AC17-9

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AC17-9

OFFICIAL MAGAZ I N E:

BANGLADESH CERAMIC EXPO DHAKA

IN FOCUS:

Indonesian tiles Sanitaryware production costs Glaze and frit: the digital impact China: a heavy clay opportunity Plus news, views, analysis and much more!

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AC 17-9

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News

Contents: AC 17-9 News

Features

4 Inside Asia

24 Heavy clay in China

Under the cosh in Indonesia.

6 Welcome

Demonetisation hits brick sector.

8 Across The Continent

Openings, closures and industry moves from across Asia.

18 International News Our eye on the international arena.

20 Material Matters Raw materials news and views.

22 Comment & Analysis REACH-ing out post Brexit…

AC provides a statistical analysis of recent developments in China’s brick and roof tile industries.

30 Sanitaryware production costs

Yogender Malik looks at varying production costs for some of Asia’s main sanitaryare production centres, and asks what companies can do to achieve more competitive rates going forward.

36 Digital print: effects on glaze

AC looks at how the digital printing surge has revolutionized decoration and the effect it has had on frit and glaze suppliers.

42 Indonesian tiles

AC looks at how Indonesia’s tile industry continues to under perform and what it can do to improve its current outlook.

42

Analysis

24

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52 Talking Shop

Jahir Ahmed interviewed Irfan Uddin Rifat, General Secretary of Bangladesh Ceramic Manufacturers & Exporters Association (BCMEA) and Chairman of Fair Organizing Committee of BCMEA’s Ceramic Expo Bangladesh-2017, and also Managing Director of porcelain tableware manufacturer-exporter FARR Ceramics Ltd, to explore critically what is looming on the country’s horizon.

56 Insight

Analysis and insight into Spain.

58 The Hunter And The Hunted

William returns from his travel and looks at why we are all “exhibitionists…”

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Inside Asia UNDER THE COSH‌ Muted demand in domestic market due to less than expected economic growth has been hitting the Indonesian ceramic tile producers badly in the last 12 months. Ceramic tile production, for example, in the country only reached 353 million square meters, or about 59.83 % of the total installed capacity of 590 million square meters per annum. Of the total production, about 87 percent was allocated to the domestic market, while the rest was . exported to various countries in Asia, Europe and America. Despite its competitive advantages, the tile sector is still unable to realize its true potential with a low domestic per capita tile consumption compared to most of its Southeast Asian neighbours. In this issue, AC looks at what the future may hold for this sleeping giant‌

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OF FIC IAL MA GA Z I Brick industry kiln owners in the Telengana district of India N E: BAN G LAD E S H have come out, en masse, and admitted that demonetisation has had an adverse impact on construction activity CE RAM IC Demonetisation and its effects on real estate and EX P O construction activities has affected the brick industry badly, DHAKA bringing it to a virtual standstill in the district. Since there were no takers of bricks made of either cement or soil, the kiln owners have sent away the workers who came from IN FOCUS: different States mainly from Maharashtra and Odisha.

Indonesian tiles Sanitaryware productio n costs Glaze and frit: the digit The industry which recorded the downward growth till al impact China: a heavy clay oppo rtunity Plus news, views, analysis recently seems to have collapsed completely at present. and much more!

For the last two months, brick kiln owners have been sitting idle and wondering what to do.

No money in the hands of farmers and builders following the dry spell, crop failures, absence of remunerative price for agriculture produce, demonetisation and abnormal increase in material costs are attributed to the current plight of the brick industry. Earlier, we used to go round neighbouring States in search of workers and bring them to the kiln sites agreeing to their conditions. The industry used to be vibrant for 10 months in a year and closed only for two months during the rainy season.

Now, the situation is reversed. We ourselves are sending the workers back to their native places,” deplored R. Mallikarjun, owner of Vengamamba Cement Brick Works at Dichpally expressing no hope of revival of the industry in the near future unless construction activity picks up.

He says the cost of material that is dust and cement and coupled with electricity and labour doubled, resulting in bricks becoming costlier.

Apart from that, there is complete slowdown in the real estate business and construction industry, he adds.

There are about 80 kilns in the old district and at least 7 to 10 families are engaged in the work in each of these kilns.

The place was buzzing with workers, owners, customers and vehicles earlier but now they wore a deserted look.

In the latest of a long line of body blows, the impact of Goods and Services Tax also added to the sector’s woes as the industry was brought under the new tax regime.

“Progressive rate of tax is imposed on the industry for the sale of Rs. 50,000 and above. In addition they must be registered online. If they do not get registered they would be punished,” says Kotapati Narsimha Naidu who stopped the business some years back as he became active in politics.

Once again it seems a centralised, sweeping policy in India has threatened the very industries that helped build the sub-continent into an economic giant. How much longer can this be allowed to happen?

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ASAKI fears that industry remains in slowdown • GBH receives takeover offer • Asbestos ban to boost roof tile mar sector closed in the NCR • Johan concedes defeat and confirms closure • Master Tile to undertake expansion • Rus to launch into ceramics manufacture • HD Kilns get green light for brick sector...

INDONESIA

ASAKI fears that industry remains in slowdown There still seems no light to appear at the end of the tunnel for ceramic manufacturers in Indonesia.

The ceramic industry is largely dependent on the property sector. However, as Indonesia's property sector growth has remained insignificant so far in 2017, there is few room for ceramic sales growth. Moreover, local ceramic producers have to compete with cheap imports from abroad.

Normally, the ceramic industry feels the positive impact of big property projects' groundbreaking after about three months, when demand for ceramics suddenly rise steeply. However, without this stimulus from the property sector, it becomes difficult for ceramic producers to keep sales at a satisfying level.

Elisa Sinaga, Chairman of the Indonesian Ceramic Industry Association (ASAKI), said ceramic sales in Indonesia have remained rather flat

in the January-September 2017 period. Moreover, local producers have to compete with ceramic imports.

In full-year 2016 a total of 50 million square meters of ceramics were imported into Indonesia with most imports originating from China where the structural ceramic oversupply situation encourages Chinese manufacturers to aggressively penetrate the global market by offering their ceramic products at attractive rates.

China is estimated to have an installed annual ceramic production capacity of 8 billion square meters.

However, ceramic domestic demand in the world's second-largest economy only stands at 5 billion square meters. Ceramic imports into Indonesia grew 27 percent in 2016, while domestic ceramic sales declined. This points at weak competitiveness of Indonesian-made ceramic.

Edy Sujanto, Chief Operation

Ceramic Production in Indonesia: Company

2015

2016

Y/Y Growth

Ceramic Tiles (in million m2)

400

350

-12.5%

Tableware (in million pieces)

290

275

-5.2%

Sanitary (in million pieces)

5.4

5.1

-5.6%

Roof Tiles (in million pieces)

120

100

-16.7%

Officer at Arwana Citramulia (one of the big four ceramics manufacturers in Indonesia), agrees with Sinaga as he detects no positive impact yet from an improving Indonesian property sector in the third quarter of 2017. Currently, most of the company's sales involve end-users in the retail segment (for example those who renovate their home or build a new house).

However, Sujanto remains optimistic that Indonesia's

ceramic sales will grow in the last quarter of 2017, particularly on the back of the government-led infrastructure development push in Indonesia. Arwana Citramulia targets to see a 15 percent (y/y) rise in revenue to IDR 1.74 trillion in full-year 2017, and a 44 percent (y/y) increase of net profit to IDR 130 billion. So far this year, however, shares of Arwana Citramulia have fallen 20 percent to IDR 416 a piece.

MALAYSIA

GBH receives takeover offer Shareholders of Goh Ban Huat Bhd have received an unconditional mandatory takeover offer from Paragon Adventure Sdn Bhd. Paragon Adventure offered to buy each Goh Ban Huat share at RM1.40, which was a 2.1 per cent discount to its last traded price of RM1.43 as AC went to press.

The takeover offer came after low-profile tycoon Tan Sri Robert Tan Hua Choon sold his 51 per cent stake in the ceramic products company to Paragon Adventure for RM145.71 million.

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Paragon Adventure said, in a filing to Bursa Malaysia yesterday, said the takeover offer includes its warrants, which are priced at 40 sen a piece after having considered the exercise price of RM1 per warrant.

Paragon Adventure intends to maintain Goh Ban Huat’s listing status on Bursa’s main market.

Paragon Adventure is owned

by Datuk Seri Edwin Tan with a 65 per cent stake and Datuk Seri Godwin Tan with the remaining 35 per cent.

It is involved in property

developments in Johor. This includes semi-detached factories "Bizhub Skudai 8", as well as Paragon Residences, Paragon Suites and Paragon Private and International School which commenced operations in January this year.

For the first quarter ended June 30, 2017, Goh Ban Huat returned to the black, registering a net profit of RM445,000 against a net loss of RM715,000 a year ago.

Revenue, however, more than halved to RM4.79 million from RM13.25 million.

As for the full year ended

March 31, 2017, its net profit improved to RM1.88 million from RM244,000 recorded in the previous year. Its revenue declined 29.58 per cent to RM37.35 million from RM53.04 million.

Goh Ban Huat is exploring options to grow its sanitaryware and tableware trading segment beyond the domestic market.

“We are exploring some countries which we think we have some competitive edge, like Vietnam,” executive director David Lai reportedly said at a media briefing early this month.

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rket • Sinto takes stake in 3D Ceram Negev plant poised for closure • Brick stic tile market grows steadily • Industry calls for regulation extension • DBL SRI LANKA

Asbestos ban to boost roof tile market Roof tiles made out of red clay is now in high demand due to the asbestos ban that is set to come into effect next year, according to the country’s Industry and Commerce Ministry. “Our clay is of high quality and is in demand for roof tile making due to the asbestos imports ban starting next year,” Industry and Commerce Minister Rishard Bathiudeen told the 14th AGM of Sri Lanka Ceramics and Glass Council

held recently in Colombo.

“We also assisted SLS certification programme to create a good image of local red clay industry. With the support of National Engineering Research and Development (NERD) Centre we set up Sri Lanka’s first roof tile drying centre in Dankotuwa.

We sent 30 Lankan red clay industrialists for technological training to Belgium and China,” he added.

In September 2016, on a proposal by President Maithripala Sirisena, Sri Lanka announced it was banning the importation of asbestos from 2018.

According to Bathiudeen this has spurred a new wave of redclay roof tile production in the country, a part of which is now successfully exported to UK as well.

Sri Lanka’s ceramic and glass exports fell to US $ 50 million in

2016 from US $ 61 million a year ago, though many believe the plunge was temporary since it was the first time a decline was recorded for many years.

The ceramic and glass industries employ a workforce of around 55000.

The Minister also told the gathering that surveys to find clay and other mineral deposits in the Western and Central Province were completed and they were successful.

JAPAN

Sinto takes stake in 3D Ceram Ceramics are a relatively new material in 3D printing, at least on a large scale. One company has been working with the material in 3D printing for over a decade, however, long before most people knew of it as a material that could be 3D printed. 3DCeram has been 3D printing ceramic parts since 2005, inventing the Ceramaker printer for the purpose. The French company began marketing 3D printing lines based on the Ceramaker 3D printer and associated services in 2015, and since then it has seen a high level of growth and success.

To further accelerate that growth, 3DCeram has signed an agreement with Japanese company Sinto Group, a global industrial partner. Sinto Group has taken a majority share in 3DCeram and will help the company to increase its 3D printer production capacity and accelerate export development, particularly in Japan and the United States.

“This share agreement is a crowning achievement, following our efforts to build an

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effective business and cement our role as responsible company directors,” said 3DCeram CoDirectors Christophe Chaput and Richard Gaignon. “We are working hard to ensure that 3DCeram has a solid, productive future both in France and around the world, and we want to grow our teams. This will provide us with even more solid and reliable financing, allowing us to go forth, grow stronger and offer our clients truly global ‘360° optimised solutions’, built on long-lasting partnerships.”

Chaput and Gaignon have codirected 3DCeram since 2009; the company was founded in 2001. It has opened up new applications for 3D printed ceramics in three major sectors: • Industry: aerospace, defense, aeronautics, electronics, automotive • Biomedical: ocular and cranial implants • Luxury goods: jewelry, clocks, watches 3DCeram saw a turnover of about €2 million in 2016 and currently has about 20 workers in France. Through the new partnership, it will be able to hire

new staff, especially in sales and R&D. “We’re looking to take a new step forward. We’re aiming to both consolidate the value of 3DCeram’s dominant position in the 3D ceramic printing market and strengthen our position as an engineering company in ‘360° additive manufacturing’ on a global scale. Our objective is to make 3DCeram the world leader in its field,” said Chaput and Gaignon. “For the past 8 years, we’ve been building relationships of trust with our employees and partners. This is what has enabled us to meet our growth targets, and we’d like to thank them for their support.

Today, we’re choosing to take a new step forward to ensure that we can continue to expand with the backing of the Sinto Group.

We know that they share the same entrepreneurial spirit, and that they will help us find fresh success with our projects.”

The Sinto Group was founded in 1934 and is currently the global leader in foundry equipment. It also offers solutions for surface treatment, environmental protection,

handling, mechatronics, materials, processes and more.

Investing in 3DCeram is part of Sinto’s plan to expand further, boost international growth and become a leader in additive manufacturing.

“We are delighted to come on board and help 3DCeram grow,” said A. Nagai, President of the Sinto Group. “This French company is renowned for their technological excellence, and we want to help them take their place on the international stage.

This is a long-term investment for us, and our aim is to ensure that 3D ceramic printing can grow to a much larger scale.”

News, views and analysis

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AC 17-9

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News

ISRAEL

Negev plant poised for closure Workers heading for their shifts at the Negev Ceramics Ltd. factory in Yeroham in October were locked out by security guards and received a typed letter that the plant would be shutting down and some 130 workers laid off.

“We tried every way to save the plant, but unfortunately, we did not receive the necessary cooperation from the Histadrut and the workers’ committee and, therefore, our hope was lost,” CEO Uri Gilboa wrote in a letter to employees posted on Facebook.

“We have a real desire to continue production at the plant but, on the other hand, it generates losses of NIS 2 million ($570,000) a month that could pull the entire company

into a dangerous situation.”

According to Gilboa, the company has been forced into an uncompetitive position by a dramatically changing global ceramics market. “The cost of imports [to Israel] is continuously declining,” he said, specifying that Negev Ceramics produces porcelain tiles at a cost of NIS 40 per meter, while imported tiles – mostly from China, Turkey and Spain – sell for NIS 26 per metre.

“Contractors are looking to buy porcelain tiles at a cheaper cost than production in [our] factory,” he said.

Yeroham Mayor Michael Biton rushed to meet with the lockedout workers and management in an attempt to forestall

layoffs, while the Histadrut labor federation petitioned the Beersheba Labor Court for an emergency injunction against the firings.

MK Eli Alalouf (Kulanu) called for an emergency parliamentary panel, which will convene on Tuesday, to discuss the layoffs.

An Economy Ministry representative told The Jerusalem Post this was an internal work dispute but that if both parties ask the ministry to intervene or arbitrate it will do so.

Negev, according to TheMarker, employs 700 people at 10 store branches and offices across the country with 85% of its sales coming from imported products.

The company was bought by

private-equity fund Viola Credit for NIS 320m. in April after losing some NIS 500m. in recent years. Much of the losses stemmed from operations at the Yeroham plant, the country’s only manufacturing facility.

Long-time employees bemoaned the move, which will leave dozens of families without breadwinners in both Yeroham and neighboring Dimona.

A local resident took to social media to condemn the news.

“Is there a responsible adult in the surrounding area?” asked Hanni Briga. “The employees of Negev Ceramics came to work this morning and met a group of thugs wearing black who prevented them from entering the factory.”

INDIA

Brick sector closed in the NCR The booming realty sector is set to be adversely hit in the National Capital Region (NCR) with brick-kilns not conforming to environment norms slated to be closed for four months—October to January.

