The Condition Seemed to Be Favorable

Picture of a Ceramic Industry in Yimen, Yunnan Province A drought attacked Yunnan Province last year, but this year, the condition seemed to be favorable and electric power was abundant enough. Even so, the Yimen the production area in the far south-east China offered a depressing picture of production. The reporter with CTW had a telephone interview with Mr. Ling Dongxu, the secretary of the Ceramics Chamber in Yimen County. When talking about the current situation of production and sales, Mr. Ling sighed and said, "The production did not go well. One third of the lines have been stopped." Yimen is the biggest ceramic cluster in Yunnan, with 18 production lines of ceramic building materials and 80% of the total production capability in Yunnan. In recent years, the acceleration of urbanization and improvement of people's living standard in the countryside stimulate the need of wall and floor tiles. If the ceramic sector could develop normally, the ceramic enterprises in Yimen should be entering into a golden period of development. But the truth is that life has become tougher and tougher for the ceramic enterprises. Mr. Ling told the reporter that compared with last year the situation is more severe even though there were no natural disasters or electricity power cuts. Mr. Bai Yuezong, the office administrator of Ya Ou Ceramics Co., Ltd complained about the current situation of the ceramic sales. He said, "It all went wrong. There are problems in the production and sales." Mr. Bai told the reporter that the sales value has decreased by 30% than that of last year. At present, there are as many as 1.5 million to 2 million square meters inventory tiles in the nearly full storage but the sales trend is still going down. Still, Ya Ou Ceramics Co., Ltd keeps all of the lines going, and the daily production volume of 15,000 to 20,000 square meters. As for the solution towards the off-season and the inventory, Mr. Bai, same as Mr. Ling Dongxu, sighed and said: "We have no solutions now. Once the storage is full, we have to stop the lines and wait for the end of the off-season to get rid of the inventory." One marketing department member of Yimen Yi Da Ceramics Co., Ltd told CTW reporters that while other production areas are suffering from power shortage or floods or droughts, Yimen enjoys a much better environment to develop. However, their business still meets with difficulty. "The price of every cost is soaring, such as the raw materials, the electricity and the human resource. But the price of products is hard to grow up, only 0.2 yuan up per square mater in this year." It was said that the crises in other production areas could bring opportunities to Yimen. But the realty goes to the opposite side. Ceramic products in the mid-end and low-end markets of Yunnan mainly come from Jiangxi and Sichuan. Most of the products from Jiangxi are rustic tiles. There is no direct competition since Yimen has no lines of rustic tiles. In the Guo Ya Ceramic wholesale market, the reporter found that the Yimen ceramic enterprises are located in the rear of the market. Mostly, the factories rent the storages directly and use them to wholesale without formal stores. Although the local brands have the advantages of price and regional superiority, the lack of marketing strategies and production capability limit their competitiveness. In all, despite the fact that there were no disasters and power cuts in Yunnan, the sales crisis still exists and even more severe than before because the local brands fail to break the outdated structure of production and sales and fail to grasp the market share owned by migrant brands. Source: fstcb.com