Gaoan Production Area: Expansion Under Pressure

07 Aug 2015/CTW

With kiln shut down for maintenance, 2013 has come to an end. What are the developments in


Gaoan production area in 2013? What are the highlights? We visited ceramic producers in the area for a big picture of this year.


Over 20 new production lines in operation


The year of 2013 is still the expansion year thanks to the ease on new lines limit from the government. Based on incomplete statistics, over 20 new production lines were set up 10 old lines were rebuilt in the whole Gaoan production area in 2013.


Companies specializing in polished tiles su ch a s H uashuo C eramics, Rover Ceramics, Jinhuan Ceramics, Ruiyuan Ceramics each set up one new line; companies specializing in full polished glazed tiles and ru stics tiles such as Jingcheng Ceramic, Jinweiguan Ceramics, Pujing Ceramics,


Zhongpeng Ceramics and New Peak all had new lines put into operation, so do ceramic chip companies like Shenzhou Ceramics, Jinkairui Ceramics and Luosifu Ceramics; Companies of Spanish tiles a nd exte rior wall tiles also established lines.


In addition, Yu Guoguang, the board chair of Jiangxi New Scene Ceramics, invested a new Spanish tile company named Guofeng Ceramics; Jian Guokang, former general manager of New Pearl, invested to build one new ceramic chip company in Pingxiang. The New Pearl and Henghui Ceramics also renovated polishing lines and upgraded their products. 


What’s worth noticing is that the new lines are all big ones and broad kiln is the main trend. After the emergence of five ceramic presses in one line by New Peak, the eight ceramic presses were installed in one line by Luosifu, with the capacity of 30,000-50,000m2 per day, reaching the record in both ceramic press amount and production capacity.


Xiao Naiguo, vice general manager of New Peak, thought that the operation of big lines meant the improvement of capacity and fiercer competition next year in Gaoan area; Xie Xiangjun of Huashuo Ceramics held that the capacity increase of single line would influence product price.


Fiercer war of price


Xie Xiangjun said t hat the general sales in August of Jiangxi were not bad and the performance of Huashuo Cer amics gained the approval from stockholders after ad ding one new production line. The sales remained surprisingly good since the beginning of this year, especially from June to August withou t the expected slack season. But things changed since the second half of the year when it was more and more difficult to make deals. 


Hong Kewen, marketing manager of Shenzhou Ceramics related that the pressure of the second half of the year was larger, for so many ceramic chip companies have made fine tune on price. Noticeably, Spanish tiles and exterior wall products faced more market pressure and suffered severe inventory due to poor market. After the expansion of last year, competition became fiercer. To differentiate product, some company stepped into the production of ink-jet printed exterior wall tiles. According to a ink printer supplier, 2014 would be“ the year of ink jet” of exterior wall tiles after the successful operation of the line of this kind. 


The full polished glazed tile is the theme of Gaoan this year. It has been used by large companies like Taiyang Ceramics, Jinniu Ceramics, Tianrui Ceramics and Jinsanjiao Ceramic with more and more positive market feedback. Xia Guanghui, president of Jinweiguan Ceramics in marketing related that the second line of full polished glazed tile of the company has gained acceptance from many distributors and full polished glazed tile has become the new fashion in t he field of rustic tiles. The price of it was actually de-creasing influenced by that of other areas despite of the increasing output. 


It’s said that the price of full polished glazed tile in Gao an is between 23RMB and 30 RMB. The competition of price would be fiercer.


More pressure from environmental tax


Together with fiercer competition, more pressure is from the increasingly harsh regulation and environment protection policy from th e g overnment, and operation cost including property management fee and tax on production power. In 2013, Gaoan government released a list of enterprises to renovate environmental facilities like desulfuration and dust elimination. Responses from companies showed that the fee of single line up grading has reached hundreds of thousand yuan and even millions for those with more lines. 


In addition to harsh environmental measures, the change of tax mode left companies in unprecedented mire. According to the latest No.80 document by Gaoan branch of National Tax Bureau, the tax would be leveled on the amount of electricity instead of kiln previously. Consequently, companies of polished tiles, rustic tiles, ceramics chip and Spanish tiles would pay an added-value tax 30% more than last year, some even higher. It is analyzed that Gaoan ceramic companies would become the ones with highest tax among all major production areas nationwide.


Expansion boom elsewhere Along with enlarging produciton scale in Gaoan, some companies began to expand in other areas: Henghui Ceramics raised its investment in Yili, Xinjiang Autonomous Region as the second line was put into operation; Ruizhou Ceramics also set up factory in Yili, so did many partners in ceramics industry; Jinniu Ceramics Group expanded in Hunan for the first time, where it contracted to a local ceramics company in terms of lease. The production and sales are both sound; Xinzhongying Ceramics enlarged c nstantly its production scale in Jiujiang base and add new lines in 2013.


With regard to business development, ceramics companies in Gaoan actively go out under the guidance of government. After MosBuild, 12 companies in the area showed up in group in Big5. As the largest outbound ceramics company, Jiangxi Jingcheng Ceramics continues to lead the ceramics companies in central China with an export volume of more than 80 million yuan.


Reporter Wang Yongsheng

This is the 3rd issue.

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