In compliance with the directions of the Supreme Court-monitored Environment Pollution (Prevention and Control) Authority headed

by Bhure Lal, the Haryana Government has ordered

closure of the brick-kilns that had not converted from natural draft to induced draft technology (popularly known as zig zag technology).

Sources said of the over 350 brick-kilns in the NCR districts falling in Haryana, about half are yet to switch over to the zig zag technology.

The final closure orders had been served as the defaulting brick-kilns were given enough time to comply with norms prescribed by the authority

that mandated the brick-kilns to “install improved emission technology either zig zag or any other technology approved by the Haryana State Pollution Control Board”.

With the closure of the brick-kilns, the construction industry and the common man is set to face hardships, as the existing brick-kilns will be hard pressed to meet the increasing demand for the bricks. The NCR districts surrounding Delhi have emerged as a hub

of construction activity with a host of real estate players coming up with residential and commercial projects in these areas.

The Environment Pollution (Prevention and Control) Authority headed by Bhure Lal was constituted by the Supreme Court with a view to suggest ways and means to control air pollution in the NCR falling around Delhi in the states of UP, Rajasthan and Haryana.

MALAYSIA

Johan concedes defeat and confirms closure Johan Holdings Bhd is winding down its ceramic wall and floor tiles manufacturing business parked under Prestige Ceramics Sdn Bhd, which has been bleeding losses for the last six years.

Tan Sri Tan Kay Hock, who also controls George Kent Malaysia Bhd, is the chairman and chief executive of Johan Holdings with a 45.77% stake in

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the company.

According to Johan Holdings, the move to wind down Prestige is part of its plan to eventually cease the loss-making ceramic wall and floor tile business by year end.

The business first commenced commercial operation in 1981 and was profitable up to Jan 31, 2011, according to Johan Holding's Bursa Malaysia

statement today.

“Despite efforts and measures taken by the management over the years to improve its performance it has failed to turn the company around. Prestige’s (manufacturing) plant was commissioned in October 1995 and is now 22 years old,” said Johan Holdings.

It is unable to compete with the more modern and larger

manufacturers and imports from China, Indonesia and Vietnam, Johan Holdings said.

As such, Johan Holdings said its board of directors is of the view that Prestige is “no longer commercially viable” to continue with its tile manufacturing business.

Johan Holdings said the move to wind down the business is in its best interest.

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News

PAKISTAN

Master Tile to undertake expansion Leading ceramic producer from Pakistan, Master Tile & Ceramic Industries is undergoing a capacity expansion at its plant. The expansion would be completed before the year end and will increase the company’s installed capacity by 24,000 square meters per day.

Installation of a complete plant is currently with a capacity of 24,000 square meters per day

is underway. The new plant which be used to pro¬duce porcelain, glazed stoneware and monoporosa tiles in sizes up to 800x800 cm.

Currently, Master Tile is among leading ceramic tile producers in the country.

Company’s production facility in Gujranwala, Punjab, has a pro¬duction capacity of 50,000 sq.m/day. The new line

will strengthen the company’s leadership position in terms of both quality and out¬put and will make it more com¬petitive in international markets.

Despite, rising demand of ceramic tiles in the country, last few years have been tough times for Pakistani ceramic tile manufacturing industry. Availablity of natural gas and huge imports of ceramic tiles from China has hit the

domestic ceramic tile producers badly.

Individual producers and ceramic association of the country has made several requests to authorities to check the huge influx of Chinese tiles, but the situation is worsening year after year. According to Chinese customs data about 33 million square meters of ceramic tiles were exported to Pakistan in year 2016.

CHINA

Rustic tile market grows steadily According to figures made available to AC, rustic tiles production accounts for 10% of all the ceramic tiles in China.

Currently, nearly 80% of the lines of rustic tiles are distributed in Guangdong, Fujian, Jiangxi, Shandong, Hunan and Hubei. In the first half of this year, 50 new lines for rustic tiles presented in Guangdong and Fujian and Gaoan and Linyi. All these production areas have more than 10 new lines for rustic tiles.

Fujian is the largest production area for exterior wall tiles. But in the first six months of this year, it has the largest number of new lines for rustic tiles, which were almost produced by transforming the lines for exterior wall tiles.

These new lines for rustic tiles

are mainly used to produce wood tiles and small rustic tiles.

After changing the lines for rustic tiles, some ceramic companies launched the rustic tiles with low water absorption while some other ceramic companies tended to produce large rustic tiles.

In the first 2 quarters of 2017, Guangdong increased nearly 10 lines for rustic tiles, which were produced by changing the original lines. And these new lines are most often used to produce the popular modern rustic tiles and the large rustic tiles. It is noteworthy that QHTC has invested 50million yuan to increase 5 new lines for rustic tiles, which may increase the capacity of rustic tiles to 4,6000 sq.m.

Gaoan has also increased more than 10 lines for rustic tiles. Half of them were newly-built and the remains were transformed.

Most of these new lines are used to produce the rustic tiles in the size of 600×600 (mm). And some of them are used to produce cement tiles and wood tiles and rustic planks.

Shandong has two big production bases for ceramic tiles. One is Zibo, and the other is Linyi. There were more than 20 lines of rustic tiles in Zibo.

After June, many ceramic companies in Zibo gave up shifting their lines for rustic tiles due to the uncertainty of government’s policy. So, there are no new lines for rustic tiles in Zibo. On the contrary, some

ceramic companies in Linyi has already transformed lines for the production of rustic tiles in early May. Currently, there are 8 lines which have been successfully transformed to produce rustic tiles in Linyi. And it is expected that the new lines for rustic tiles will continue to increase to 12 by the end of July.

Apart form the production areas that have been mentioned above, Guangxi and Jiajiang also have some lines which have been changed into producing rustic tiles. So, in the first half of this year, there are nearly 50 new lines for rustic tiles presented in China. It is an index, an indicator which we can see that shifting lines for rustic tiles is popular in China.

PAKISTAN

Industry calls for regulation extension Appreciating the measure taken by the government to increase regulatory duty RD on the import of ceramic tiles, the local tiles manufacturers have called for the continuation of duty for the better interest of local industry as well as the economy.

Addressing journalists, Shabbir Tiles and Ceramics CEO Masood Jaffery, said that the duty will help curb the main issues hurting the industry including underinvoicing, dumping and inferior quality of products. He said that it will support the local industry and discourage the import of tiles especially from China.

“The importers are buying

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sub-standard tiles from different countries that dump their excess inventories in Pakistan,” he added.

This affects the sales of local products because the manufactures come face to face with higher input cost challenge.

“Locally manufactured Tiles are expensive due to 21 percent of sales tax, high wages of laborers, power and gas prices. We have to run plants 365 days a year and a consistent demand is required from the market to run our plants smoothly. In the last last few years, especially in the fiscal year 2016-17, Shabbir Tiles & Ceramics Limited faced a loss of Rs. 190 Million due to dumping

of imported Tiles,” said Jaffery.

He further said that the government has imposed antidumping from 9% to 36% on all Chinese imports, which is a very healthy step. Additionally, regulatory duty has also been increased by 20%.

“This will not only give breathing space to the local manufacturers who, despite huge investments have been on verge of collapse.

This will also create opportunities for the new investors to invest in the sector and create new job opportunities,” he added.

“Anti-dumping is a very brave and bold step taken by the government to help grow the local

industry and also will open new avenues for the investors as it promises substantial gain on their investment,” he reasoned.

He also said that this will bring economic prosperity to the country and increase employment opportunities, tax revenue from imports and remove pressure from foreign exchange reserves.

He said despite all the problems and losses Shabbir Tiles is committed to provide best quality tiles and contemporary designs to its customers.

“We are regularly investing in the upgrading of our production facility,” he added.

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CERAMIC EXPO

APPROVED BY

Bangladesh -2017

Nov 30 - Dec 01 02

@ ICCB, Dhaka, Bangladesh

- 2017

International Convention City Bashundhara (ICCB), Dhaka, Bangladesh

An International Exhibition & Seminar on Ceramic TABLEWARE | TILES | SANITARYWARE | INSULATOR | POTTERY | BRICKS | ROOFTOP TILES CHEMICALS | RAW MATERIALS | MACHINERy & TECHNOLOGY

KEY FIGURES

3800

Sq.mt HALL SPACE

PRINCIPAL SPONSOR

GOLD SPONSOR

150

SILVER SPONSOR

National Partners

International Partners

CONTACTS ORGANIZER

EVENT MANAGER

Bangladesh Ceramic Manufacturers & Exporters Association (BCMEA)

Wem Bangladesh Limited

Mob: +88-01913535149, 0171 1202170 E-mail: bcmeabd@gmail.com

Mob: +88-0171 8307764, 0171 8530661 Email: wembdltd@gmail.com

www.ceramicexpobd.com

News

BANGLADESH

DBL to launch into ceramics manufacture Leading apparel exporter DBL Group has taken up a $1.2 billion investment plan to set up 19 factories inside Sreehatta economic zone in Moulvibazar of Sylhet by 2021.

The company got 170 acres of land inside the state-owned zone from Bangladesh Economic Zones Authority (Beza).

It will build a spinning mill, a ceramics factory and industrial units to manufacture raw materials and finished products, such as integrated sportswear and apparel accessories, for domestic and export markets.

“We could not grow as expected because of land, gas, electricity and other infrastructure constraints,” said DBL Group Managing Director Md Abdul Jabbar.

“The new land will definitely boost the company's growth.”

With an annual export turnover of nearly $370 million, the business entity employs 30,000 people in 23 concerns, mostly in the apparel sector.

The enterprise registered a 15 percent year-on-year growth in exports over the last couple of years and Jabbar expects to reach 25 percent through the expansion.

Jabbar said they were waiting for the final nod from Beza before starting work from November to develop the area, including construction of effluent and water treatment plants.

“We will also have rooftop solar system to generate green electricity and harvest rainwater to meet part of our demand for water,” he said. A staff training centre will also be established there.

“We hope that two-three factories will come into operation by mid 2019,” he said.

The business entity says the expansion would create jobs for about 39,000 people over the next four years.

DBL Group had earlier appealed to Beza to allocate the whole 352 acres of land of the economic zone, including 112 acres of water bodies, to

the group.

Beza has provided 25 acres to Great Wall Ceramic, 14 acres to garment exporter Palmal Group and three acres to a non-resident Bangladeshi based in the United Kingdom, said Beza Executive Chairman Paban Chowdhury.

He said work was underway to establish gas transmission lines and a power substation. Palmal Group wants to set up two textile units while Great Wall a ceramic factory, he added.

The Sreehatta economic zone is expected to be the first stateowned industrial enclave to go into operation among the 60 zones Beza selected after coming into being in 2010, to encourage local and foreign investment and create jobs.

Beza has already leased out the Mongla economic zone to PowerPac Economic Zone Private Ltd, a unit of Sikder Group, to develop and operate the industrial area for 50 years.

The Mirsarai economic zone near the Chittagong port is being

developed to host industries of local and foreign investors, according to Chowdhury.

Besides, Beza has issued prequalification licences for the establishment of 19 private economic zones, five of which have got the final licence.

NEWS IN BRIEF Dehua county, China, wellknown for its ceramics making, has developed a greener way to fire ceramic wares by encouraging local enterprises to discard their traditional wood-fired kilns and use electric kilns. By the end this August, 70 percent of all the porcelain enterprises have turned to electric firing, reducing 100,000 tons of carbon dioxide emission.

INDIA

HD Kilns get green light for brick sector Central Building Research Institute (CBRI), an apex national institute for building construction research, has started transferring high draught (HD) kiln technology in the area of brick manufacturing to private players enabling conventional brick kilns to save fuel (coal) consumption by 20 to 25% and to go almost smoke-free.

According to reports, CBRI sold the HD kiln technology to a Panchkula-based private industry in Haryana for Rs 8.28 lakh. The industry will now sell the technology to conventional brick kiln owners.

The institute claimed that it has received around three dozen queries from private players who are interested in buying the technology.

The new technology assumes significance with the environment pollution (prevention & control)

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authority making it mandatory for brick-manufacturing units

The institute claimed that it has received around three dozen queries to use HD kiln in the National Capital Region (NCR) from November onwards.

Claiming that the industry's response to the technology is "overwhelming", CBRI director Dr N Gopalakrishnan told TOI, "We have sold the technology to a Haryana-based private

firm. In a month, however, we will be transferring the technology to more firms."

Talking about the benefits of the technology, which has been developed indigenously, CBRI director said it would help kilns save fuel by 20 to 25% in comparison to conventional brick kilns — known as Bull's kiln — and would also increases the production of 'avval' (top grade) bricks.

The most significant aspect of this technology is that it does not spread too much of pollution as does Bull's kiln.

CBRI chief scientist A K Minocha, the principal investigator of this project, said, "The pollution SPM (suspended particulate matter) level for Bull's kiln, according to government norms, is 750 mg per cubic meter, whereas our technology reduces it by 60-70%."

Sukram Palm, owner of a

Tikoula-based brick field, near Narsan, said, "We have been using the HD kiln technology and the result in terms of quality of backed bricks and fuel consumption is much better than earlier."

Uttarakhand has more than 400 brick kilns, of which 156 are in Haridwar district.

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News

VIETNAM

Caesar hails Gaiotto investment In Vietnam for over 20 years, the Caesar Sanitaryware Co. Ltd, which has its administrative offices in Taipei (Taiwan), develops and manufactures complete bathroom product lines that include everything from ceramics to faucets and bathtubs; today, it is one of Vietnam's top three sanitaryware manufacturers, with sales on the rise both in Vietnam and worldwide.

With a steadily growing output capacity, currently in excess of a million pieces per year, Caesar Sanitaryware is constantly investing in modern machinery and advanced technological research. Their goal is to improve product quality while bettering efficiency, lowering water consumption and giving their products a distinctively modern,

eye-catching look.

It is this innovation-driven philosophy that has led Caesar Sanitaryware to sign a contract with Sacmi for the installation and testing of two automatic glazing lines at their plant in Ho Chi Minh City. Equipped with Gaiotto GA2000 and GA/OL robots, the lines also feature innovative dry filters for the spraying booths and new GDA80 spray guns.

The first glazing cell uses the tried and tested technology of the GA2000 robot, that is, a glazing robot that features not just selflearning but other consolidated programming functions (such as point-to-point and the formidable OFFLINE 7WD system, developed internally by Gaiotto engineers).

The philosophy behind implementing robotics in

Caesar's glazing department is as follows: to have one line equipped with GA2000 robots - to allow for ultra-fast, selflearning programme creation, allowing new articles to be put into production quickly or tests to be performed on a limited number of pieces - and the remaining glazing lines equipped with GA/OL robots that can operate with programmes created in self-learning mode by the GA2000 or with optimised programmes developed using offline techniques.

Both glazing cells have identical layouts: the glazing robot is positioned at the centre of a 4-position carousel which transfers sanitaryware items from the loading zone to the glazing booth in just five seconds.

Piece loading/unloading on the

4-position carousel consists of a 4-station bar conveyor system to load pieces and a parallel belt conveyor to unload glazed pieces. Transfer from the conveyor to the rotary carousel occurs by way of an angular conveyor with 3 degrees of freedom. The glazed article foot cleaning device - with automatic sponging roller - is mounted on the parallel belts conveyor.

Caesar's technicians have also focused on innovation by applying (on both glazing lines) spray booth self-cleaning dry filter systems. The latter provide multiple advantages: recovery of glaze scattered by spray guns, lower maintenance and cleaning costs, elimination of filter wash waste waters and, consequently, huge savings on sludge recovery and disposal.

VIETNAM

TOTO building a new sanitary ware plant Leading Japanese sanitary ware producer TOTO is building a new sanitary ware production plant in Vietnam. This would be Japanese company’s third sanitary ware factory in the country.

Currently, TOTO’s two manufacturing facilities have a cumulative installed capacity of 1.15 million pieces of sanitary ware products per year. About half of the products manufactured by two

factories hit the local market and the rest is for export to China, Japan, America and European countries.

