The 2023 Foshan Uniceramics Technology Expo has concluded successfully. On the evening of the first day of the opening ceremony on May 30th, "Uniceramics in Foshan Reception", co-sponsored by the exhibition organizing committee and the Ceramic Town Weekly, was held in Foshan Huaxia Pearl Grand Hotel. More than 600 ceramics peers from China, Italy, Spain, India, Vietnam, Turkey, Indonesia, South Korea, Bangladesh, Sri Lanka, Egypt, Algeria and other countries gathered together to think about the future of world ceramics in the new era.
At the dinner, Chen Huan, Executive Vice President of Guangdong Building Materials Industry Association and President of Guangdong Ceramic Association, Gian Paolo Crista, Executive Director of Italian Ceramic Machinery and Equipment Manufacturers Association, and Nguyen Mingjun, Vice President of Vietnam Ceramic Association, respectively shared the situation of China, Italy, and Vietnam's ceramic industry and proposed development suggestions. Meanwhile, Liang Tongcan, President of the Foshan Ceramic Industry Association, announced on behalf of the organizing committee that the 2024 Foshan Uniceramics Expo will be held from April 18th to 22nd, with the product and technology exhibition held simultaneously, and the exhibition will last for 5 days.
Then, Bian Cheng, the President of the Foshan Entrepreneurs' Association and also the Chairman of KEDA Industrial Group, a leading Chinese ceramic machinery enterprise, made a speech that many low-yield old production lines are no longer competitive and need to be transformed towards higher production and lower costs. Italian and Chinese ceramic machinery companies can collaborate to reduce manufacturing costs and help customers save money.
He also suggested that China is the world's most capable consumer of luxury goods, and Italian ceramic companies and their Chinese counterparts can work together to expand the sales of Italian tiles in China.
Old ceramic production lines lose competitiveness
The Production Line on "Chinese Manufacturing Model" is the Future
The first viewpoint proposed by Bian is about the future destination of the old production lines on "European Manufacturing Model". He believes that those old ceramic production lines that have been built for more than 15 years and have a daily production capacity of less than 5,000 sqm. have lost their market competitiveness and are difficult to survive because there are production costs at least 20-30% higher than the lines on "Chinese Manufacing Model". Only by transforming them into new production lines with a daily production capacity of over 10,000 sqm. can have a chance of survival.
The "Chinese Manufacturing Model" refers to a production line with characteristics of small investment, large output, low cost, and high return, as this production model is mainly created by China. While the production lines manufactured by European companies in the past often have characteristics such as small output, high cost, and flexibility, which we consider to be the "European Manufacturing Model".
From a global perspective, between the 1990s and in the early 2000s, many ceramic production lines with a daily production capacity of no more than 8,000 sqm. were built in ceramic production areas such as Europe, North Africa, the Middle East, and Southeast Asia. Most of their equipment were provided by European companies, which was a typical "European Manufacturing Model" production line. These production lines have a history of over 15-20 years, and they have fallen behind the times in terms of production efficiency, automation, intelligence, and energy conservation and environmental protection. Most of them have a need to be renovated or transformed.
In recent years, most of the new ceramic production lines in India, Turkey, Algeria and other places has adopted the "Chinese Manufacturing Model". Through large-scale production, the comprehensive energy consumption of these production lines is greatly reduced, fuel and electricity can be used more economically, and carbon emissions are also relatively lower. And the high level of intelligence has also significantly reduced the number of single line employees, resulting in a reduction in labor costs. According to the industry, the cost difference between new and old production lines has exceeded 20% based solely on energy consumption costs and labor costs.
However, this does not mean that the "Chinese Manufacturing Model" is better than the "European Manufacturing Model", and ceramic companies still have the choice to find the model that suits them. Moreover, it is not only Chinese ceramic machinery companies that can do "Chinese standard", but also their Italian counterparts.
If ceramic tiles are divided into three levels: building materials, decoration materials, and artworks, the "Chinese Manufacturing Model" production line can be used to produce building and decoration material level ceramic tiles that meets the needs of most people, but ceramic tiles at the art level require the "European Manufacturing Model" production line, so the "European Manufacturing Model" still has its market.
In any case, this is a huge opportunity, both for the development of ceramic companies with old production lines and for ceramic machinery companies. "Not only Chinese ceramic machinery companies can do it, but also Italian counterparts. All machinery companies can produce equipment and production lines on "Chinese Manufacturing Model" . We can face this opportunity together, " Bian said.
