China's dinnerware exports are on the rise as demand from major markets continues to grow and makers enhance the quality of their products.
The country exported US$2.8 billion worth of porcelain, ceramic, melamine and plastic dinnerware in 2005, a yearon- year increase of 25 percent.
China's main export market of porcelain dinnerware is the EU with exports reaching US$433 million in 2005. The region accounted for 30 percent of total overseas shipments in the line.
When it comes to plastic and melamine dinnerware and tableware, the country exports mostly to the US, accounting for 36 percent of the China's total exports in the line.
Aside from the US and the EU, Asia is also a key export market, especially for melamine models.
An estimated 70 percent of dinnerware shipments from China are under OEM orders.
Some companies also export under ODM, wherein their own designs are exported under buyers' brands or labels.
The following are some of the key trends we see in China's dinnerware industry:
• Export prices, particularly of porcelain dinnerware, are expected to increase marginally in 2006 to reflect adjustments in the cost of petroleum and raw materials.
• A large number of companies will boost their production capacity in anticipation of increased export orders, especially from the EU.
• Companies will take measures to deal with rising production costs. While some will install energy-saving kilns, other manufacturers will increase capacity to achieve economies of scale.
• The ODM line is expected to grow up to 20 percent annually in the next few years, as more makers are enhancing their design capability.
China's dinnerware exports comprise mostly porcelain, ceramic and melamine products. These are also the scope of this report.
The Products & Prices section in this report details the material composition, features and price ranges of these products. The latest trends in design are discussed in the R&D/ Design section.
The Manufacturing section explains the processes involved in the manufacture of dinnerware and how these differ in small and large makers.
The Industry Overview elaborates on the industry composition, highlighting key characteristics of the different types of suppliers.
Guangdong province is the main production hub for ceramic and porcelain dinnerware, while most melamine product makers are spread across Fujian, Guangdong and Zhejiang. Most suppliers in Zhejiang are small and midsize companies catering to the low-end of the market.
Industry Overview
China's exports of dinnerware are growing steadily even as the industry deals with numerous challenges including increases in material costs, labor shortage and stiff competition.
According to China customs statistics, overseas shipments of dinnerware in 2005 rose 25 percent to US$2.8 billion. Porcelain dinnerware shipments accounted for more than half of total exports in the line, increasing about 26 percent. Plastic tableware and kitchenware shipments increased 27 percent to US$1 billion.
Exports of porcelain dinnerware to the EU jumped by a dramatic 112 percent to reach US$433 million in 2005, after quota restrictions were removed at the beginning of the year. Shipments to the US rose by a comparatively modest 20 percent to US$247 million.
The positive outlook for the industry is expected to remain this year, as demand for China-made dinnerware, especially porcelain products, continues to grow.
However, in the backdrop of this robust growth are numerous impediments that could slow the export boom.
One of the most pressing challenges in the industry is rising manufacturing costs. Fuel, which accounts for a large share of production expenses for ceramic and porcelain dinnerware suppliers, continues to fluctuate. The cost of the most commonly used fuel, coal gas, jumped more than 60 percent to US$617 per ton last year. Some suppliers shifted to natural gas, which is less expensive. Its cost, however, also rose about 20 percent.
Melamine dinnerware makers are also coping with rising material costs. Although the price of melamine powder has stabilized this year, the material is still 10 percent more expensive than it was in 2004.
In addition, a shortage of skilled workers has been posing problems, especially for porcelain and ceramic dinnerware makers. In fact, a number of companies are unable to run at full capacity because of this.
A growing service sector and the increasing reluctance of rural residents to seek employment in urban areas have contributed to the labor shortage. This, coupled with a restrictive rural to urban migration conditions, has reduced the pool of both skilled and unskilled labor in industrialized provinces such as Guangdong, Zhejiang and Fujian.
Porcelain and ceramicware production requires highly skilled and experienced workers for tasks such as operating manual kilns. However, with the labor shortage, many suppliers are forced to hire inexperienced workers who are not as efficient. This can potentially affect quality and increase defect rates.
The large number of suppliers in the industry also adds to the problem. Small makers are especially affected as they are unable to provide better benefits to workers, who are enticed by companies offering higher wages.
In order to retain employees, many companies have had to raise salaries, and improve living and working conditions of their workers. Some well-established large companies, on the other hand, have invested in computerized kilns to eliminate the need for skilled workers.
Supplier Profile
Chaozhou Dafeng Ceramic Fty
Established in 1996, Chaozhou Dafeng specializes in ceramic products. Midrange and high-end models, all of which are exported, dominate production. About 40 percent of exports go to the EU, with the remainder shipped to Asia, the US and the Middle East. OEM orders account for 80 percent of exports.
The company's total annual revenue is US$1 million, 95 percent of which comes from dinnerware exports.
Products
The maker produces ceramic household dinnerware and wine bottles. About 80 percent of all products are targeted at midrange markets.
Prices are determined mainly by shape, glaze, size, production processes used, and amount of detail added. All items are below US$1 per piece.
Most models exported are priced from US$0.15 to US$0.25 each. Handpainted products with gold edges and decorative patterns, color glazed items or those in fancy shapes are US$0.20 to US$0.30 each, about 15 percent more than basic ones.
Since fuel accounts for 40 percent of production cost, the firing temperature required for each product also affects price. Models with decorative patterns are fired at 810 C and up, while glazed products have a firing temperature of 1,120 to 1,250 C. Because of this, prices of ceramicware fired at high temperatures are 10 to 15 percent higher than those that require lower temperatures.
Although the price of fuel has almost doubled, Chaozhou Dafeng will not raise prices in coming months.
Its R&D team has 13 members and releases more than 1,000 new models annually.
Clay and glaze are purchased locally. All materials used are approved by the Guangdong Municipal Bureau of Quality and Technical Supervision.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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