Coming up with a total investment of 9.7 billion yen (Bt3 billion), the new plant will commence commercial production from March 2018 . Located in the northern province of Hung Yen, the plant will have a capacity to produce 600,000 pieces of sanitary ware per year.

Currently, Vietnam is second largest production

base for the Japanese company in ASEAN.The new Vietnamese plant will also serve other rapidly growing Asian countries.

According to Masao Yamasaki, general director of Toto Vietnam, “ We have had very healthy growth in the domestic market. In 2016, we registered growth figures of 13 %.”

TOTO’s first plant in Vietnam commenced operations in 2004 with a capacity of 400,000 units per year.

The plant which incurred an outlay of USD 32 million at the time of set up was first ultra modern sanitary ware production plant in the country.

The second plant, which started commercial operations in 2006 is located in the Thang Long Industrial Park in Ha Noi’s Dong Anh district. The US$52 million facility, has a capacity to produce 750,000 units of wash basins, bowls and cisterns per year.

OBITUARY

Harunar Rashid Khan Monno Asian Ceramics is sad to hear of the death of Bangladesh’s pioneering modern and export-export oriented ceramic industry founder, Harunar Rashid Khan Monno, Chairman of Monno Ceramic Industries Ltd. He breathed his last on August 1, at his residence in Monno City that he founded in Manikganj, near

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Dhaka. He was 84, and was suffering from old age.

Monno was an inspirational industrialist figure since start up of his major porcelain and bone china tableware factory in 1985. His success propelled him build up an industrial empire of 19 entities. He spent his fortune to the charities and founded many social service

organizations and educational institutions, including medical college and nursing institute.

He became a minister of the Bangladesh government, and was elected Member of Parliament for several terms.

He left behind his wife Hurun Nahar, two daughters, relatives and many friends and admirers to mourn his death.

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News

International News

Results encouraging for SITI-B&T Italy

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he Board of Directors of SITI-B&T GROUP S.p.A., a manufacturer of complete plants for the world ceramic industry listed on the AIM Italia stock market approved the Interim Financial Report to 30 June 2017.

“We are pleased with the performance of the first half of 2017 despite its lack of historic significance given the seasonal nature of orders. We have continued our strategy based on R&D investments and on the development of our international network involving the opening of the new branch in Dubai,” - commented Fabio Tarozzi, Chairman and Managing Director of SITI-B&T GROUP S.p.A. In the first half of 2017, SITI-B&T GROUP S.p.A. posted sales revenues of 91 million euros, 22.5% up on the 74.3 million euros of the same period in 2016. As in previous years, the seasonal nature of orders means that the revenues generated in the first half are not proportional to those reported by the Group annually. The value of billable orders already received as of 30 June 2017 added to turnover already generated was 13.9% up with respect to the same period the

previous year.

The EBITDA of SITI-B&T GROUP S.p.A. before non-recurring items to 30 June 2017 totalled 3.4 million euros (3.7% of revenues), an improvement on the 2.5 million euros to 30 June 2016 (3.3% of revenues) but still not representative of the 2017 full-year results given that the first half revenues, as in previous years, are not proportional to the total revenues expected for the full year.

The net profits of SITI-B&T GROUP S.p.A. to 30 June 2017 was negative by 1.2 million euros compared to the negative result of 1.1 million euros to 30 June 2016.

The consolidated net financial position as of 30 June 2017 was

48.4 million euros compared to 32.6 million euros at 31 December 2016 and 45.9 million euros at 30 June 2016. Borrowings, mainly absorbed by the increase in Working Capital, are in line with the larger number of orders due to be shipped in the second half of the year.

“The investment policy for the SITI-B&T Group’s global network development programme continued in the first half of 2017, leading to the opening of the new SITI Middle East branch located in Dubai.

“The Technology Centre in Formigine continued to develop new products such as the innovative SUPERA® large-format ceramic slab production line and the new thermal machines combining lower consumption with reduced atmospheric emissions.

The company Ancora continued development of a line of products for the treatment of ceramic surfaces without the use of water, while Projecta continued to develop a new dry digital decoration machine called DryFix®.

“Given the order book level and the good market outlook, it is reasonable to expect an increase

Italcer on the acquisition trail Italy

ZIA announces appointments World

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talcer, the holding company created by the Italian Private Equity Mandarin Capital Partners and led by Graziano Verdi, aiming to create a luxury cluster in the ceramic tile segment, have reached an agreement for the acquisition of 100% of the Florentine company Devon&Devon, world leader in the luxury bathroom furnishing.

Mr.Gianni Tanini, who has always owned and led the company, through this transaction, will join the Italcer shareholders parterre.

Italcer has acquired La Fabbrica, based in Romagna, at the end of May and Elios Ceramica, based in Emilia, in August and has reached a total turnover of EUR 75 million.

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in sales revenues in 2017 with respect to the previous year” said the company.

SITI-B&T Group, listed on the AIM Italia stock market since March 2016, is a manufacturer of complete plants for the world ceramic industry with a strong presence in all global markets. It delivers outstanding technological solutions and innovative services with a special focus on energy efficiency and production cost reduction.

It offers customers a complete personalised service including technical assistance with installation, maintenance and modernisation of production lines.

SITI-B&T Group operates through the following business units: Tile (complete plants for tile production), Projecta Engineering and Digital Design (digital decorating machines and digital graphic design projects), Ancora (surface finishing systems for ceramic products) and B&T White (complete plants for sanitaryware).

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Through this new acquisition it will almost reach EUR 100 million.

Devon&Devon exports to more than 80 countries with a network of boutiques, retailers and flagship stores situated in the most prestigious world capitals, from Europe to USA, Russia, Middle East, China and Australia.

“The business plan we announced some months ago is operationally being confirmed, day by day, by the quality of the acquisitions carried on by Italcer Group as well.” commented C.E.O. Graziano Verdi “Acquiring the Florentine company, Italcer confirms once again to be focused on luxury and “made in Italy” design and creativity: Devon&Devon

is one of the most prestigious Italian brands”.

Within the end of 2018 Italcer aims to further expand its range of top brands, land in the USA with a 4.0 industry and define soon new significant acquisitions.

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he recent Annual General meeting of the Zircon Industry Association (ZIA) confirmed the appointment of Jean-Michel Fourcade (TiZir), Fidel García-Guzmán (Guzman Global) and José Carlos Serrano (Chilches Materials) to its board of directors with immediate effect. The ZIA board also appointed Pirmin Wilhelm (Imerys Fused Minerals) as its Chairman, effective from 12 November. Simon Hay (Iluka Resources) will step-down as Chairman from that date, but will remain on the board of directors.

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Raw Materials News

Raw Material News THUNDERBIRD IS “GO” AS DEBT GETS RESTRUCTURED Zircon // Australia Sheffield Resources says it is close to securing $US200 million in debt funding to help develop its Thunderbird heavy mineral sands project in the Kimberley.

The Bruce McFazean-led explorer also today appointed GR Engineering as preferred tenderer for the engineering, procurement and construction of the 7.5Mtpa processing plant associated with the project which lies between Broome and Derby.

Sheffield said it had appointed Taurus Funds Management as the lead arrangers and underwriters of the $US200 million senior secured facility, which was subject to further due diligence with final approval expected by the end of March next year.

Mr McFadzean said the facility provided the company with $US200m in underwritten funding without equity dilution and a reasonable cost structure over a seven-year tenor.

“Sheffield is now strongly positioned to advance Thunderbird towards development,” he said.

However Thunderbird is still subject to native title permissions with an appeal lodged in the Full Federal Court earlier this month by a claimant group against a National Native Title Tribunal decision that Sheffield had negotiated its agreements in good faith.

A previous appeal against the decision has already been dismissed by the Federal Court and Sheffield said it would endeavour to have the latest matter expedited.

Sheffield has placed a $348 million cost on stage one of Thunderbird, which is expected to deliver an average annual EBITDA of $123 million over an initial 42-year minelife.

The company has two bindings offtake agreements in place covering a minimum of 18,000 tonnes of premium zircon annually with two Indian companies. Thunderbird will also produce ilmenite products.

Sheffield is targeting early construction works later this year with first production targeted for 2019.

ALTECH SECURES LAND EXTENSION Kaolin // Australia Australian innovator Altech Chemicals Ltd. Has announced that it has exercised its option to purchase approximately 230 acres surrounding its kaolin mining lease at Meckering, Western Australia. No financial terms for the purchase were released by the firm.

According to the firm, mining lease M70/1334 encompasses around 12.7 million metric tons of Al2O3, with an estimated kaolin ore reserve of 1.224 million metric tons at 30% Al2O3.

Altech says that the kaolin harvested from the mine will fuel the firm’s high-purity alumina (HPA) plant in Malaysia. The company plans to mine 140 thousand metric tons of the ore in two-month stretches every three years. The mined ore will be stockpiled on site and transported in lots once a week to port and across the sea to Malaysia.

Altech’s Managing Director Iggy Tan welcomes the development, saying that the move is an important next step in bringing HPA production to fruition.

“The exercise of Altech’s option to purchase the land over mining lease M70/1334 is another important milestone in advancing our HPA project; Meckering is now fully permitted for construction.

Development of the kaolin screening and loading facility then initial mining can proceed upon finalising of project finance.”

Altech was granted the lease in the spring of 2016, with a mining proposal and mine closure plan following ten months later. A work permit allowing construction of the screening and loading facility on site came down in August, which was the final official approval needed prior to the commencement of construction.

Altech Chemicals is based in Subiaco, Western Australia and is attempting to develop a marketable process for delivering 99.99% (4N) HPA. It plans to construct a 4,000 metric ton per annum HPA plant at Tanjung Langsat Industrial Complex, Johor, Malaysia. The firm is fast-tracking HPA production due to an agreement with Mitsubishi for 100% of its proposed HPA production for ten years. At present, Altech intends to commence project development in 2018.

FERRO ACQUIRES ENDEKA AND GARDENIA Coatings // World Ferro Corporation has entered into an agreement to acquire Endeka Group, a global producer of coatings and key raw materials for the ceramic tile market.

In a separate transaction, Ferro has acquired a majority interest in Gardenia Quimica, which also supplies the ceramic tile market. Both privately held companies are headquartered near Ferro’s facilities in Castellón, Spain.

Ferro’s acquisition of Endeka for approximately EUR64 million is expected to be completed in the fourth quarter.

The transaction will be funded through excess cash and borrowings under the Company’s existing revolving credit facility. Endeka full-year forecasted 2018 revenues are approximately EUR75 million. The company produces

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frits and glazes, digital inks and colours used in the manufacture of ceramic products, including tile, tableware and sanitaryware. This transaction backward integrates Ferro into certain key raw materials used in the manufacture of ceramic coating materials. Endeka operates 9 facilities in Europe and Asia.

The Gardenia Quimica transaction was completed on August 3, 2017. Gardenia Quimica produces mediums, additives, binders, and other ancillary products for the tile coatings industry. Gardenia’s products enable Ferro to further backward integrate into a number of materials used in the manufacture of tile coating products. The transaction resulted in Ferro increasing its ownership in the joint venture company from a minority to a majority position. Revenue is forecasted to be approximately EUR5 million in 2018.

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News Anaylsis

News

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REACH-ing out post Brexit…

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ne of the key arguments for the UK leaving the EU has been that Brussels is shackling the member states with excessively burdensome environment, health and safety (EHS) regulations.

Among the many regulations, REACH has been identified as the most burdensome for small and medium-sized enterprises (SMEs). So, would leaving the EU mean British SMEs are no longer covered by REACH? Here are some preliminary thoughts about the possible effects Brexit could have on future UK chemicals policy – and in that sense, colours and glaze suppliers to the world’s ceramic industries?

The Brexit effect would, in any case, not be immediate as, regardless of the referendum result, REACH compliance has been written into most existing chemical supply agreements. All these commercial agreements would then need to be updated to reflect the changing status of the UK. At the government level, upon the decision to leave the EU, negotiations would start on a new trade agreement between the EU and the UK under Lisbon Treaty Article 50. The negotiations could take around two years.

On the one hand, the UK could choose as its new status “still-inREACH”, to be a non-EU country that is a part of the European Economic Area (EEA) and the single market, like Norway. On the other hand, it could choose to be “outof-REACH”. This could be done, for example , as part of the European Free Trade Area (Efta), as a country that is outside of the single market but with free trade agreements, like Switzerland.

The key difference between the Norwegian and Swiss models is that REACH does apply in Norway but it does not apply in Switzerland. The Swiss must get either their importers or appointed only representatives (ORs) in the EU to register their substances. If REACH was no longer to apply in

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the UK, a question of the validity of already REACH registered manufacturers, importers and ORs would arise.

There are more than 5,000 REACH registrations made by companies in the UK. This puts it in second place in the EU, only exceeded

by Germany. So would this mean these registrations are deactivated and replaced by importers or ORs in the EU, possibly doubling the initial cost burden of compliance?

Furthermore, joint-registrants, depending on the dossier of a UK-based lead registrant, will need to elect a new one within the EEA, potentially leading to lengthy discussions on data ownership and cost sharing with the former UK lead registrant.

Should the leave option win the day next month (and the estimated two-year negotiation period on a new trade agreement with the EU begin), thousands of phasein registrations for low volume substances would still need to be completed by SME registrants in the UK by 31st May 2018 to continue trading on the single market. These registrations might end up being deactivated should the “out-of-REACH” option be chosen by the British government.

More than 40% of UK registrations have so far been made by ORs for non-EU manufacturers. The UK REACH regulatory service provider industry that has been servicing international manufacturers, from Commonwealth nations and the US, would also need to relocate in the EEA or lose their business as ORs. In the ensuing UK-EU trade negotiations, the UK government would need to make a delicate trade-off between increased national sovereignty and the level of access to the single market, negotiated with the EU. The “still-in-REACH” scenario would see the UK lose its ability to take part in decisions on the future of EU chemicals policy, but maintain the existing single

market for chemicals, and preserve the value of REACH registrations.

However, this would bring no relief to UK SMEs from the regulatory burden of REACH. The “out-of-REACH” option, on the other hand, could potentially seriously disrupt chemicals trade.

REACH implementation has been going on in the UK for almost a decade. This work would still need to continue during the interim period as a leaving member state, despite the uncertainties about the future validity of the registrations being made. The UK would then need to develop a national chemicals policy similar to REACH to address the same issues.

The silver lining for the UK enterprises in the “out-of-REACH” option would be that the other processes of REACH – authorisation, evaluation and restriction – would no longer be directly applicable to them. It might be possible to reintroduce certain substances that have been phased out in the EU. However, this possibility would appear rather limited by what can be done within the existing framework of UK national EHS legislation. EHS directives, already implemented into UK law, would continue to apply post-Brexit. UK national laws could, of course, be amended but it is unlikely that there would be substantial support for the reintroduction in production of a significant number of substances, phased out due to safety concerns.

Weighing the pros and cons of a possible exit from REACH, it would seem that the REACH implementation process is already far advanced and will continue at least in the near future, including in the UK. Any foreseeable benefit from the lessening of regulatory burden in the “out-of-REACH” option would appear to be offset by the disadvantages of moving into a regulatory environment in the UK that would be partly compatible, and partly incompatible, with the EU single market.

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Analysis: Heavy clay

The Chines pollution to limit output?

AC provides a statistical analysis of recent developments in China’s brick and roof tile industries.

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n the first half of 2017 the brick industry in China reached new levels of structural adjustment as continued implementation of state policies and measures for reforming the supply side of the industry kept biting. These measures have been primarily geared at reducing overall production capacity, wearing down product inventory and improving the overall technical standard of the sector.

These measures, in turn, have been focused towards the increased output of “green” building materials and the removal of those of inferior quality and those as an output from poor environmental practices.