Chinese steel and labor have cost advantages
Chinese companies can contract for global manufacturing
The second viewpoint is based on China's cost advantage in machinery, Italian and Chinese ceramic machinery companies can cooperate . He said that the average price of steel in China is 600 euros per ton, while in Europe it is 1,500 euros per ton. The average monthly labor cost in China is about 8,000 yuan(About 1,052 euros), while the average monthly labor cost in Europe is about 20,000 yuan(About 2,632 euros). These two main production costs in Europe are 2.5 times that of China. If a part of European ceramic machinery manufacturing is handed over to China for production, the cost can be saved by at least half, so that customers can save money, and European and Chinese ceramic machinery companies can also make profits.
The world steel center has undergone three transfers in history, the first from Britain to the United States, the second from the United States to Japan and South Korea, and the third from Japan and South Korea to China. At present, China's steel production has reached the level of 1 billion tons, accounting for more than half of global steel production, and China's steel consumption also accounts for over 50% of global steel production.
"According to Shanghai Steel Union, since 2011, the price of steel in China has fluctuated within a certain range of 4500 yuan/ton (About 600 euros). Although China's labor costs have been increasing in recent years, they still have a huge advantage compared to Europe. Moreover, according to the National Bureau of Statistics of China, the average monthly wage level in China's manufacturing industry in 2022 was 8,127 yuan(About 1,069 euros)", which is basically in line with what the Bian said.
The huge gap in production costs such as steel and labor has created conditions for cooperation between Europe and China. In fact, Italian ceramic machinery companies such as System, Sacmi, and Siti B&T have established factories in China, but there are still many European ceramic machinery companies that do not have the conditions to invest factories in China. So, it may be a good choice for Chinese companies to engage in partial OEM, as this can not only enjoy the benefits of labor, land, raw materials, etc. in China, but also retain the final production control of the product, while also saving costs for customers.
"This cooperation must be a win-win result, " Bian said. Now KEDA's factories have the ability to manufacture equipment with an annual output of 2 billion US dollars in the future. KEDA is willing to provide OEM for the equipment for ceramic machinery companies around the world.
The largest market for Italian ceramic tiles is in China
Chinese and Italian ceramic companies can achieve deeper cooperation
The third viewpoint is that Italian tiles can make China as the world's biggest exporter. He said that more than half of the global luxury goods market growth comes from China. As a luxury item in the ceramic industry, Italian tiles can fully consider China as the main exporting country, or even the first exporting country. Italy produces 500 million square meters of ceramic tiles annually, which can sell at least one tenth of them to China. The Chinese market is sufficient to absorb these high-end Italian ceramic tiles.
As the world's largest producer and consumer of ceramic tiles, China has a huge market for ceramic tile consumption. In 2021, the consumption of ceramic tiles in China reached 8.268 billion sqm. Even in 2022, which experienced a decline, it was estimated that the consumption of ceramic tiles still was between 6-7 billion sqm.. The market is still huge.
Although Italian tiles have a good reputation in China, their sales scale is always smaller than expected. Bian Cheng believes that Italian ceramic companies should cooperate with Chinese top ceramic companies with the help of the channels of them to increase sales scale.
" If selling one square meter of Italian products is more profitable than selling one square meter of their own products, then selling Italian tiles not only helps Italian companies, but also helps chinese conpamies themselves. This is a collaborative world, whether it's Italy or China, as long as consumers get better products, it's right, "he said.
In addition to considering China as the largest market, Bian cheng also believes that China's redundant ceramic tile production capacity can be utilized by the world. Taking the porcelain slab as an example, as of June 2022, China has built 99 production lines for porcelain slab with specifications of 240 x 120 cm and above, ranking first in the world. However, due to multiple factors such as market environment and epidemic, these production lines are unable to produce at full capacity, and the utilization rate of production capacity is currently at a relatively low level. In contrast, from 2022 to 2023, some ceramic companies in Italy and Spain are still investing new porcelain slab production lines.
He also suggested that Italian and Spanish ceramic companies, as well as ceramic companies worldwide that lack porcelain slab production capacity, can go to China and India, which have abundant production capacity but low utilization rates, to contract and utilize these plentiful production capacity, instead of building more production lines. This can not only save resources and investment costs, but also bring business to partners. Meanwhile deeper cooperation can be achieved between different ceramic production areas.
At the end of the speech, Bian Cheng said that the world ceramic industry should grow through cooperation, rather than through vicious competition. "The world's ceramic people are gathering tonight in Foshan. I hope that from now on, our ceramic industry will enter an era of win-win cooperation!"
Although the above viewpoints still need further consideration and verification, the world ceramic industry does need to strengthen communication and cooperation. Gian Paolo Crista, Executive Director of the Italian Ceramic Machinery and Equipment Manufacturers Association, also mentioned in his speech that Italy is an innovation center, while China is a manufacturing center, and both sides must jointly face industry challenges.