Sichuan Province Piled up a Large Number of Tiles Outside The Door

One of the Ceramic Industrial Park in Jiajiang From the picture that ceramic enterprises in Jiajiang, Sichuan province piled up a large number of tiles outside the door, we can clearly know that the enterprises are now going through a tough time. The reporter of CTW got information from leaders of some enterprises that many storage bases owned by the enterprises were filled with finished products. The difficulty of sales emerged to be a serious question for the ceramic sector in Jiajiang. A sales manager of a famous brand held the viewpoint that the ceramic sector in Jiajiang had entered into a state of "Shuffle Pattern" (the adjustment of industry structure); some of the enterprises will be eliminated in the severe market competition. A ceramic player told the reporter that by June 16, one of the top 5 enterprises in Jiajiang decided to stop producing some regular products (polished tiles, rustic tiles and ceramic chips). The plant of a Guangdong famous brand in Jiajiang has stopped 50% of its lines. The sales value will hit the new lowest record in these years. Professionals in the ceramic sector estimate that the large-scale stop of production lines will break out at the end of June or the beginning of July. The regular tiles, polished tiles and rustic tiles will stop 50% of all the production volumes in Jiajiang. In 2008, there appeared some signs of "Shuffle Pattern" in Jiajiang ceramic industry. Some of the enterprises were in a hard time and even some of them stopped producing tiles. Nevertheless, the market reconstruction after Wenchuan Earthquake boosted Jiajiang ceramic sector, making some closing-down enterprises restarted their production lines. A ceramic player told that during the two years of reconstruction, the market was huge in demand and small in competition. So the enterprises were easy to survive. Moreover, a large number of small medium enterprises began to produce tiles, bring about an expansion in the production capability. This year, under the pressure of electricity power cuts, micro-control of the real estate, and the increase of raw materials' price, the enterprises in Jiajiang were overburdened. Besides, the last two years witnessed an emergence of ceramic production areas in other places and a rush of ceramic products made in other places into the southwest market. The market once occupied by Jiajiang ceramic producers was invaded by other production areas. It is said that there are 400 to 500 railway wagons of ceramic products coming into Sichuan per month, causing Jiajiang ceramic sector to become marginalization. Jiajiang ceramic industry once took up 50% to 60% of the whole market share in Chengdu, but now the king of mid and low end markets has lost its status. There are three reasons accounting for Jiajiang's loss. First of all, the local producers lack crisis consciousness. In the past two years, while other production areas were busy with the industrial upgrade, Jiajiang ceramic industry stayed still because of the reconstruction of Wenchuan in Sichuan Province. Their machinery, process and even the product quality still fell behind their counterparts. Second, numerous ceramic products made in other areas rushed into local market, creating a blast wave in Jiajiang. After Guangdong ceramics were transported to Jiajiang, they defeated the local products for they had better quality and lower price. Thirdly, the blooming market after the Wenchuan earthquake no more existed. But some of the enterprises which started the production lines hastily two years ago just released their production capability in recently days. Nearly 80% of all the Jiajiang ceramic products are sold in Sichuan and Chongqing. There was contradiction between the rapidly expanding production capability and the limited market volume. As far as the reporter knows, there is 20% to 30% production capability that is not completely released. As a result of supply exceeding demand, it was inevitable that some of the enterprises "cannot feed themselves". There are two difficulties in front of Jiajiang ceramic industry. On the one hand, the enterprises cannot sell the products out, hence the storage volume was huge and capital turnover was difficult. On the other hand, the profit was so low that the enterprises were just selling their products with high consumer recognition and little actual profits. In the area, very few enterprises can keep a balance between production and sales. The interview with Mr. Yang Wei, P resident of Sichuan Guang Le Ceramics showed that the enterprises need the help of brands but the core competence remains the product itself. The building of brand is helpless without the support of good products. The concern rate of ceramic industry itself is low while the salesmen of ceramics are widely concerned by people. Although most of the enterprises cannot exert an impact on the consumers directly, they can build a good reputation among distributors. When the majority of the distributors approve the product quality and reputation of the enterprises, it is easier to build sales network and exclusive agencies. If so, why are many ceramic producers in Jiajiang still not so stable? Quite a few distributors in Jiajiang even shift between different brands. The reporter of CTW had talks with some distributors while visiting the markets in Jiajiang. The unstableness of product quality and the lagging updating of design are the major causes. Without a stable sales channel, it is hard for the enterprises to keep the stability of business operation and the development. No stable product quality, no stable distribution group. In all, ceramic producers in Jiajiang still need to devote themselves to products. Only with a solid foundation can the enterprises keep their business longer and more stable. Source: fstcb.com