As such, above a certain scale, companies have grown and prospered, whilst those at the bottom end of the industry – more involved in batch production – have suffered exponentially. Indeed, the number of small-scale companies involved in the sector has dramatically decreased, and continues to do so, whilst the mid-large sized units are expanding in both terms of product quality, and also market share. This has also had an effect on prices of course, and since the middle of 2016 the industry has seen a considerable uplift in terms of finished product price following a relatively long period of stagnation and partial deline.

Roof tile

Output overview

When you consider the entire wall material market, including brick, Chinese roof tile, aerated concrete and building block, then because of the overhang of excessive production capacity and low market demand in the first quarter, most of the enterprises were in stoppage or half stoppage status. It was this period that the regulations began to bite, and the number of enterprises gradually declined. After the demand grew better in March, and the production output and price in the first half of the year as a whole grew better than that of the last year.

In the first half of the year the number of new production line for wall material was clearly reduced, but on the other hand, the number of upgraded production lines was continuously increased. In order

Statistics made available to AC from a number of related state authoritoes indicate that the total brick production output by scaled enterprises in the first half of 2017 was 248.210 billion pieces, up by 4.2% than that of the same period last year, with five provinces having increased production. These are: Fujian, with a growth of 21.8%, Guangxi – 21.6%, Shaanxi – 16.7%, Sichuan – 9.2%, Anhui – 7.3%, Three provinces in the same period demonstrated a decline in production, namely Guizhou, with a drop of 17.9%, Hunan – 9.15, Shandong – 6.1%. Hebei has also shown a sharp decline of 29.9%, but this is thought to be an uncharacteristic dip, rather than a trend.

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The total Chinese roof tile output by scaled enterprises in the first half of 2017 was thought to be around 6,065 million pieces, with seven provinces having a large production increase than the same period of the previous year. These were: Jilin, with an increase of 665.3%, Shaanxi -35.2%, Fujian – 29.4%, Hubei- 13.4%, Anhui – 11.9, Henan – 9.8% and Sichuan – 9.6%. Just two provinces exhibited a decline in production, namely Jiangxi, with a drop of 20.4% and Shandong,19.5%.

Overall trends

In the first quarter of 2017, brick production of scaled enterprises declined by 3.1% compared with the same period of last year, while production of Chinese roof tile increased by 2.6%. By the end of the first quarter however, production of both brick and Chinese roof tile began to show a recovery which led to the situation that production output of brick and Chinese roof tile of scaled enterprises in the first half of the year both increased by 4.2% and 11.6% respectively over that of 2016.

Second quarter recovery

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Analysis: Heavy clay

se Wall to meet the requirement for energy conservation and environment protection, some production lines began to have technical reform by means of substitution of new equipment, creating ample opportunities not just for Chinese-made equipment, but also overseas kiln technology.

There number of production lines put into operation in the first half of this year for aerated concrete has been less than 50. This means there has been little extra employment created, since all the companies involved have been able to cover these expansions with existing workforces. However, interestingly, it is estimated that over 70% of these new lines are capable of producing much higher grade and quality of slabs, with improvements in cutting technology one of the most notable developments.

The number of building concrete blocks for wall, however, has been greatly reduced, and less than 50% of the production lines remain in operation that were present in 2016.

Of these survivors, there has been a material shift in all senses on the basis that many of the lines have re-engineered themselves to be able to cope with construction waste and provide product ranges that include heat preservation building blocks, pavement bricks and retaining wall blocks.

Upgrades imminent

It is well accepted that in the wall material industry in general in East Asia, that production has been gradually shifting from medium-low grade towards medium-high. As a result, Chinese suppliers of technology are pushing further into the region and starting to compete on an international front.

This is particularly interesting as there has traditionally been a very low presence of Chinese equipment in these markets

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for the heavy clay sector, with Europe dominating in terms of technology. However, it is now seen by the sector – with some government support of course – that overseas presents a major opportunity away from the more expansive ceramic products that have been the traditional targets. As such, we are fully anticipating a much more involved approach from the Chinese suppliers, and with India and Bangladesh in particular flagging up as major openings for future kiln technology and increased automation, it seems that China is maneuvering itself into a position to dominate again. That trend also been seen in the Middle East and Africa too.

Economic efficiencies

he accumulated prime business income of brick, Chinese roof tile and building blocks completed in the first half of the year amounts to RMB 178.77 billion, up by 8.2% than that of the last year, the accumulated profit completed is RMB 11.94 billion, up by 5.5% than that of the last year, while the profit rate of sales is 6.7%, down by 0.2% than that of the last year.

For brick, Chinese roof tile and building blocks in the first half of the year, the amount of receivable is up by 7% than that in the same period of the last year, and the storage is up by 15.5% than that of the last year, which indicates the sales situation is not very favorable.

The product prices of scaled enterprises have a recovery rise and it is mainly because of the following factors. First, the local building construction market was growing and subsequently so was the market demand for wall materials. Secondly, an intensified elimination of poor components in some areas helped the rise of the product prices.

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Analysis: Heavy clay

Issues to resolve

The first problem, despite the improvements, remains excessive production capacity, and this is of course compounded by poor quality and lower price clay solid brick, building block, and aerated concrete that, in turn, affected the pricing of good products by some enterprises.

The second problem is the low level of entry qualification and regulation. This means that despite government plans to reduce the amount of low grade factories, China being China means that there is always a surfeit of companies waiting to jump back in and attempt to make a fast buck for little investment. What is more, heavy clay is arguably the easiest sub-sector of the ceramics industry to break into with a low technical level. Yes, the products will therefore generally be poor, but the point is that a company can get in for relatively low investment and start bringing down the quality and pricing accordingly. Even now, despite the changes and evolution, the actual number of lines for production of medium- high grade products is comparatively small.

Thirdly, although more and more lines are put into operation for production of high grade products like heat conservation blocks, porous pavement bricks, aerated concrete blocks of low density, decoration bricks and slabs, as well as roof Chinese roof tiles, the production amount still only accounts for a relatively small proportion, and production of some of these components is in a nascent phase.

The fourth problem is the intensified requirement for control of energy conservation and production emission which companies are feeling, but are yet to really get to grips with.

Another problem is competition by means of lowing price among some of China’s heavy clay equipment manufacture enterprises. With lower prices comes a lesser degree of service, and as such the result of this lack of attention is a drop-off in terms of product quality.

One other step to reduce the low price, low quality idea that was taken was the adaption of a tax policy on comprehensive utilization of resources by the State Development and Reform Commission and State Administration of Taxation in 2016. The implementation of this new policy led to higher taxes that also caused financial cost increases and stress on smaller players, and yet it still has not proved to be the “silver bullet” that the sector craves to eliminate these low-margin enterprises.

Finding solutions

The heavy clay industry plans to actively follow and implement the State Council no.34 document, which essentially insists on the principle of production capacity reduction, structure adjustment, weak point improving, rising industry development, and focus on new wall material of safe quality, energy conservation and environmental friendly, light weight and high strength, and accelerate the progress of shifting from mediumlow grade products to medium- high grade products. The particulars are as follows.

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The first is to pay more attention to policy study and focus intensified efforts on industry structure adjustment, speed up the progress of poor components elimination by means of comprehensive implementation of standard for environment protection, energy consumption, quality control and production safety, and at the same time, and carry out implementation of the Application Proposals for Production of Green Building Materials so as to promote a healthy development of the industry.

The second is more efforts for innovation and standard upgrading to raise the level of entry qualification by means of adjusting and revising the industry standard and practices, and is to upgrade the quality of wall materials through efforts on aspects of evaluation system implementation for green building materials.

The third measure is to guide the industry development towards product component and combination by efforts on publicity and promotion of new technology and new products, encourage the enterprises to develop circular economy, and create some example enterprises for energy conservation and emission reduction to push the industry transformation and upgrading.

The fourth is to have a better play of large enterprises’ role by further self-control and promotion so as to encourage production of large scale, hasten the process for enterprises merging and reorganization, and promote to have a better production concentration.

The fifth solution is to have intensified emphasis on reform of supply side through production capacity reduction and structure adjustment, encourage enterprises to create new products, to have differential operation and management, to have better management inside so as to release more potential to reduce production cost and increase profit efficiency.

And another important solution is to have better international communication and exchange for advanced technology, and guide our enterprises to follow the “one belt and one road” strategy in order that we can further move into the international market to obtain larger market share, with our target to create our prevailing enterprises of international operation competence.

The Pollution crackdown

China has launched its toughest anti-pollution campaign for the upcoming heating season, with 31 cities pledging to restrict activity in factories, of which brick-makers are one of the hardest hit.

Three cities recently joined other regions in northern China in implementing measures to fight air pollution as the heaviest pollution season approaches. Specifically, the environmental protection bureau of East China's Shandong Province requires the city of Linyi to shut down steel, iron, ferro-nickel and manganese iron production from November 15 this year to March 15, 2018.

The government of Linfen, North China's Shanxi Province requires its steel mills to slash activity in half. And the government of Xuzhou, East China's Jiangsu Province requires the city's steel, cement, brick and glass factories to reduce activity by at least 30 percent.

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Analysis: Heavy clay

Experts said this shows the government's determination to fight air pollution this winter, as more residents grow increasingly concerned about health risks.

"China has been taking tough measures in recent years to curb pollution and significant improvements had been made in the first half of last year. However, in winter, the smog bounced back, and several pollution alerts have triggered public concern. This year, the government is determined to impose far stricter limits on coal use and hasten economic restructuring away from the heavily polluting sectors," Wang Gengchen, a research fellow at the Chinese Academy of Sciences' Institute of Atmospheric Physics, told the Global Times.

China is targeting a drop of at least 15 percent in the level of PM 2.5 particles in 28 cities in the Beijing-Tianjin-Hebei region as well as in Shandong and Shanxi provinces between October 2017 and March 2018.

"The plan is based on previous experiences, and the target balances environment protection and economic development. It means the level of PM 2.5 particles this winter should be kept at an average of around 60 micrograms per cubic meter," Wang said.

Already, the city of Tangshan, Hebei Province has begun enforcing the odd-and-even license plate scheme, and local iron and steel plants began to limit production a month ahead of schedule, China National Radio reported.

Brick production growth by Province (% year on year)

Roof tile output growth by Province (% year on year)

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On Wednesday, the environmental authority of Shanxi, China's top coal producing region, vowed to cut PM 2.5 levels and sulfur dioxide by 40 percent from October to March, the Xinhua News Agency reported.

Some cities in Shanxi have been plagued by high levels of sulfur dioxide in previous winter heating seasons. Earlier this year, the Ministry of Environmental Protection summoned top officials from Linfen, Shanxi as the density of SO2 in the city reached a high of 1,303 micrograms per cubic meter on January 4, 21 times higher than the national standard.

"Some people may worry that the tough restrictions would stifle the country's economic development. However, the government is not shutting down factories but providing subsidies and guidance to companies to help them upgrade," Wang said.

Overseas Influence…

Of course, China’s prevalence in the construction of brick factories overseas has not been without hiccups. Earlier this year, one of the country’s leading investors in Namibia was forced to close its factory due to unsafe conditions. Mariental Bricks was shut down by labour and health inspectors due to alleged health and safety violations. The company is said to employ an estimated 100 to 300 people at the facility. The Mariental municipality's chief executive officer Paul Nghiwilepo confirmed the closure on Saturday, stating that authorities were concerned about the lack of safety gear, toilets and running water for the workers.

“Workers are exposed to harsh chemicals and excessive dust every day. They are not provided with uniforms, helmets, dust masks or safety glasses, and there are limited water and toilet facilities on site,” he said.

Production was suspended by municipal health inspector Ester Kahiha, Mariental constituency councillor Hafeni Haikali and officials from the ministry of labour.

Haikali told Nampa that the violations on the part of the Chinese company were long-running.

“This is an old story. Inspectors have been trying to work with the Chinese for years, but they just ignore them. Up to now, we have not managed to speak to the owners or managers. When we go there, we are told they are in Windhoek or China. The supervisors there claim not to be able to speak English.” The production site on the outskirts of Mariental was abandoned when Nampa visited on Friday afternoon, save for a few workers who were unsure of the future of the company. A Chinese worker insisted that all workers were provided with protective masks during production. A Namibian worker welcomed the closure.

“They [Chinese] don't care. We don't even have toilets here, and some of us sleep on old bricks. But we don't have a choice, we need the jobs and the money.”

He was also worried about financial implications a protracted closure may hold for workers.

Haikali said he empathised with the workers.

“They must not think we are taking the bread from their mouths; we are just fighting for their health,” he noted.

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Analysis: Sanitaryware

Counting the cost

sanitaryware production costs

Yogender Malik looks at varying production costs for some of Asia’s main sanitaryare production centres, and asks what companies can do to achieve more competitive rates going forward.

C

ompetition in the sanitary ware producing industry has grown intensely over the last two decades. To survive in the industry, sanitary ware producers must produce product at lower cost compared to competitor. One of the best ways to capture the market is providing low cost product, while maintaining the same / similar quality level.

Despite strong sales of sanitary wares in most of the Asian countries, rising cost challenges facing the manufacturers have made manufacturing difficult for a number of companies. The cost of manufacturing has continued to escalate, due in large part to everincreasing labor and energy costs. In an effort to remain profitable, a number of manufacturers have launched campaigns to consolidate and streamline their operations.

Production cost per tonnage varies from country to country because of the raw material availability, fuel cost, and manpower cost but wherever you are, cost reduction has become one of the prime objectives of sanitary ware producers across the globe.

Prices under pressure

Low cost sanitary ware production by Chinese producers has put great pressure on other Asian sanitary ware producing nations to match their Chinese counterparts. Three major cost variables ( raw material prices, energy cost and labour cost) differ significantly in most of the Asian countries, resulting in different cost of production.

Sanitary ware producers in these countries are putting their best efforts in minimizing these costs in order to stay ahead in the competitive environment.

For example, India, The Middle East, Egypt and Thailand- four dominating forces in sanitary industry in the Asian region have different energy costs, widely varying labour costs and availability of raw materials for sanitary ware production.

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Three of the four countries ( in fact one is a region) have emerged as large exporters of sanitary ware due to their cost competiveness.

India has emerged as one of largest exporter of low and medium cost sanitary ware products to the Middle East region. Thailand has emerged as a top exporting nation in ASEAN region on account of presence of four multinational sanitary ware producers, who have made the country a base for their exports in the region. Egypt- another low cost production base has exploited its strategic location to export to a number of European, African and Middle Eastern countries.

The only exception- the Middle East region is not an export base as the region is dependent on imports to meet the regional demand. However, a few sanitary ware producers ( RAK and Oman Ceramics) have been able to export their products due to their cost competiveness.

Major factors

Fuel prices, labour cost and raw material availability and cost are such factors which are country specific and play an important role in total cost of production. But there are a number of common factors, which enable ceramic sanitary ware producers to reduce the production cost have become important priorities for sanitary ware producers globally.

One of the most important factors is energy efficiency in the production process. Achieving energy efficiency has a significant influence on the economic efficiency and competitiveness of ceramic sanitary ware producers. A few years back, a number of sanitary ware producers in the Middle East region and other countries, where fuel prices were low hardly paid any attention to energy efficiency, but, these same producers are paying a lot of attention in achieving higher energy efficiencies in their production plants. Leading Middle Eastern producers, RAK Ceramics and Saudi Ceramics Company are two of the leading examples for this.

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Analysis: Sanitaryware

Vigorous attempts in reducing the raw materials cost and proper selection of raw materials is another important aspect, which has gained a lot of attention in the sanitary ware industry in terms of cost reduction. Yield is one of the most important drivers of profitability in a sanitary ware plant. Yield is the ratio between the number of sanitary ware pieces a manufacturer actually produces and the number of pieces they put into production. The difference between the two figures, that is the losses made, may happen at any stage in production: at the slip house, at the casting shop (for instance if pieces are too weak to stand by themselves and break), at the firing stage (for instance if pieces are too wet and break under firing), etc.

