China's exports of ceramic sanitaryware in the 11 months to November 2005 soared 47 percent from the same period in 2004, closely mirroring the 50 percent average growth rate the industry has registered since 2001. This year will be no different as more suppliers focus on expanding their business overseas, particularly in high-end markets such as the US and the EU.
Ceramic sanitaryware exports to these destinations will consist primarily of OEM orders as suppliers in China are currently incapable of competing with industry giants such as American Standard, Kohler, Roca and Duravit in terms of branding.
The following are some of the key trends we see in China's ceramic sanitaryware industry:
• Most suppliers will boost capacity this year to be able to meet the anticipated increase in demand. Many will be upgrading their factories by purchasing new kilns while some will be moving to larger facilities.
• More suppliers will be exporting to the EU and the US, depending on their CSA- and UPCcompliant products and strong OEM capability to attract orders.
• Export prices will rise in the next 12 months, albeit by up to 10 percent only, even as costs of various manufacturing inputs continue to soar by as much as 60 percent.
• Makers will be dealing with higher raw material costs by improving QC standards and procedures to minimize defects and save on production expenses.
Toilets, bidets & urinals, and washbasins are the two biggest ceramic sanitaryware product categories exported from China. Many suppliers also manufacture ceramic bathtubs, but output in this line is relatively low because of weak demand. All three product categories have been covered in this report.
The Products & Prices section discusses the main criteria that distinguish low-end, midrange and high-end ceramic sanitaryware.
Industry Overview
INDUSTRY OVERVIEW
China's exports of ceramic sanitaryware have grown dramatically in recent years, soaring at an average 50 percent every year since 2001. This annual double-digit increase will continue, especially as more buyers opt for low-cost products from China and more suppliers concentrate on expanding their market reach overseas.
The emphasis on exports is a strategic measure to counter the slowdown in the country's domestic market. The slowdown resulted from macroeconomic policies implemented in 2004 that restricted investment in several industries. These included construction and real estate, which are the main drivers of domestic demand for ceramic sanitaryware.
China suppliers currently do not have the resources to compete directly with well-known sanitaryware makers such as American Standard, Kohler, Roca and Duravit on an own-brand basis. Backed by more than 50 years' experience in the industry, most of these multinational companies have wide sales and distribution networks that span several countries and regions. Most China manufacturers, on the other hand, have been in the industry for less than 30 years and started exporting only in the past decade. Even large makers are just starting to establish their brands overseas.
This is primarily why most manufacturers in China are focusing on enhancing their OEM capability to penetrate foreign markets further, especially the high-end segments of the EU and the US.
OEM orders currently account for about 70 percent of ceramic sanitaryware shipments from China. Major clients include Mansfield, Western and Wal-Mart of the US, Caroma of Australia, B&Q of the UK and OBI of Germany.
Bolstering the price advantage
China suppliers' ability to offer prices up to 50 percent lower than most of their overseas rivals will continue to be the main factor that will win more OEM orders. This competitive advantage, especially over large-brand companies that do not manufacture in China, is made possible by low labor costs, the use of indigenous raw materials and the abundance of fittings and accessories locally.
Supplier Profile
Chaozhou Paja Ceramic Wares Industry Co. Ltd
Ceramic sanitaryware and bathroom accessory maker Chaozhou Paja offers midrange and high-end washbasins, toilets, bidets, urinals and squat pans. It also makes acrylic bath and shower enclosures, plumbing fittings and accessories.
The maker has two factories in Chaozhou, Guangdong province, with a combined area of 53,000sqm and 450 workers. The company hopes to expand capacity by as much as 20 percent by upgrading its facilities in the next 12 months.
Products
Chaozhou Paja devotes 60 percent of total production to toilets. In turn, 60 percent of the line consists of two-piece models with a washdown flushing system. Two-piece toilets range in price from US$28 to US$40. The PB-2130 with 3 to 6L flush volume is priced at US$36.
Washbasins, including countertop, under-counter, half pedestal/pedestal, cabinet and art basins, take up the remaining 40 percent of output. Above the- counter basins represent 70 percent of the line and sell for more than US$25.
A nine-member in-house R&D team comes up with more than 20 new products annually. The maker developed nanoceramic powder and started using nanotechnology two years ago in its glazing to give products bacteria-resistant features.
The team currently focuses on square designs, specifically for art washbasins, and water-saving products. Buyers' specifications are also accepted.
Manufacturing
Chaozhou Paja processes clay and glaze and makes all molds in-house. Plumbing fittings, drains and traps are sourced from local suppliers such as WDI and Aimas. PVC and stone used in cabinets and vanity tops are imported from Iran.
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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