Internal ceramics industry, internal and external conflicts frequently caused by profit margins due to price war

For the ceramic industry, this year can be described as internal and external problems. Overcapacity, low value-added products, weak international competitiveness, and low profit margins have encountered many anti-dumping investigations.

Faced with such difficulties, where is the future of the ceramics industry?

Internal worries: Weak profits in excess capacity As ceramic companies continue to expand, production lines continue to expand, and the total production volume continues to increase, resulting in serious overcapacity, supply and demand have lost balance.

In fact, although China is a big ceramic producer, it is not a strong country. The main products are middle and low grades, with low added value and low selling price in the international market.

According to reports, a ceramic cup with a price of US$0.7 was exported to the European Union at a price of approximately US$3.5, but domestic enterprises only profited US$0.1. The rest of the bulk was taken away by foreign distributors. They removed expenses such as shipping costs of about US$1.50 and actual profits exceeded US$1, which was 10 times that of Chinese manufacturing enterprises.

Zou Mingxiao, researcher of China Investment Advisor Building Materials Industry Group, told the Securities Daily that China's ceramic companies have a meager profit due to high costs and relatively low sales prices. One of the most important reasons is fierce market competition. Due to the serious homogeneity of products and the high concentration of sales markets in major manufacturers, the market competition is fierce. In order to increase sales volume and gain market share, ceramic companies do not hesitate to lower prices. Sales, which led to a meager profit in the industry.

"The rise in upstream raw materials is also one of the reasons for the slim profits of ceramic companies," said Xia Gaosheng, deputy secretary-general of the China Building Sanitary Ceramics Association.

In addition, due to the introduction of China's real estate control policies, the ceramic industry is also facing the problem of excess production capacity is even more serious.

Xia Gaosheng said that the macro-control of real estate restricts the growth of market demand, making price competition fierce and price increase difficult.

External problems: According to data from several Chinese anti-dumping Chinese Ceramic Industry Associations, at present, China is already the largest producer of daily-use ceramics and its output accounts for about 70% of the world's total.

In addition, China's daily-use ceramics market share in the EU has been close to 50%, is the EU's largest importer of ceramics for daily use.

According to statistics from China Ceramic Industry Association, the cumulative amount of EU kitchen utensils exported by China last year exceeded 700 million U.S. dollars.

The European Commission recently issued the "Circular on the EU's Anti-Dumping Investigation on China's Ceramic Kitchenware", announcing an anti-dumping investigation against China's exports of ceramic tableware and kitchen utensils to the European Union.

Prior to this, in September 2011, the European Union made a final ruling on Chinese ceramic tile anti-dumping cases, imposing a punitive tariff of up to 69.7%, which is valid for up to 5 years, and may be extended as the case may be.

This is an anti-dumping case in China's ceramics industry with the most extensive impact and the largest amount of money involved. The amount involved is as high as 700 million U.S. dollars, including more than 2,000 companies.

In fact, this is not the first anti-dumping case faced by the ceramic industry.

According to the Ministry of Commerce, the Indonesian anti-dumping committee also announced at the beginning of this year the final ruling on anti-dumping investigations of Chinese ceramic tableware products. It is proposed to impose an anti-dumping tax of 87% on these products. This is the first anti-dumping case encountered by the ceramics industry this year.

"The EU has launched an anti-dumping adjustment on China's ceramic tableware and kitchen utensils. During its investigation, it will reduce the number of China's ceramic exports and exports," said Zou Mingxiao.

At the same time, this anti-dumping will also be beneficial to the long-term development of China's ceramic industry.

"Current ceramic companies lack the capability of independent innovation and the competitiveness of the international market is not strong," said an industry source.

Zou Mingxiao believes that this may be conducive to a certain extent, China's ceramics continue to improve management and management, improve product quality and market transparency. If there is no problem in China's ceramic industry after the EU investigation, this will enable China's ceramic products and kitchen utensils to obtain excellent export benefits, which will benefit the ceramic industry's exports.

Need to pay attention to the industrial chain division of labor It is worth noting that due to overcapacity and other reasons, a number of ceramic listed companies in the first half of this year's performance is also very unsatisfactory.

Among them, *ST Guanfu expects net profit attributable to the shareholders of the listed company for the period from January to June 2012 to be a loss of 35 million to 40 million yuan.

According to ceramic companies, the poor performance of ceramics companies in the first half of the year was mainly attributable to the decrease in the sales volume and the decrease in the average sales price compared with the original estimate, which affected the decrease in gross profit.

A ceramics company official interviewed the "Securities Daily" reporter, said that the ceramic industry currently needs to carry out industrial chain division of labor and resource integration, different products have their own specialized OEM factory, each specialized in a small number of varieties but the scale of production The specialized production will divide production and branding and sales channels and cooperate. The cost-competitive companies will be better and better, and production capacity without cost competitiveness and low product technology capacity will be eliminated naturally.

In this regard, Xia Gaosheng also agreed that: “The ceramic industry's entire industrial chain management, without a specialized division of labor, resulting in the production side of the asset investment is too large, the channel is too complicated to sell the surface, management is difficult and costly. ”

In addition, Zou Mingxiao told the "Securities Daily" reporter, the ceramic industry is in the off-season, the market demand is low and the ceramic industry is overcapacity, to resolve the contradiction between production and marketing are mainly from the two sources of income and reduce expenditure.

“In terms of open source, ceramic companies should open up new channels and gradually reduce product prices to promote sales and increase sales. In terms of cost reduction, ceramic enterprises should gradually reduce their production volume, improve their technical level, and conduct research and design of new products to meet their needs. The need for personalized and diverse consumers."

Zou Mingxiao believes that in the future, China's ceramics industry must improve its technical level, increase its R&D strength, and continuously introduce diversified and individualized high-quality products to occupy the market with product quality. In addition, ceramics companies should explore emerging markets to avoid high concentration competition in the industry and differentiate their products and channels in order to increase market competitiveness and capture the market.

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