The organization of a given plant and the know-how of the workforce are important factors and so are the raw materials used.

India

The pressure of cost reduction in sanitary ware industry is perhaps highest in India among its Asian peers. During the last one and a half decade, unorganized sector producers have taken over a large chunk of Indian sanitary ware market from the organized sector players by producing at very low costs. In fact, In India there has not been any significant capacity addition in the organized sector ( Though Kohler, Duravit and Japanese sanitary ware producer, TOTO started their operations in this one and a half decade period but both are running at very low levels of initially declared capacities) due to low cost production by the unorganized sector.

The Indian sanitary ware industry, currently pegged at INR 35.6 billion, is growing in single-digits over the past three years as compared to a 14 % CAGR over FY10- FY14, largely due to significant slowdown in the real estate sector.

Production cost minimization has become topmost priority for the sanitary ware industry in such a scenario. The sector is passing through a period of consolidation as key organized sector players are diversifying their product portfolio so as to moderate expenses.

The sector comprises around 250 unorganised players using traditional methods and catering to the mass market. In contrast, the organised players use state-of-the-art technologies to address the standard and premium segments.

With the real estate sector likely to see only a gradual uptick,

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Asian Ceramics foresee the sanitary ware industry growth to remain under pressure till FY18. To a large extent, cost competiveness of the individual sanitary ware producers will decide their chances of survival in the next two years.

Most of the organized sector producers are focusing on manufacturing higher value-added products. A few years back some of the organised sector sanitary ware producers were forced to outsource lower value-added products as these ( organized sector) producers were unable to compete on the cost with the Gujarat based producers.

But, currently almost all of the Indian sanitary ware producers in the organized sector are following asset-light model by outsourcing, economy and premium category sanitary ware through contract manufacturing, from Gujarat based manufacturers in order to reduce the total cost of production.

Leading sanitary ware producer Cera Sanitary ware procures about 50,000 pieces of sanitary ware per month. The company also outsources sanitary ware from China. A key executive from the company told, “We have dedicated manufacturers in China with a quality control team from our side in place. Production and packaging is done in China, in accordance with the designs selected by us (including labeling), which are dispatched to India.

CERA focus on enhancing capacities through asset light model not only reduces its capital investments, but also de-risks the balance sheet, enhances return ratios and provides faster access to capacities. 40% of total revenues from sanitary ware segment are contributed by outsourcing.”

According to Vivek Tiwari, President ( Works) at Cera Sanitary ware, “At Cera Sanitary ware, we believe in optimum utilization of assets. The manufacturing team is well experienced to ensure best technical output and yield on product recovery keeping stringent quality norms as the topmost priority.”

He further adds, “ The process parameters, as established, in production are outcome of years of experiments and development efforts by dedicated team of technologists. The equipments comprise of general purpose sanitary ware machineries; specially developed machines to suit some of the processes and high tech kilns to achieve top notch quality at least production cost.”

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Analysis: Sanitaryware

Indian sanitaryware industry breakdown Low/ Basic Segment

Standard/ Mass market

Premium segment

Super Premium/ Luxury segment

Market Size

INR 13 billion

INR 11 billion

INR 8 billion

INR 3.6 billion

Market Mix

36 %

31 %

23%

10 %

Price Points

INR 500- 1000

INR 1000- 2500

INR 2500-5000

INR 5000 onwards

Organised Vs. Unorganised Competition Intensity

10 : 90

75 : 25

100 % organized

100 % organised

High with 300 unorganised units in this space

High- with four organized players and 20 unorganised producers struggling for market share

High- With organized players and MNC’s jostling for market share

High with organized and MNC brands competing in this space

Thailand

One of the largest sanitary ware production bases in ASEAN, Thailand has 9 sanitary ware producers who produce approximately 210,000 tons per year (8.84 million pieces in 2016). Four majors producers namely; Karat Sanitary ware Public Company Ltd. ( Kohler) , American Standard Sanitary ware (Thailand) Company Ltd., Villeroy & Boch ( Nahm Sanitary ware ) and Siam Sanitary ware Industry Co.,Ltd. ( TOTO) , account for approximately 80% the country total production in the sanitary ware sub-segment.

In comparison to India, Thailand has higher energy , labour and raw material costs for sanitary ware production. The overall cost of production is higher in the range of 15- 15 % in the premium category ( 40 % of the total sanitary ware production volume in Thailand is in premium and luxury categories).

Dependence on imports for about 26 % of the raw materials for sanitary ware production also makes production cost higher in Thailand as compared to India. Only 74% of the raw material supplies can be acquired domestically, while 26% of raw material are to be imported. Most of the big scale companies apply state-of-theart technology with high degree of automation, which initially cost significantly higher than the domestically available technology but offer higher returns on account of higher quality products. Small scale factories encounters all kind of manufacturing problem i.e. lack of professional – technical knowledge, lack of economy of scale, high numbers of defected products and lack of product testing in each manufacturing process.

TOTO (Thailand), subsidiary of Japan’s leading sanitary ware producer , which is operating in Thailand for more than three decades.

Thanks to a Bt2-billion investment made prior to its takeover of the local operations from Siam Cement Group in October 2013, Toto has a sanitary-ware production capacity of 540,000 pieces per year.

Currently, Toto (Thailand) sells 20 % of its production in the domestic market. The subsidiary makes 60 per cent of its sales revenue from its exports to Japan, 15 per cent from the United States, and about 5 per cent from Europe.

In order to take advantage of lower production cost (lower as compared to Japan) in ASEAN region, a few months back TOTO held the foundation stone laying ceremony for its second manufacturing plant in Thailand a few months back. Located at Hemaraj Saraburi Industrial Land, the new plant is equipped with the latest technology, which will enable TOTO to increase the existing capacity and further expand its production footprint in the region.

According to Hiroyuki Suzuki, president of Toto (Thailand),”

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Thailand’s production costs were similar to Vietnam’s. But labour costs are currently about double of the Vietnam’s. Nevertheless, Vietnam’s labour costs are rising by 20 per cent per year, and sanitary-ware shipments to the US from Vietnam will be subject to an import tax, while Thai products are not being taxed.”

In order to take the advantage of comparatively lower cost of production in Thailand German sanitary ware producer entered into the country in 2008 by acquiring an existing sanitary ware producer.

Nahm had an installed capacity of 500,000 pieces per annum at the time of acquisition. However, post acquisition of Nahm Sanitary ware, V & B increased the installed capacity to one million pieces.

According to V & B management, “ Lo¬¬cal pre¬¬sence allows a quick reaction to ever changing demands in the dynamic Asian markets. Thailand is an attractive destination for expansion, especially on account of its reputation as a production location for quality goods and of free access to the South-East Asian markets (ASEAN).

Nahm Sanitary ware Co, Ltd. is positioned in the medium to high quality goods segment and ranks amongst the leading sanitary ware producers in Thailand.”

The Middle East

The Middle East region has added significant capacity in sanitary ware industry in last few years. Though, to a large extent the region is still dependent on significant imports from other Asian countries and Europe (in premium and luxury categories), but the overall situation of sanitary ware production is far better than a decade back.

Ultra cheap natural gas, gradually acquired economies of scale over the years and reasonable labour cost from a vast pool of migrant Indian and Pakistani labour pool has made production cost in the Middle East competitive in recent years.

Natural gas availability and pricing has been the largest strategic advantage for the ceramic sanitary ware producers in the Middle East region for a number of years. However, some of the governments are gradually increasing the natural gas prices for industry, which is likely to have an impact on sanitary ware production cost in short and medium term. Oman doubled its domestic price in 2015, and Saudi Arabia did the same in January 2016. The increases came as a surprise; Saudi Arabia has had the region’s cheapest gas for some time, at $0.75 per million British thermal units.

Oman Ceramics, the largest sanitary ware producer in Oman has been badly affected by the government move of doubling the natural gas prices to 41 baisas per standard cubic meter from 20.5 baisas in a sudden move in early 2015. The government also mandated an

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Analysis: Sanitaryware

annual increase of 3 % in natural gas price every year. Hike in fuel prices has eroded the single most competitive edge of country’s sole sanitary ware producer Oman Ceramics to a large extent.

Another jolt in form of increase in electricity tariff of large industrial and commercial users from 1st January 2017 has led to another cost increase for Oman Ceramics. The new tariff applicable to those consumers who use more than 150 megawatt hours (MWh) per hour are in the range of 26-30 baisas per kilowatt hour (kWh) in the case of low voltage customers and 18-22 baisas for high voltage customers.

This is against the existing tariff of 20 baisas per kWh for commercial, 12-24 baisas for industries and 10-30 baisas for government sector.

Largest sanitary ware producer in the Middle East region, RAK Ceramic’s sanitary ware revenues rose by a meager2.7% year-on-year.

The company has been losing one of its key sanitary ware markets, Kingdom of Saudi Arabia to low cost products.

According to RAK’ management, “Sales to Saudi Arabia was lower by 31.6% year-on-year. And the fourth quarter dropped 59.7% as lower priced imports from India continued to put pressure on an already soft market. We have been keeping the manufacturing costs under control by increasing the production efficiency by tuning up the production process, savings in raw material costs on improved ( mostly imported raw materials) on account of floatation of purchasing and formulation.”

Egyptian Pound were the major reasons behind the increase in Second largest producer of sanitary ware in the Middle East cost of production. region, Saudi Ceramics Company has been working on production According to Lecico’s management , “For most of 2016 we cost reduction programmes faced an extremely in anticipation of an increase challenging Country Energy cost Labour Cost Raw Material Cost in domestic energy prices, the operating Company has signed a contract environment: India Mid Low Average with an international company weakening Thailand High Mid High demand in Egypt specialized in energy recycling and regional for the re-use of heat resulting UAE Low High High export markets; from kilns instead of using Saudi Arabia Very Low High High overcapacity and natural gas, which will reduce price competition; the cost of energy in those Egypt Mid Low Average a significant operations by 15 %. increase in cost due to the extraordinary increase in the cost of energy in mid-2014 Egypt compounded by higher electricity costs, sales taxes and interest Availability of natural gas ( Egypt is second largest producer of natural rates.”Ceramica Cleopatra , the second largest sanitary ware gas after Algeria) at reasonable prices, cheap labour and availability of producer in the country has adopted various measures to cut the major raw materials for sanitary ware production has made Egypt one of the most cost competitive sanitary ware producers in the Middle production cost. The company spent about 45 million Egyptian Pounds towards modernization of its sanitary ware production East & Africa region. Some of the country’s sanitary ware producers plants in order to stay competitive in the cut throat competition in ( Lecico and Ceramica Cleopatra ) are counted among top sanitary the country and region. ware producers globally.

However, in past three years several factors after one another have added to cost of sanitary ware production in the country.

Sanitary ware production cost of Lecico Egypt The first jolt came in 2015, when in a sudden move the Egyptian government raised the natural gas prices for industries. Later the floatation of Egyptian Pounds has made import of raw materials costlier by many % points , which has had a negative impact on the cost of sanitary ware production in the country. Critical state of Egypt’s foreign reserve forced the government to bring down the value of the pound in a sudden move in 2016. This was a major shock to the economy and many industries, which were dependent on imports of raw material for their production.

Entire sanitary ware production industry in the country had to bear the brunt of these developments. Country’s largest sanitary ware producer, Lecico sold 4.99 million pieces of sanitary wares in 2016. Company’s average cost of production at 135.4 Egyptian Pound registered an increase of 8 % in 2016 in comparison to 2015. Higher energy prices and increase in raw material prices

THE COST OF MANUFACTURING HAS CONTINUED TO ESCALATE, DUE IN LARGE PART TO EVER-INCREASING LABOR AND ENERGY COSTS

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Analysis: Decoration

Surface tensions

digital dilemmas for frit and glaze

AC looks at how the digital printing surge has revolutionized decoration and the effect it has had on frit and glaze suppliers.

T

he past decade has seen a remarkable take-up of inkjet printers by the global and Asian ceramic tile printing industry. Things have come to such a pass that sales of new screen presses has almost come to a standstill in most of the countries in the continent.

Xaar’s Gillan Ewers statement, “ It is no longer a case of offering digital tiles as an optional extra : digital capacity is expected and digital inkjet is the only viable option”, best sums up the current situation in the ceramic tile printing industry.

The first dedicated tile inkjet was introduced by KERAjet in 1999, but it was only around the global economic crisis days that developments in inkjet heads allowed the higher viscosities needed for ceramics to be handled successfully.

Adopting inkjet printing has enabled ceramic tile producers to cut production costs, reduced work-in-progress, waste and stocks of finished goods. Change to inkjet mode has enabled has improved producers responsiveness to design changes and customer demand.

It has also led to production of higher quality tiles that are more realistic representations of marble and other natural materials.

Advantages over Screen Printing

Across Asian countries, screen printing was the only process for ceramic tile printing till the start of this decade. This process has the ability to print high viscosity, large pigment particle inks, but the main disadvantage is that it is a long run process where every image has to be same and changeover takes significant time. Though, initially inkjets struggled with the high viscosities and larger particle size of ceramic inks , but these initial glitches were overcome by introduction of new print heads by lead ing technology suppliers.

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The introduction of digital inkjet technology has prompted one of the biggest changes in the history of ceramic tile production, helping floor and wall tile producers create more diversified products. Introduction of inkjet printing allowed tile producers to offer thinner tiles as there was no contact of the printer with the surface of tile. In terms of the production process, inkjet technology has brought grea¬ter flexibility and improved warehou¬se management, allowing producers to satisfy requests for increasingly small and differentiated batches of ceramic tiles.

Industry dynamics

From a largely in-house activity till a couple of decades earlier, ceramic glaze production and supply has transformed itself in a full fledged industry in Asian countries. A function that used to be controlled by a small and often inexperienced and semi skilled workers team is increasingly coming in the domain of specialized and dedicated companies who produce and supply glaze to ceramic producers at their door-step.

Though, this doesn’t mean that ceramic producers have altogether stopped producing their glaze requirements for their captive needs.

For example, one of the largest tile producers in India, H & R Johnson operates a dedicated glaze production facilities at one of its manufacturing plant, which caters to company’s captive demand.

But, increasingly a number of producers have started to source their requirements from specilaised glaze producing companies.

Indian ceramic industry consumed about 365,000 tons of ceramic glaze in the year 2016, of which around 4-6% is consumed by sanitary-ware products, 8 % by tableware segment and the remainder, approximately 86-88%, was consumed by ceramic tile industry.

Vietnam is the second largest producer and user of ceramic glaze.

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Analysis: Decoration

THE LINE WILL COMBINE CUTTING EDGE TECHNOLOGY WITH OUTSTANDING SCOPE FOR CREATIVITY IN CERAMIC PRODUCTION Digital impacts

Introduction of advanced process technology, particularly, move to faster firing, exacting quality standards, increasing concern for health and emissions and advent of digital printing have imposed complex demands on ceramic glaze industry in recent years.

Asian Ceramics interacted with various stakeholders in Indian ceramic industry to access the changes and challenges brought by digital printing on traditional glaze and frits sub-segment. Our interaction with tile producers, glaze and frit producers & supplier and technology suppliers for digital printing on ceramic tiles gave some important in-sights on the glaze consumtion and changes brought in in the glaze and frits sub-sector.

Former Managing Director of Endeka India, Asha Sampath, who runs a brand consultancy firm in Ceramic Industry says, “Digital printing has truly been a disruptive technology that has revolutionized tile Industry in Asian and India over the past 5 years. With the advent of digital printing , multidimensional avenues have opened up in the glazed vitrified tile technology space which in turn paved the way for a huge growth potential for the glaze and frit industry as well.

On a query, weather digital printing reduced the volume of glaze consumption in ceramic tile industry, Asha says, “Digital printing has nor reduced the glaze consumption in Indian ceramic tile industry, on the other hand it has significantly increased the glaze consumption due to the glazed vitrified tile segment in the total tile production.”

