycle for bearing products. Ningbo's general-purpose bearings, exported to countries such as Iraq and Kuwait, originally transited through Dubai to reach their destination ports, a process that took approximately 25-30 days. However, due to disruptions in the transit route, the delivery cycle has now been extended to over 40 days, severely impacting the company's customer reputation and subsequent order negotiations.
III. Industry Linkage: Supply Chain Disruptions and Upgrading Opportunities Coexist The supply chain of China's bearing industry is highly dependent on upstream and downstream partners. From raw materials (bearing steel, seals) to production equipment and logistics, disruptions in any link can affect the industry's operation. The Middle East wars, by impacting energy prices and logistics links, have had a chain reaction on the supply chain of China's bearing industry, while also forcing the industry to accelerate transformation and upgrading. This impact is particularly evident in the production and operation of Ningbo DAZ.
From the perspective of supply chain pressure, rising energy prices have pushed up production costs. The Middle East wars have caused significant fluctuations in global crude oil and natural gas prices. Bearing production processes, including smelting, forging, and heat treatment, all require large amounts of energy. Rising energy prices directly increase the production costs of enterprises. Ningbo DAZ's main product, high-speed precision heavy-duty bearings, has high requirements for heat treatment processes and consumes a large amount of energy. The continued rise in crude oil prices has led to an 8%-12% year-on-year increase in its unit product production costs. At the same time, the production of bearing steel-the core raw material required for bearing production-also depends on energy. Rising energy prices further transmit to bearing steel prices, leading to increased raw material procurement costs and further squeezing the company's profit margins. Furthermore, delays in the delivery of some imported raw materials (such as high-end seals and precision gears) due to disruptions in Middle East shipping routes may affect Ningbo DAZ's production schedule, especially for the production of customized precision bearings, which requires timely delivery of raw materials. Supply chain uncertainty increases the company's production risks.
However, in the long term, the supply chain disruptions caused by the Middle East war are also forcing the Chinese bearing industry to accelerate its transformation and upgrading, enhancing the stability and autonomy of its supply chain. On the one hand, companies are optimizing their supply chain layout, reducing reliance on single logistics routes and single raw material suppliers. Ningbo DAZ has adjusted its logistics strategy, adding a transit route from Ningbo Port to Singapore and then to the Middle East, in addition to the traditional Ningbo Port-Middle East route. It has also expanded its domestic raw material suppliers, reducing its dependence on imported bearing steel and improving the supply chain's resilience. On the other hand, companies are increasing investment in technological research and development to enhance the core competitiveness of their products and escape the predicament of "trading volume for price." China's bearing exports have long exhibited a pattern of "increasing volume but decreasing price." In 2025, China's rolling bearing exports increased by 6.36% year-on-year, but the average export price decreased by 3.77% year-on-year, reflecting the narrowing of industry profits and insufficient momentum for industrial upgrading. The rising costs and intensified market competition caused by the Middle East wars have made Ningbo DAZ realize that only by improving the technological content and added value of its products can it gain a competitive edge. Currently, the company has increased its R&D investment in high-speed, precision, heavy-duty bearings, optimized its product structure, reduced the proportion of low-value-added general-purpose bearings, and improved its profit margins and market competitiveness.
Furthermore, the Middle East wars have also promoted the clustering development of China's bearing industry. Ningbo DAZ is located in Ningbo, one of the core areas of China's bearing industry cluster, home to well-known bearing companies such as HCH CW and C&U.
With a complete industrial chain, 99% of the components can be sourced within half an hour. This cluster advantage helps companies quickly respond to supply chain disruptions, reduce production costs, and shorten production cycles. Under the influence of the Middle East wars, the ningbo bearing industry cluster has further strengthened upstream and downstream collaboration, sharing logistics and technological resources to jointly address market risks and enhance the overall competitiveness of China's bearing industry.
IV. Breaking Through the Dilemma:
Ningbo DAZ's Response Strategies and Industry Implications
Faced with the multiple impacts of the Middle East war, Ningbo DAZ, leveraging its product portfolio and overseas advantages, implemented a series of countermeasures. These measures effectively alleviated current operational pressures and provided valuable experience for small and medium-sized bearing enterprises in China.
First, optimizing logistics and order allocation to reduce risks.
Ningbo DAZ adjusted its logistics routes, expanding diversified transshipment channels to avoid shipping risks in the Strait of Hormuz by choosing safe ports such as Singapore and Colombo. Simultaneously, it established long-term partnerships with multiple shipping companies to ensure space availability and reduce logistics costs and delay risks. Secondly, it adjusted its order structure, reducing reliance on countries severely affected by the conflict and increasing market development efforts in stable markets such as Saudi Arabia and the UAE. It also expanded into emerging markets in Southeast Asia and Africa to hedge against the volatility risks of the Middle East market. Furthermore, the company negotiated delivery schedules with customers, communicated in advance regarding logistics delays, reduced contract disputes, and maintained customer relationships.
Secondly, increasing investment in technological research and development to enhance product competitiveness.
Leveraging the technological advantages of the Cixi bearing industry cluster, Ningbo DAZ has increased its R&D investment in high-speed, precision, heavy-duty bearings and precision transmission components, optimizing product accuracy, lifespan, and stability to enhance added value and escape the predicament of "trading volume for price." Simultaneously, catering to the specific needs of the Middle Eastern market, it customizes bearing products to suit local petrochemical, power, and other sectors, meeting customers' individual requirements and increasing market share. For example, considering the high-temperature and high-dust environment of the Middle East, it optimizes the sealing and high-temperature resistance of bearings, launching specialized bearings adapted to local conditions, which have gained recognition from Middle Eastern customers.
Thirdly, it strengthens supply chain management to enhance resilience.
Ningbo DAZ further improves its supply chain system, expands its diversified raw material suppliers, and establishes long-term cooperative relationships with domestic bearing steel manufacturers to reduce reliance on imported raw materials. At the same time, it optimizes inventory management, rationally controls raw material and finished product inventory, avoids inventory backlogs or stockouts due to logistical delays, and enhances the flexibility and stability of the supply chain.
Furthermore, the company strengthens collaboration with upstream and downstream enterprises, sharing market information and logistics resources to jointly address supply chain disruptions.
Ningbo DAZ's response strategy offers important insights for the Chinese bearing industry in dealing with the impact of geopolitical conflicts: On the one hand, Chinese bearing companies must face the challenges to logistics, markets, and supply chains brought about by the Middle East wars, and reduce operational risks by optimizing logistics routes, adjusting order structures, and strengthening supply chain management; on the other hand, they must seize the opportunities presented by market restructuring and industrial upgrading, increase investment in technological research and development, optimize product structure, enhance core product competitiveness, escape the predicament of low-value-added competition, and expand into diversified markets to reduce dependence on a single regional market.
V. Conclusion: Finding Opportunities Amidst Crisis to Promote High-Quality Development of China's Bearing Industry
The Middle East war, as a sudden geopolitical conflict, has had a multi-dimensional and profound impact on China's bearing industry. It has brought short-term challenges such as logistical disruptions, rising costs, and order fluctuations, but also long-term opportunities such as market restructuring, industrial upgrading, and technological breakthroughs. Ningbo DAZ, as a representative of China's small and medium-sized bearing enterprises, reflects the resilience and vitality of China's bearing industry in the face of adversity through its product layout and coping strategies. The Chinese bearing industry, with its complete industrial chain, high cost-performance advantage, and proactive responses from enterprises, can effectively resist short-term risks and seize long-term opportunities.
