China’s ceramic tile and sanitary ware industry has made great progress in recent years due to improvements in technology and upgraded production machinery. China now is capable of making turnkey ceramic tile and sanitary ware production lines equipped with complete production facilities, from pressing, glazing, powder loading, printing and decorating through to drying and kiln firing.
Although the country is now almost completely independent from imports of machinery and equipment, including 7,000-ton presses and kilns measuring over 300 meters in length, China is still behind developed countries in terms of technology, innovation and design, most specifically technology for energy-saving and environmental protection. In regards to stability and reliability of the production line, there are many improvements that need to be made to catch up with European modern technical standards.
Structure of industry changingIn accordance with the principle of developing a scientific and harmonious society, the Chinese government has made great efforts to promote the healthy development of the ceramic industry by administrative, economic and legal means. Laws and regulations on energy-saving emission reductions, hygienic production, and environmental protection have been promulgated and a series of evaluation measures and implementation methods concerning price, taxation and finance control have been introduced.
The government focuses on a policy of optimizing and upgrading the ceramic tile and sanitary ware industrial structure. As a result, the industrial structure of the ceramic industry has undergone major changes.
At Foshan, the largest ceramic tile production base in China, the ceramic industry upgrading policy has forced some enterprises to move away from the Guangzhou area with all the new factories following a more rational industrial layout.
Small enterprises with obsolete technology and high-energy consumption will be closed down and operations of centralization and consolidation of the ceramic tile factories will be undertaken. More and more large-scale enterprises will take over small- and medium-sized units as the European ceramic tile and sanitary ware industry has done for years.
Technological progress is also leading to larger production units. Larger presses and kilns are now allowing for greater production capacity and efficiency, especially in energy-saving kilns.
A third important aspect of this period of change is the shortening of product lifetime in China. This is due to the fact that products in the market have greater variety and better quality, while poor-quality and high-energy consumption products will be gradually pushed out of the market.
Last but not least, in accordance with the environmental policy, referred to as the “Three Wastes Policy,” ceramic companies in China are making efforts to develop recycling systems, to minimize the consumption of resources (energy, raw materials, land and water) and production of industrial waste, and to achieve the “zero” emissions target laid down by national standards. Most of the newly built ceramic factories can boast a high level of plant design, energy saving, environmental protection and clean production.
In addition to installing larger kilns with greater production capacity, companies are making best use of high-performance refractory materials to improve energy saving on the production line.
Environmental protection and costsChina has been making great efforts in research and development of high-performance products with greater energy-saving and heat insulation capabilities that guarantee lower energy consumption of buildings, as well as smaller, thinner and multifunctional products.
Considering environmental protection and cost saving, some companies have moved to other new ceramic tile and sanitary ware production areas such as Jiangxi, Hubei, Hunan and Liaoning, a trend that is gradually resulting in the formation of many new ceramic production bases in Jiangxi Gaoan, Liaoning Faku, Jianping and Hubei. These new manufacturing bases are strictly monitored by the local government and must be constructed under the non-negotiable regulations that require compliance with the above-mentioned standards.
In the new production bases such as Jiangxi Gaoan, most of the factories and kilns are very large measuring over 180 meters in length. Annual capacity is expected to be around 650 million square meters when all the companies have reached full-scale production in the near future. The total new area covered is about 10 square kilometers, which includes not only the manufacturing areas but also the research and development laboratories, warehouses and logistics centre.
Meanwhile, production costs have risen in recent years for a number of reasons: increased prices of energy and raw materials in ceramic production; rise in labor costs following approval of the new labor law; the greater efforts made by the Chinese government and enterprises to adapt plants to environmental protection legislation; increased land costs and logistics costs of enterprises.
Moreover, on account of the cut in export tax rebates which will decline to zero in the future and the appreciation of the RMB, the international competitiveness of China’s export enterprises will decline. Low-price exports will be terminated while most export companies will have to concentrate on design, innovation and quality in order to compete in the international marketplace with high value-added products, thereby increasing the total value of exports.
Production and main export marketsChina has been the world largest producer and export leading country for several years. In 2007, its production capacity of ceramic tiles was 5 billion square meters. Because of the consolidation and merging of factories, the number of ceramic factories has decreased each year - now standing at around 2,000. Most tiles were shipped to countries in Southeast Asia and the Middle East such as Saudi Arabia, United Arab Emirates, South Korea, Singapore and Hong Kong. Exports to Europe and the United States were relatively low (only 30 million square meters of ceramic tiles to the U.S.). The main problem faced by China’s ceramic exports is OEM-based and the fact that low prices have led to poor economic benefits. Meanwhile, exports increased by a “mere” 11%, a slowdown that is partly explained by the government’s policies to progressively discourage low-cost and outsourced exports.
Chinese products in U.S.A. and forecastsIn 2003, exports of ceramic tiles from China to the U.S. reached 5.38 million square meters. This figure has increased considerably in recent years considering the low price. The growth rate of exports to the U.S. was about 50% during these years, but dropped sharply in 2007 to just 14.3%, apparently affected by the U.S. subprime mortgage crisis. But, China is the only country not to have experienced a fall in exports to the U.S. in 2007 in terms of either volume or value.
Due to the economic recession and real estate downturn in the U.S., the growth rate in ceramic tile exports will slow down, further aggravated by other factors such as the steady increase in production costs due to the abolition of export tax rebates and the appreciation of the Chinese currency.