Krijan Modi, Chief Supply Chain Manager with Italian glaze and

pigment producer, Colorobbia told Asian Ceramics, “Effectively there has not been much disruption in glaze segment of Indian ceramic tile industry. With the growing popularity and adaptation of digital printing, Indian ceramic tile producers have started to pay higher attention to quality aspects in every sub-segment, including glaze. With a number of high quality glaze producers setting up their manufacturing facilities in the country, availability and pricing of glaze has become more competitive. These factors have provided a competitive strength to Indian ceramic tile producers. Going forward, we do not anticipate many changes in Indian glaze sub-sector in the short term.”

Asian printing

Asian countries have increasingly adapted to digital printing in a big way in recent years. Digital revolution in Asian tile industry, which started with China in 2011 has spread to most of the countries. Other significant producers- India, Vietnam, Indonesia, Thailand, Iran and United Arab Emirates have increased their share of digitally printed tiles by huge percentage points year after year.

Double charges tiles, soluble salts and a small percentage of other tiles are still being produced under the traditional method accounting between 25- 40 % of the total ceramic tile production in these countries. However, in case of wall tiles almost 95 % of the total production is taking place with the help of digital printing.

Vikas Daksh, Production Manager with one of the leading ceramic

Ceramic Glaze consumption in different Asian countries (tonnes) Country

2016

2015

2014

2013

2012

India

364,160

334,091

321,235

307,519

299,635

Thailand

87,160

84,578

83,186

81,406

80,105

Indonesia

147,159

153,210

159,386

156,148

148,932

Vietnam

186,270

172,472

163,325

156,292

152,180

57,189

56,084

54,974

53,191

51,800

UAE

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AC 17-9

asian ceramics

37

Analysis: Decoration

tile producer, City Tile says, “Digital printing has brought some changes in the quality of glazes used in the industry. The trend is likely to be range bound between glaze vitrified tiles and double charge technology. The customer value proposition that GVT technology is able to create is significant and spans from a high level of creativity , infinite design patterns , high resolution print quality, end to end printing and most importantly benefit of customization . At the same time, large format tiles in the double charge segment are also gaining momentum and a shift to some extent from glazed vitrified tiles to double charged tiles seems quite likely.”

Carlo Ricotta, Export Sales Manager for Malaysia for Chinese frit producer, Panson ( the company is largest frit producer in China) says, “It is expected that by the end of 2017 about 80% of the total ceramic tile produced in ASEAN countries would be in the digital format. Gradually the tile decoration will reach 100% and more glazing application will take place in glazed porcelain slabs tiles, which will open further avenues for the glaze and frit suppliers.”

Raw material issues

As reaction times, melting points, temperatures, and substrates have changed and are still changing fast in the ceramic industry, the materials used in glaze formulation have also gone for a metamorphosis in recent years.

Silica is a major glaze component and is added in many forms such as quartz, feldspar, or wollastonite into a glaze. Silica acts as a glass former and is used to control thermal expansion and help impart acid resistance to the glaze. Clay such as kaolin, ball clay, china clay, or bentonite continues to be the primary suspending agent used in ceramic glazes. Consideration of the rheology characteristics needed by the application method as well as physical properties such as glaze drying time or shrinkage characteristics need to be taken into account when selecting the clay to be used in a ceramic glaze.

Feldspathic minerals, such as soda and potash feldspar and nepheline syenite, continue to be some of the most commonly used raw materials. These materials are a major source of alkali fluxes in a glaze as well as silica. Feldspar can be used as either a flux or refractory material in a glaze depending on the firing temperature.

Alumina is normally added as calcined alumina or alumina trihydrate, although both clay and feldpars are sources of alumina in the glaze. The alumina is used to improve the scratch resistance or abrasion resistance of the glaze but also influences the gloss level.

Zirconium silicate is the major opacifier used in ceramic glazes. However, tin oxide is also used by some manufacturers particularly if chrome-tin pigments are being used in the glaze. It is also becoming more common to use zircon opacified frits to provide some or all of the zirconium silicate needed in a glaze.

This is especially true in fast firing cycles where the use of a high percentage of a refractory material, such as zirconium silicate is not desirable.

Raw material availability and prices have been two of the prime problems faced by the global and Asian glaze producers. Zircon, borates and in some cases feldspar have major bearing on the prices of glaze. Prices of some of the key inputs have seen very erratic movements in last two years. Thankfully, Zircon prices have stabilized after touching the peak in 2014, bringing a much needed respite to glaze producers.

Formulation changes 38

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AC 17-9

Type

Lower range ( INR/ Kg)

Upper range ( INR/Kg)

Transparent (Double Firing)

42

52

Opaque ( DF)

45

70

Transparent ( SF)

40

50

Opaque ( SF)

44

65

57,189

56,084

UAE

Digital printing has led to some significant changes in formulation in glazes and frits. Conventionally fired glazes typically contained 20-25% frit, with the balance being lower cost raw materials such as feldspar, silica, or wollastonite. Now a day's fast fire glazes typically contain 40-50% frit with some glazes being all-fritted.

While all-fritted glazes contain 90-95% frit, a blend of several frits is commonly used in many glazes. Glaze formulations in Asian countries are becoming more similar to those being used by European tile producers as Asian tile producers emulate European production techniques and designs. In addition, the use of engobe has become a necessity in many plants to produce higher quality glaze surfaces or to maintain glaze quality.

The frits being used today remain leadless but have very low levels of boron and alkalis with much higher levels of calcium and zinc when compared with traditional fire frits. Typical frits used by the fast-fire wall and floor tile industry produce excellent glazes when used all fritted. Clear glossy and opaque glossy frits are the dominant types of frits used in fast fire glazes in both the wall and floor tile industries. Zirconium silicate remains the dominant opacifier.

Carlo Ricotta of Chinese company, Panson says, “ With the advent of digital printing technology there has not been a major change in sales of glaze and frits. However there have been some changes in formulation in order to develop the coloration of the inks. This has opened the way to sell more materials such as grits, mica to make the tiles looking more and more natural.”

Debasis Das at Hopewell Ceramics told Asian Ceramics ,“Introduction and wide usage of digital printing in ceramic industry has been an important factor, which have pushed the glaze demand higher. In India, matt finish and imitation of natural surfaces is becoming more and more popular.”

Ink challenges

Digital printing on ceramic tiles has raised the bar for inks, colors and additive suppliers to ceramic industry due to the very nature of industry and exacting standards of production process. As ceramic inks cannot use the same pigments as those used in other digital inkjet applications – ceramic tiles are subject to very high temperatures during the firing process, up to 1200°C, in order to fuse the glass frit in the glaze to the body of the tile.

Therefore the pigments used in digital inkjet decoration of ceramic tiles have to be capable of withstanding these high temperatures. The only pigments that will not be destroyed by such a process are inorganic ones, for example metal oxides.

However, carrier fluids are generally the same – oil or glycol – both for traditional and digital inkjet ceramic inks. The choice of carrier fluid enables the surface tension and viscosity of the ceramic ink to be carefully controlled, which is important to ensure reliable printing or jetting of the ink, both for traditional and digital inks.

The significant difference between traditional and digital inks is the particle size allowed and the concentration of solids in the inks.

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Analysis: Decoration

Traditional inks were pastes; the carrier fluid is generally of the order of 10-15% by weight, the pigment 20-40% and the rest is mostly made up by frit, with smaller amounts of other materials to adjust surface tension and inhibit agglomeration, etc. Digital inks are liquids, still with high pigment loadings of over 20% and more by weight, but without the high frit loading.

Glaze evolution

A new disrupting technology is expected to bring sea changes in the traditional glaze and frit industry. The new technology will be capable of glazing, decorating, creating effects and reliefs and depositing protective layers on the ceramic tile surface. Introduced by technology supplier System SPA, the technology can handle applications including glaze-engobes, glazes, coloured, gloss and matt effects, colour designs , metallic effects, protective layers and powder applications on ceramic tile.

According to System, “The line will combine cutting edge technology with outstanding scope for creativity in ceramic production. The minimum printing width of 1200 mm will enable the same levels of productivity to be achieved with a belt speed of 10 m/min. as narrow high speed lines. This will make it possible to work simultaneously on different sizes with different applications loaded on the machine bars. By properly using drop on demand technology it is possible to competitively apply, from an industrial point of view, weights close to 200 g/m2, an amount that, together with the particular features of digital glazes object of this invention, make it possible to obtain continuous glazes on ceramic substrates, similar to those achieved with traditional glazes using non-digital application techniques. In fact, the preferred use of digital glazes object of the present invention focuses on a weight lower than 150 g/m2 and more preferably 100 g/m2.”

The new technology will led to many changes in glaze formulation. While in traditional glazes clay materials, kaolin and the like are used as antisettling agents, mainly polyphosphates are used as dispersants and glues mainly based on carboxy methyl cellulose are used as binding agents, in the digital glazes it is necessary to use other type of organic compounds such as carboxylic acid copolymers, hyper-dispersants, polymeric fatty esters, polyamides, derivatives of aromatic hydrocarbons, phosphate salts of polymers with acid groups, urea derivatives, polyether modified poly dimethyl siloxanes, among others.

Floorex Frits

Floorex Frits is engaged in the manufacturing of a variety of frits which include satin matt variety (both transparent and opaque),

40

asian ceramics

AC 17-9

special frits, transparent and opaque frits. The firm has an installed capacity of 35,000 MT per annum.

Apart from frits, the firm also manufactures zinc oxide which is used in the manufacturing of frits and printing powder which is used in printing designs on tiles. The installed capacities for frits and zinc oxide stood at 3,000 MT per annum and 8,500 MT per annum. The state-of-the-art manufacturing facilities of the firm are located at Panchkula (Haryana; commenced operations in 2010) and Navapur (Gujarat; commenced operations in 2012).

Orient Glazes Private Limited

Udaipur-based (Rajasthan) OGPL is engaged into manufacturing of ceramic glaze frits and other value-added glaze products which find application in ceramic tiles industry. The manufacturing facility of the company is located at Radhu (District- Kheda) in Gujarat with an installed capacity of 32,535 metric tonnes per annum (mtpa). The company caters to the requirements of large ceramic tiles manufacturers along with Morbi based ceramic tiles manufacturers.

Gibraltar Glass & Ceramics

Padra, Vadodra based, Gibraltar glass and Ceramics Industries has emerged as one of the leaders in India in the production of frits and glazes for ceramic industry. The company started manufacturing conventional frits in 1994.

Gibraltar boasts of a wide portfolio and serving the diverse needs of digital wall and floor tile industry.

According to Mr. Vachhani of the Gibralater Glass “ Indian glaze industry is making improvements on quality front very rapidly, but raw material availability and prices are a cause of concern for most of the glaze producers, including us. Boron and its derivates are not available in desired quantities in the country and when available, their prices are too high. As a result, glaze producers have no option other than raising the prices, which is not acceptable to end users and often work as deterrent to the growth of glaze industry.”

According to the company, “ We have made a huge investment in state of the art European production technology. With the aid of tilting continuous furnaces and rotary furnaces running on natural gas, we are able to produce best in quality glazes for ceramic industry.”

Auxiliary facilities like ball mill for captive grinding purpose, shuttle kiln for calcination process aids the company to achieve these goals. The orocess of weighting and batching, which are critical success factor in glaze production are also fully automated.

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Analysis: Indonesia

Indonesia sta

expansions stop as industry suffers

Jahir Ahmed looks at how Indonesia’s tile industry continues to under perform and what it can do to improve its current outlook.

I

ndonesia’s dream of becoming the ASEAN hub for tiles has been stalled as the country could not recover from the slump that affected production and consumption this year also, for three years in a row. The production was much lower than 440 million square metres of 2014 despite increase of production capacity by about 100 million sq metres. The exports remain lower than imports. In fact, Indonesia has now become a hot spot of Chinese tiles that continue to enter in increasing quantities.

There was a slight improvement in production. However, this upturn in output has been very small in quantity. Estimated to be about 20 million sq metres. It increased the production to 370 million sq metres this year from 350 million sq metres of 2016. Weak real estate and property market has badly forced the tile manufacturers to continuously control production. “Capacity utilization remained at a lower level of 65 percent, although, improved a little from last year’s 62 percent,” said Elisa Sinaga, Chairman of ASAKI, Asosiasi Aneka Industri Keramik Indonesia (Indonesian Ceramic Industry Association).

Indonesian ceramic tile sector was affected by its unstable markets at home and abroad both. Increasing floodgate imports from China have added additional unbearable burden because of their lower prices. A high degree of idle capacity was triggered by weak property sector, resulting in a significant decline in demand for tiles in the domestic market since past three years.

Currently Indonesia has a production capacity of 580 million sq metres of floor and wall of tiles of various qualities and sizes. ASAKI

42

asian ceramics

AC 17-9

said production of tiles was 400 million sq metres in 2015, when capacity utilization was 66 percent. Since past several years Indonesia aspires to become the centre of ASEAN tile trade with support of a booming production, driven by higher domestic consumption.

But slower domestic demand following a slump in real estate market and construction of residential houses and other buildings have blocked the hope at least for a couple of years, if not permanently, when Vietnam appears to be the largest exporter of tiles with highest production capacity in the ASEAN region. .

However, the Indonesian government is ambitious that tile production and exports will rebound with increase of consumption in the coming years. Industry Minister Airlangga Hartarto believes that Indonesia has a chance to utilize capacity at full scale to raise Indonesia’s position to the fourth largest tile producer in the world from the current 7th. Airlangga claims the country has competitive advantages in the ceramic tile industry, especially considering its abundant natural resources that could be used for raw materials, as well as the country’s largest consumer population in ASEAN. Despite various measures to raise production and exports, Indonesia is now feared to be a big market of imported tiles. Sinaga said local tile sales have remained flat in 2017 but import is rising. Due to cheaper imports, local producers have to compete at the expense of profit.

Indonesia had 5th place in the world in manufacturing tiles in 2014,

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Analysis: Indonesia

alls for time with production of 400 million sq mtres. Vietnam replaced Indonesia in the following year with production of 440 million sq metres. Now Vietnam is going up a notch more with production of over 500 million sq metres by replacing Spain. ASAKI believes that when the property market rebounds, its production will rise to more than 500 million sq metres. However, Indonesia was 5th largest consumer last year with consumption of 369 million sq metres, after Vietnam’s 412 million sq metres.

Tile manufacturers still have high hope of making Indonesia a centre of tile as the country’s huge consumer market remains untapped because of want of adequate transport infrastructure. In per capita, Indonesia’s tile consumption is also relatively low compared to its Southeast Asian neighbors. Per capita consumption in 2017 is estimated to be 1.42 sq miteres, compared to1.40 sq metres of 1016.

However, it is lower than 1.49 sq metres of 2015, according to ASAKI. In 2016, of the total production of tiles, about 87 percent was allocated to the domestic market, while the rest was exported to various countries in Asia, Europe and America. Indonesia is not among the top 10 exporters, but it holds the 9th position among the top 10 importers with imports of some 57 million sq metres.

Domestic profits

According to the industry sources, with improvement of future demand, Indonesian tile market is expected to nearly double to US$4.4 billion in 2026 from present about US$2.3 billion. Major players, such as, PT Muliakeramik Indahraya, PT Arwana Citramulia Tbk, PT Roman Ceramics, PT Platinum Ceramics Industry, PT Keramika Indonesia Assosiasi (KIA), Niro Ceramics Indonesia, are dominating in the domestic markets.

The manufacturers said they are depending more on the domestic markets than exports due to fall in demand and prices in the export markets. However, the manufacturers said they are worried about duty free access of foreign tiles as the imported tiles have been grabbing the market share with higher quantities every year.

In 2016 an estimated 50-60 million sq meters of tiles were imported into Indonesia. The main supplier is China, which has enough surplus capacity to meet the demand of Indonesia and other Southeast Asian countries, being the world’s largest producer and exporter. Tile imports into Indonesia grew 27 percent in 2016, according to the industry sources. The tile manufacturers said most buyers are now retailers, while sales to projects did not pick up this year as expected.

