Expert Analysis: Reasons for Low Price of Chinese Ceramic Products Exports

In the past 20 years, China's ceramic industry has developed rapidly. The output has increased year after year, and the export volume has been increasing. China has become the world's largest ceramic producer and exporter. According to statistical data from relevant departments, in 2010, the output of sanitary ceramics in China reached 177 million pieces, accounting for 40% of the world's total output, and the export volume was 54.2 million pieces, accounting for 30% of the output. The output of daily-use ceramics has reached 27.1 billion pieces. About 77% of the world's total production; ceramic tile production reached 7.8 billion square meters, accounting for 70% of world production. But let's look at the selling prices. In 2010, the average unit price of sanitary porcelain exports was US$14.39, while the average unit price of imports was US$94.66. The export price was only 1/6 of the import price; the average daily export price of single-use porcelain was 34.62 US dollars. Points, while the daily price of imported porcelain is as high as 4.90 US dollars, the export price is only 1/10 of the import price; the average unit price of ceramic tile exports is only 4.53 US dollars / square meter, and the average import price is 18.45 US dollars / square meter, the export price is only equivalent to 1/4 of the import price. Other ceramic products and other industries have similar conditions.

Large production volume, large export volume, but low export sales price, this is the reality that our ceramic industry faces, and it is also a common phenomenon of China's export products. Why is our product's export price low? Some people often think that the quality of our products is not good. In fact, this understanding is one-sided. Is our product quality really not? Not all is also. After years of development, the quality of ceramic products in China has generally improved and reached a certain level of quality. Otherwise, foreign merchants will not come to us to process orders, ordering goods to prove that our products meet their quality standards. Although our products are of good quality and meet the standards of our customers, there are still variability in quality. Some of our ceramics companies have unstable product quality and low quality products. According to the requirements of the merchant's order quality standards, the first-time kiln-excellent product rate is only about 50% (only 50% can meet the quality standards of merchants taking the excellent goods). However, the company adopts certain measures, which can reach about 80% after re-burning; or through more lines (shared), increase production, and meet the requirements for taking goods on time.

We consume a lot of resources and energy, invest a lot of manpower and material resources, generate large amounts of waste, and in exchange for low product prices. At the same time, due to the low prices of export products, they have frequently been subject to anti-dumping sanctions in many countries around the world. Recently, the European Union imposed an anti-dumping tax of up to 69.7% on ceramic products exported from China, and the implementation period will be up to 2016. Prior to this, Argentina, South Korea, Peru and other countries also imposed anti-dumping duties with different tax rates on ceramic products in China. I sometimes think hard to understand. The low price of our export products was originally conducive to the lives of people in export destination countries, but it was subject to anti-dumping charges. Why do we not increase the export price of our products? Manufacturers are afraid that raising prices will lead to sluggish sales and that they will lose the market. In fact, merchants or middlemen are not afraid of low prices, so that they can make more profits. The anti-dumping investigations conducted on ceramic export destination countries are aimed at protecting the interests of domestic companies. This is really a very tangled thing.

China's ceramic products have low export prices. In summary, there are several reasons for this:

1. There are many domestic ceramic companies and the market is fiercely competitive. In order to compete for limited export market resources, the prices of low-price products have been reduced, resulting in low prices for the export products of the entire industry.

2. Most companies do not have a brand, or the visibility and reputation of the brand are low, so the brand value is low and the market share is low. The lack of well-known brands, especially international famous brands, directly leads to low product prices.

3, some companies have poor product design, overall supporting level is low, glazed quality, poor regularity, resulting in a low level of product quality, can only enter the middle and low market, which determines the low price;

4, OEM processing over the years, did not control the terminal market, there is no pricing right. According to the economist Professor Lang Xianping's 6+1 (industry chain) theory, some domestic OEM companies that earn poor hard-earned money only occupy the “1” of the industrial chain, that is to say, they are at the bottom of the profits “production”; The "6" in the high-end profits of the entire industry chain, including: product design, raw material procurement, warehousing and transportation, order processing, wholesale operations, and terminal retail, are controlled by foreign (large company) merchants. In other words, foreign (large company) merchants hold the bulk of profit, control the up and down industry chain, and control the price of the product.

5. Some countries in the world have a long-standing discriminatory attitude towards China's export products. Many years ago, foreigners thought that the products made in China were low-grade products. This subconsciously determines the low price of your product.

How to increase the price of ceramic products in China? This is a concern for everyone in the industry. We should calm down and reflect carefully. In fact, according to the normal product price formation (pricing) theory, [cost (production cost + sales cost)] + profit = price. However, “the price of a commodity is often determined not by its cost but by its value”. This shows the importance of value in determining prices.

Therefore, our first priority is to strengthen brand building, to create a well-known brand and increase brand value. Followed by a good product design, improve product quality, do a good job supporting services, provide a full range of products. Control all aspects from product design to terminal sales, to the "6" at the high end of the industrial chain. In accordance with the “12th Five-Year Plan” requirements of the national ceramics industry, the company will continue to develop “three highs and two selfs” (high value-added, high-tech content, high cultural and artistic, independent intellectual property rights, independent brands) enterprises, and strive to strengthen technological innovation work. Out products with independent intellectual property rights and core competitiveness. Until then, our products have the potential to increase prices and capital.