However, some dynamic producers for the mass markets is still doing better in the domestic market. Companies like second largest and world’s 14th top producer, Arwana Citramulia with production capacity of 57.4 million sq metres a year, is continuously expanding

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Indonesian tile manufacturers (ASAKI members) PT. Arwana Image Noble, Tbk Puri Sentra Niaga, Bl T2, Jakarta 11610 PT. Asri Pancawarna Dc West Middle-Karawang Cikampek 41 373 PT. Best Ceramic Pegasus (PT. Whitehorse Ceramic Indonesia) Jl. Jend. S. Parman Kav. 77, West Jakarta PT. Ceramic Industry Jaya Victory Jl. Printing State No. C 261-263, Jakarta 10570 PT. Concord Industry H Kebon Kacang, Desa Cimahi, Karawang Timur PT. Diamond Ceramic Industries Kemang, Pmp Mampang, South Jakarta 12720 PT. Goose Resources Jl. Mangga Dua Raya Blok F2, Jakarta 10730 PT. Granitoguna Building Ceramics Jl. Mi. Ridwan Rais No. 10-18, Gambir, Jakarta Pt. Jui Chang Fang Pluit Mas Com, Jl. Raya Bridge Iii, Jakarta 14450 PT. Jui Shin Indonesia Warehousing Pluit, Bl C No. 6, Jakarta 14450 PT. Ika Maestro Industry Jl. Pluit Timur Raya No.36 Ab, North Jakarta PT. Indoagung Multiceramics Industry Jl. P. Jayakarta, No. 33 E PT. Indonesia Ceramic Association (KIA Group), Jl. Senen Raya, Jakarta Pusat

AC 17-9

asian ceramics

43

Analysis: Indonesia

Output of ceramics in Indonesia Item

Production capacity of ceramics in Indonesia

2012

2013

2014

2015

2016

Ceramic tile (m.m2)

390

430

440+

440

350

Ceramic houseware (m.pcs)

275

275

290

290

Ceramic sanitaryware (m.pcs)

4.7

5.1

5.4

5.4+

Item

2012

2013

2014

2015

Ceramic tile (m.m2)

390

430

290

Ceramic houseware (m.pcs)

275+

275+

290+

290+

290+

5.1

Ceramic sanitaryware (m.pcs)

4.7

5.1

5.4

5.4+

5.4+

480-500 500-570

2016 580

PT. Kimliong Ceramic Indonesia Ngoro Ind Persada Bl O, Mojokerto, East Java PT. Kobin Ceramic Industry Ngoro Ind Persada Block O, Mojokerto, East Java PT. Light Son Asa Ceramic Jl. Majapahit No. 26 Ag, Jakarta PT. Magic Indopenta Teguh Jl. P. Jayakarta No. 3-4, 121 Complex PT. Mingchia Ceramics Indonesia (PT. Ayekeh Team Indonesia) Sand Gombong, Northern Cikarang, Bekasi PT. Muliakeramik Indahraya District. Cibitung, Cikarang, Bekasi 17520 PT. National Ceramic Niro Indonesia Cicadas, Gunung Putri, Bogor Regency 16 964 capacity and operating on profit.

Indonesia’s largest and the world’s 5th top tile manufacturer Mulia Ceramics (Muliakeramik Indahraya) also have recently increased production capacity to 80 million sq metres and was able to sell a large quantity of tiles last year, although, the return was not much favourable. “Operating margin dropped due to a tense market competition,” said Eka Tjandranegara, President Director of Mulia Group (PT Mulia Industrindo Tbk),

Unsold stock

Many factories have large backlog of unsold stocks. Mulia is under pressure of a severe inventory that now forces the company to raise its annual sales to 100 million sq metres, which is over 25 percent larger than its installed capacity, while export has dwindled to only three percent last year due to unfavourable prices, particularly in USA, its main export market.

Weak demand for ceramic tiles prompted severe price competition in the market. As a result, selling price tumbled throughout 2016, as each tiles producer strived to maintain its market share. As unsold stock piled up, many large manufacturers cleared their stock causing difficulties to many others and resulting in controlling capacity utilization.

Amidst tight competition, Mulia managed to keep its sales volume at 77.943 million sq metres last year. Mulia was under pressure to clear its warehouse. Due to stockpiling of unsold tiles, it needed massive sales. “As the domestic market is stagnant since past couple of years, against the huge sales target of 95.055 million sq metres in 2016, the achievement was quite big with 82 percent,” said Eka. Mulia said domestic market is now more rewarding compared to

44

asian ceramics

AC 17-9

PT. Perkasa Primarindo M Batavia, Jl. Kh. M Mansyur Kav 126, Jakarta PT. Platinum Ceramic Industry Jl. Panglima Sudirman. Embong Kaliasin Surabaya PT. Primarindo Argatile Menara B, Jl. Kh. Mas Mansyur Kav 126, Jakarta PT. Satyaraya Keramindoindah Jl. Raya Serang Km.25, Balaraja 15610 PT. Siam Solar Ceramic Jl. Tomang Raya, Lt. 13, Jakarta 10110.

PT. Sinar Works Duta Abadi Puri Sentra Niaga, Blok T2, Jakarta 11610 PT. Solar Multi Cemerlang Jl. Panglima Sudirman, Embong Kaliasin Surabaya PT. Sun Power Ceramics Desa Lolawang, Ngoro, Kab. Mojokerto, East Java PT. Sustainable Saranagriya Ceramic Village Sukadanau, Cibitung, Bekasi 17520

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Analysis: Indonesia

Indonesian ceramic tile industry Particulars of Years of Indonesian ceramic tile Indonesian ceramic tile industry under review industry 2015 2016 2017 estimated

A Chinese perspective…

One of China’s leading equipment suppliers, Keda Clean Energy, has been supplying the tile industry in Indonesia for many years, and deputy direct of international marketing, Mr Yao Jie, said to AC: “We think that the development of Indonesia ceramic tile industry has been slow in recent years and would estimate that the number of newly built production lines is only about 41 over the period from Capacity utilization in 66 62 65 2010 until mid-2017. Of course there has also been some percentage renovation of existing lines too, all of which have entailed Installed capacity in million 550-570 570-580 570-580 serious investment, but the number of new companies square metres has been much slower. This is especially the case when Total production in million 400 350 370 you compare with, say, India and Vietnam in the last six square metres years, which is the area in which Indonesia needs to Total population in million 255 257 260 be competing if it’s not to lose its position as a leading protagonist in the sector.

Per capita consumption of 1.49 1.40 1.42 “Having said that, the growth that is seen is measured and tiles in sq. metres therefore more likely to remain in place, rather than the boom and Number of workforce 170,000 160,000 150,000 potential bust we see elsewhere. In comparison, for example, In tile industry Indonesia has seen few closed lines or cases of bankruptcy.

Source: ASAKI “The current existing 51 ceramic tile enterprises in Indonesian ceramic imports Indonesia altogether have about 220 production lines and 30 of the 51 enterprises are located in Jakarta, 10 in Surabaya, Ceramic Import value in million US Imported volume in only 1 is in Medan.” products dollars thousand tons imported by 2015 2016 2017 July 2015 2016 2017 July exports to traditional markets, particularly, USA. It has been Indonesia selling large unsold stock in the domestic market Tile 159.230 198.709 30.7 857.3 1,110.90 167.54 without looking back towards export markets. Indonesia’s leading exporter Mulia faces an exchange rate fluctuation Sanitaryware 10.181 12.868 1.53 10.34 46.68 1.54 exposure since its US revenues in US dollar is lower than production cost. Mulia’s domestic market continues to remain Tableware 2.242 2.686 0.15 7.99 10.87 1.08 supportive. Sales volume proportion between domestic and export remained at 97 percent and 3 percent of total sales.

Total 177.324 222.023 32.85 881.71 1,172.95 170.16 Still some hope is there for increase of exports. Many of the manufacturers are confident that exports will rise from Sources: ASAKI, KSO SCISI this year. The demand for Indonesian tiles in other ASEAN countries is expected to grow soon as the products will regain Countries Imported volume in Import value in million US competitiveness due to lower production cost following supplying thousand tons dollars reduction of gas price to US$6 per mmBtu, from the current ceramics to 2015 2016 2017 2015 2016 2017 US$8-US$10, per mmBtu. The manufacturers are expecting Indonesia July July their products would be competitive in the export markets, as China 854.95 1,151.89 691.08 164.21 208.26 124.57 well as in the domestic markets, when gas price is lowered as assured repeatedly by the government recently.

In Indonesia, at the moment, gas accounts for 30-40 Vietnam 12.13 8.43 5.17 4.04 2.17 1.71 percent in the production cost of tiles and other ceramic products, according to ASAKI. Malaysia 10.02 7.97 5.07 3.74 2.51 1.94 Japan

1.33

1.26

1.04

2.11

4.03

3.13

Thailand

0.74

1.08

0.88

1.12

2.44

1.51

Spain

1.37

1.03

0.64

0.66

0.47

0.36

Italy

0.24

0.71

0.16

0.32

0.94

0.25

Others

0.93

0.59

0.12

1.12

1.20

0.24

881.71

1,172.96

704.16

177.32

222.02

133.71

Total

Sources: ASAKI, KSO SCISI

46

asian ceramics

AC 17-9

Import issues

ASAKI felt concerned about the future duty free imports from China and other ASEAN countries. Import duties for ceramic products that are shipped into Indonesia from other ASEAN countries and China will be scrapped to zero in next year, implying it will become increasingly difficult for Indonesian ceramic tile producers to compete with their ASEAN and Chinese counterparts.

Sinaga said the high logistics costs in Indonesia form a major obstacle that undermine the competitiveness of Indonesian tiles. He claims it costs approximately USD $400 to transport products from China to Jakarta, while it costs about USD $800 to transport products from Jakarta to Medan in North Sumatra of Indonesia.

Indonesia’s current production capacity could make

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Analysis: Indonesia

Indonesia the world's fourth-biggest ceramic tile producer, said Sinaga. He warns that if the situation deteriorates, then it could lead to deindustrialization because Indonesian tile manufacturers simply change into traders who import from abroad.

As the tile production cost in Indonesia is rising, imported tiles have been grabbing a big market share every year. ASAKI said the local manufacturers are worried about the increasing influence of the foreign tiles for their lower cost and competitive quality.

According to the Geneva based International trade Centre (ITC), Indonesian ceramic export remains stagnant due to lower demand, while import is rising despite slowdown in consumption during weak property markets. Due to unstable demand in the past few years, capacity utilization in the factories remain 62-66 percent.

Problems, problems

Indonesian tile sector is now faced with multiple problems. Since last Indonesian ceramic exports in last 5 years HS Code Product label of ceramics exported by Indonesia 6909

6911

6908 6910

6912

6907

6913 6914 6903 6904

6905

6902

6901

6906

Ceramic wares for laboratory, chemical or other technical uses; ceramic troughs, tubs and similar . . .

Tableware, kitchenware, other household articles and toilet articles, of porcelain or china . . .

Glazed ceramic flags and paving, hearth or wall tiles; glazed ceramic mosaic cubes and the . . .

Ceramic sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, flushing . . .

Tableware, kitchenware, other household articles and toilet articles, of ceramics other than . . .

Unglazed ceramic flags and paving, hearth or wall tiles; unglazed ceramic mosaic cubes and . . .

Statuettes and other ornamental ceramic articles, n.e.s.

Ceramic articles, n.e.s.

Retorts, crucibles, mufflers, nozzles, plugs, supports, cupels, tubes, pipes, sheaths, rods . . .

Ceramic building bricks, flooring blocks, support or filler tiles and the like (excluding those . . .

Roofing tiles, chimney pots, cowls, chimney liners, architectural ornaments and other ceramic . . .

Refractory bricks, blocks, tiles and similar refractory ceramic constructional goods (excluding . . .

Bricks, blocks, tiles and other ceramic goods of siliceous fossil meals, e.g. kieselguhr, tripolite . . .

Ceramic pipes, conduits, guttering and pipe fittings (excluding of siliceous fossil meals or . . .

three years the tile industry is adversely affected by the increase of gas prices to about US$8.1 per mmBtu in East Java region to about US$9.2 per mmBtu in West Java, and to nearly US$10 per mmBtu in North Sumatra region. Higher gas prices discourage new investment in ceramics.

According to the Indonesia Investment Coordination Board (BKPM), foreign direct investment is mostly going to those sectors which are less energy-intensive. Wages and salaries are also increasing continuously. Currently minimum monthly wage is US$300, according to ASAKI. Appreciation of Indonesian currency Rupiah (IDR) against US dollar, its international trading currency, reduces the export revenues. Tile manufacturers who export are badly frustrated, as export receipts cannot ensure profit. Mulia said exports to its major market, USA, is not viable enough as the export revenue earned from USA cannot meet production cost in IDR due to exchange rate problems.

Exported value in 000 US$ 2012

Exported value in 000 US$ in 2013

Exported value in 000 US$ in 2014

Exported value in 000 US$ in 2015

Exported value in 000 US$ in 2016

100,676

89,788

103,998

98,248

99,868

83,775

98,922

108,946

91,331

92,485

64,272

59,831

75,448

78,226

77,000

21,249

19,037

22,513

24,827

21,399

33,261

27,161

27,651

23,076

19,640

18,474

14,084

11,612

8,616

6,778

9,449

5,429

4,058

4,933

6,055

6,662

4,532

5,856

4,937

4,804

3,647

19,931

2,893

4,285

3,435

334

301

378

739

1,307

1,275

1,472

693

1,014

1,187

485

547

381

526

768

741

766

532

398

443

13

48

70

0

1

Source: ITC and UN COMTRADE

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Connecting Global Competence

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A global milestone. International innovations in additive manufacturing, powder metallurgy, electro and carbon ceramics are changing the world of tomorrow. At ceramitec 2018.

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Analysis: Indonesia

Hub promotion

ASAKI helps promote a number of events, including ceramic exhibitions every year. Tile manufacturers are benefited by such events. As part of Indonesian hub for tiles and other ceramic products, ASAKI organizes an ASEAN’s dedicated ceramic event Keramika, held annually in Jakarta. It showcases new launches, designs, and also solution from ASAKI. About a half of ASAKI’s 63 members are tile companies. Keramika 2018 will be held on 15-18 March, 2018, at the Jakarta Convention Center (JCC).

Initiated in association with Reed Panorama Exhibitions, the annual expo invites visitors to explore a variety of local ceramic tiles, latest designs and attractive collections, innovations in local manufacturing and display of technological developments, machinery and other materials used in the industry. Lots of ceramic manufacturers and their suppliers participate every year.

Indonesian ceramic imports in last 5 years HS Code Product label of ceramics imported by Indonesia 6907

6902

6908 6903

6909

6910

6911

6913 6914 6905

6912

6904

6901

6906

Unglazed ceramic flags and paving, hearth or wall tiles; unglazed ceramic mosaic cubes and . . .

Refractory bricks, blocks, tiles and similar refractory ceramic constructional goods (excluding . . .

Glazed ceramic flags and paving, hearth or wall tiles; glazed ceramic mosaic cubes and the . . .

Retorts, crucibles, mufflers, nozzles, plugs, supports, cupels, tubes, pipes, sheaths, rods . . .

Ceramic wares for laboratory, chemical or other technical uses; ceramic troughs, tubs and similar . . .

Ceramic sinks, washbasins, washbasin pedestals, baths, bidets, water closet pans, flushing . . .

Tableware, kitchenware, other household articles and toilet articles, of porcelain or china . . .

Statuettes and other ornamental ceramic articles, n.e.s.

Ceramic articles, n.e.s.

Roofing tiles, chimney pots, cowls, chimney liners, architectural ornaments and other ceramic . . .

Tableware, kitchenware, other household articles and toilet articles, of ceramics other than . . .

Ceramic building bricks, flooring blocks, support or filler tiles and the like (excluding those . . .

Bricks, blocks, tiles and other ceramic goods of siliceous fossil meals, e.g. kieselguhr, tripolite . . .

Ceramic pipes, conduits, guttering and pipe fittings (excluding of siliceous fossil meals or . . .

It has already become an annual meeting place of tile buyers, sellers and architects, as well as the manufacturers of machinery and rawmaterial suppliers.

The exhibitors are set to showcase ceramic tiles according for various segments of buyers. Also it covers national, regional and international standards. Keramika organizing chief Mulyadi Toha said several local manufacturers were now able to produce porcelain tiles of an international standard and those products attract a large number of visitors. He said visitors could also find ceramic tiles that had designs similar to other materials, such as stone, marble and wood, very easily with the help of digital printing technology. ASAKI chairman Elisa said the event aimed at showcasing the ability of local manufacturers, even when faced with low demand amid a declining property industry market.

Imported value in 000 US$ in 2012

Imported value in 000 US$ in 2013

Imported value in 000 US$ in 2014

Imported value in 000 US$ in 2015

Imported value in 000 US$ in 2016

161,133

127,809

166,457

159,176

181,199

121,294

96,872

102,169

75,446

94,215

32,038

17,927

28,666

32,193

33,196

37,410

39,362

32,569

31,267

33,193

14,747

12,176

13,661

10,752

15,268

18,591

11,882

12,829

10,531

12,770

11,865

4,149

3,509

2,329

3,639

7,989

3,055

2,118

1,530

1,652

17,240 589

6,052 578

2,438 3,139

988 791

1,351 495

2,023

295

649

292

447

447

112

9

7

100

68

275

124

167

40

3

119

3

0

8

Source: ITC and UN COMTRADE

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www.asianceramics.com

Talking Shop

Talking Shop Banging the drum for a new tomorrow

Irfan Uddin Rifat

Jahir Ahmed interviewed Irfan Uddin Rifat, General Secretary of Bangladesh Ceramic Manufacturers & Exporters Association (BCMEA) and Chairman of Fair Organizing Committee of BCMEA’s Ceramic Expo Bangladesh-2017, and also Managing Director of porcelain tableware manufacturer-exporter FARR Ceramics Ltd, to explore critically what is looming on the country’s horizon.

Bangladesh has achieved a brilliant success in last two decades in ceramic exports and import substitution, and emerged as one of Asia’s quality manufacturers, exporters and consumers of tabletop and building ceramics. Its porcelain and bone china tablewares have earned significant fame worldwide. Slowdown and fall in prices in the main export markets in Europe and North America have reduced the country’s export earnings from tablewares in recent years, to some US$36 million in fiscal year 2016-17, ended in June, from around US$46 million in 2013-14, but the exporters are bravely diversifying markets for revival of export growth, while tiles and sanitarywares, now meeting the domestic demands, are prepared to hit the export markets with quality porcelain and vitrified products. In initial efforts, exports of tiles, bricks and sanitarywares earned over US$3 million last year.

In this emerging economy, about 13-15 percent a year ceramic market growth domestically, indigenous natural gas, cheaper skilled labour, 60-70 percent value addition, export competitiveness, all have boosted up expansion of ceramicware production capacity. Already operating facilities include 21 tableware, 27 tile, 17 sanitaryware and 2 electric insulator plants, with annual production capacity of 260 million pieces, 130 million sq. meteres, 8 million pieces and 3,000 tons, respectively.

What is more significant in Bangladesh is that with an annual expansion of the economy by 6-7 percent plus, in recent years, the country is on the way of elevating to middle income status, from the current lower-middle income, by next 2021 to treble its annual domestic consumptions by the end of the next decade to about 300 million sq metres of tiles, 15-20 million pieces of sanitarywares, a huge quantity of heavy clay items and absorb nearly the whole current capacity output equivalent of tablewares, compared to around a half domestically at present. The huge domestic and export demands offer attractive opportunity to the local and foreign investors, as a result, one or more new plants are coming on stream almost every year or alternatively.

AC: Since last decade Bangladesh Ceramic Manufacturers & Exporters Association (BCMEA) and its leading members are talking about making Bangladesh a hub of ceramic tableware sourcing in this region of Asia, where two leading rivals, Indonesia and Thailand command the markets for a long time, while the neighboring China is the world’s top export player in sourcing markets. As an important step forward BCMEA is organizing Bangladesh’s first ever ceramic export fair, Ceramic Expo Bangladesh-2017, due to be held from November 30 to December 2, this year. Being

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the top executive of the Association, how do you visualize the possibility and what strategies could be adopted to develop your proposed hub?

Irfan Uddin Rifat: Since the inception of Bangladesh Ceramic Manufacturers & Exporters Association, known as BCMEA, decade back, we are playing key role in organizing the manufacturers and exporters of ceramics products and its allied industries. We are strategically focused to bring all allied organizations of the industry under one common platform for ensuring mutual interest, fair competition, collective growth, and most importantly a harmonious and strategically aligned relationship with the regulatory bodies of the Government of Bangladesh (GoB) to foster overall growth of the industry across the world. Our ultimate vision is to establish Bangladesh ceramic industry as a competitive hub for sourcing of ceramic products for the customers from all around the world. And yes, like you said, there are big competitions in the global markets, but to let you know, we don’t consider us any less if compared with them in terms of product quality and professionalism at work.

AC: BCMEA members cover almost entire industry (except a few unorganized SMEs). Its latest statistics show that imports hold 11.45 percent market shares of tablewares, 27.71 percent of tiles and 16.57 percent of sanitary-wares. The domestic market is growing at double digit annually, at one of the fastest rates in ceramics in Asia. What plans the BCMEA and its members have for local production to meet the future demands at home and abroad?

Irfan Uddin Rifat: All the previous and present President of BCMEA (then BCWMA), including my late father, Mr. Iftakher Uddin Farhad, has relentlessly worked during initial years under the active guidance of the country’s policymakers and concerned ministries of the GoB to identify and bring all the organizations associated with ceramics industry under one umbrella. It was rightly foreseen by the founding members that the “unorganized” ceramics industry acutely needs to be “organized” in order to attain a new height and also to retain a sustainable industry growth, which now reflects in the double digits domestic growth which you’ve rightly identified.

Well, to answer to your question about catering to local demand in one line, we are strategically focusing on export growth as torchbearer of one of the highest foreign currency earning industry, in terms of value addition both for exports and substituting huge imports, which are estimated to be about US$40 million and more than US$300 million, respectively, as of financial year 2016-17, ended last June. Besides, about 50,000 Bangladeshis are employed by the ceramic industry. But, nevertheless, as a

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part of that macro-level growth plan, the domestic market is very substantial which reflect in your mentioned growth rate. In some products and segments, according to Geneva based ITC, last year’s imports amounted to at least US$115 million.

AC: Bangladesh’s tableware export markets are mainly concentrated in Europe and USA-Canada. In recent years, the US withdrawal of GSP affected export growth in the American market. European Union markets that absorb most of Bangladesh’s exports, are largely dependent on existing GSP provided to Bangladesh and other less developed countries. Some other major markets, such as, Canada, etc, are also providing such facility. Emerging potential markets are also being approached for tariff concession. How and when Bangladesh will be ready for free market competition?

Irfan Uddin Rifat: Well, this dictates us to look back into our past history, from where we have started after the great liberation war of 1971 as a war affected country, and where we stand now after almost 46 years in 2017. All these success could be achieved only due to remarkable performance of this nation’s dynamic business leaders, extraordinary performing workers, visionary policymakerscum-leaders. We are now a role model in global context in industries such as readymade garments, leather processing, jute products, and obviously the ceramics industry. While we understand and agree with you regarding the over dependency on the mentioned Western markets and on the trade benefit arrangements, but I can assure you that we are working actively in association with our regulatory bodies to create, retain, and sustain more competitive trade arrangements with countries and regions across the world.

Opening of new export territories for our local ceramics industry products will attest my statement by all means.

AC: As your Association members are still in infancy in brand development, your products are sourced as commodity by the major wholesalers and other manufacturers-marketers who use their own brand back-stamp, in such a situation your commercial viability and sustainability are at risk, while already you are not getting expected export prices.

The export manufacturers are staying in the markets taking the opportunities exists in the 170 million population strong domestic market that shows huge potentiality with expansion of Bangladesh economy at a very high rate of over 7 percent a year. What future plans BCMEA would apply to address the issues?

Irfan Uddin Rifat: Well, you’ve rightly identified two issues here. To address one after another, we understand that there is an absence of Bangladeshi origin retail or wholesale brands in ceramic products in global scene, but this must be acknowledged that gradually we are building the market demand and overall acceptability of “Made in Bangladesh” brand in global scene through entering into millions of households around the world, through the large retail and wholesale giants, where we supply. You can’t possibly develop a brand in global scene in a short period of time. We firmly believe that our young entrepreneurs and second or third generation of leaders from businesses will actively explore across the world and they should achieve success in the long run.

And in domestic market, I can tell you that our local brands are already on upper hand in terms of reliability when compared with most of the imported foreign ceramic product brands!

AC: When Bangladesh’s tablewares have huge surplus capacity, because of export-contract manufacturing, the tiles and sanitaryware markets are deficit and being catered

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by different countries, including China, Thailand, Spain, etc, particularly, for high-end, upper middle-segment and middle class markets. In recent years, a boom in property development has attracted many tiles and sanitary-ware manufacturers to invest in the sectors boosting up the production capacity of tiles and sanitarywares to exploit mainly the domestic market, while some manufacturers are ambitious about exports. What is the future outlook of Bangladesh’s ceramic production and trade, particularly for the next five years?

Irfan Uddin Rifat: Well you’re right that in recent years many local conglomerates and promoters have invested in ceramic industries, mainly in tableware, sanitaryware, and tile industries.

The dependency on imported ceramic products are also there, but we are positive that the way our local companies are adopting is using latest world class technologies at par with global ceramics players. We will soon be experiencing decrease in usage of imported products due to our better production capacity, high-end quality, innovative designs, and competitive pricing. Overall, in the next five years, we are expecting to see better industry growth and launching of new manufacturing facilities with latest technologies for domestic and export markets both, in all categories of building ceramics as well as in household and hotelwares.

AC: As raw materials are almost fully imported, the industry is import-dependent, for that reason, all manufacturers are supported with lower import duty and duty drawback on exports, while domestic market is protected by about 200 percent import duties, taxes and related others, which is a temporary measure according to the trading rules implemented by the World Trade Organization (WTO). What steps the BCMEA members are taking to cope with the withdrawal of the protection soon for the free market compatibility?

Irfan Uddin Rifat: While I agree with your observation partially, I would like to differ into some extent. Yes, as a matter of fact, presently we are import-heavy in terms of raw materials but not actually fully dependent. It is due to the requirement of the customers, we use imported raw materials, but as a matter of fact we are developing alternative options by promoting local companies from BCMEA to setup their own raw material production factories to cater the ever increasing local demand. Even into some extent, local companies are practicing both forward and backward integration to ensure competitive pricing. While we thank our policymakers to promote this industry through varied means as you’ve mentioned, keep note that these policies are results of BCMEA’s persistent efforts and attempts to strategically ensure best possible business climate for ceramic industry in Bangladesh with collaboration of concerned regulatory offices.

AC: What safeguard you have to challenge the absence of local raw materials and unstable gas supply due to shortage, rising cost of labour and withdrawal of domestic market protection in future? What plans do you have to increase the efficiency in productivity and cost? In zeroing wastage of energy, materials and labour, and becoming environmentfriendly and competitive globally since Bangladesh continues to remain importer, while there exists potential export markets, now being exploited by other neighboring Asian countries?

Irfan Uddin Rifat: We are working on developing an alternative supply chain for sourcing local raw materials, like discussed.

Besides this, rising costs of labour is addressed by BCMEA by giving it a face of structured framework developed in collaboration with concerned regulatory bodies. As leading trade organization for

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Talking Shop HER_AsianCeramics_254x86_11_17_print.pdf 23.10.2017 13:51:06

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AC: Bangladesh’s ceramic manufacturers are benefited greatly by exploiting domestically available natural gas, at one of the world’s lowest prices per MMBTU. The government is the lone supplier and increasing the gas price frequently.

How do you cope with this situation? The government is going to import LNG and LPG to meet the shortage in supply.

What impacts it will have on the local ceramic manufacturers, particularly, in production cost? Would the government continue providing subsidy to the energy-intensive ceramic industry? As the government is thinking of importing gas by private sector, what would be the future gas price?

Irfan Uddin Rifat: I would not say ceramics industry is “exploiting,” but is actually best “utilizing” the domestically available natural gas resource by converting this into foreign earnings for the nation as one of the highest contributors to the nation’s exports and to import substitutes, and overall growth of its economy. Yes, as sole supplier of natural gas, government authority plays a monopolistic role, but we are positive that the current visions of the government will help continue support the industrial promotions and implement business friendly policies to better protect the local ceramic industry. Well, LNG and LPG will surely have a direct impact on our production costs and we are actively observing its implementation plan to keep our production cost under control after its launch. Inclusions of new and revisions of existing government subsidies are already under active discussion, and like said, we are expecting the future gas price to remain competitive which will only allow us to achieve the vision 2020 development objectives undertaken by the government.

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55

Insight

SPAIN Leading unglazed tile export destinations (sq metres, 2016)

Total unglazed tile exports (sq metres)

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Leading unglazed tile import sources (sq metres, 2016)

Total unglazed tile imports (sq metres)

www.asianceramics.com

Leading glazed tile export destinations (2016, sq metres)

Leading glazed tile import sources (2016, sq metres)

Total glazed tile exports (sq metres)

Total glazed tile imports (sq metres)

Total sanitaryware exports (no. items)

Total sanitaryware imports (no. items)

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Hunter and the hunted

Exhibitionists Dear Diary,

ASEAN Ceramics exhibition held in I recently attended, and our company exhibited the at the impressive BITEC exhibition and Bangkok from 31st August to September the second ics and been fare too busy to even Ceram China a ting concert halls. Having skipped exhibi l choice for us to do some active attend Indian Ceramics the ASEAN show was a natura to face that we often don't get much face ers custom our of marketing this year and meet some face time with. especially busy we were never idle and The show was well organised and though it never felt ers and some new potential ones. custom ant import had some important meetings with some of our time and money so its a pity a The enquiry books indicate it could be a profitable use re near as large as China Ceramics nowhe is show the t, few more big companies didn't exhibi a lot of interaction off site too. Indeed but it has a far more comradely feel to it and there is in Bangkok's impressive range of about talked and relationships and business were made restaurants and bars. usual on setting up day there is no I'd only have a couple of complaints really, firstly as hall. Nobody likes this as at best its tion exhibi every at aircon working which seems typical the environment pleasant whilst people uncomfortable, surely it can't cost too much to have nd? Please stop it, I know that different weeke the into ting work. Secondly the fashion for exhibi working week but with having to make countries have different ideas of what constitutes a y is frustrating and many of us doubt that Sunda or ay Saturd international travel having to lose a y and many people make plans to shut the floor traffic over a weekend will be valuable anywa up shop and leave early. and visitors about the value of various Once again I had many discussions with exhibitors a matter of horses for courses. With so exhibitions and I'm coming to the conclusion that it is , these days picking which exhibitions if dollars tional promo many options for the marketing and help in the decision making. any to attend is difficult – and organisers often don't ver they want to call it and whoever (whate past the in ics I've been critical of China Ceram of the exhibitors and the many wants to organise it) it's a big show but frankly, the quality t as we felt that on analysis the exhibi to bother didn't we visitors is open to doubt. This year of the valuable visitors we most e and quality of the visitors to the booth was pretty averag the stress of planning and start a for – better much was know and visit anyway. Simply visiting we could concentrate on and ten were forgot organising the booth and the promotional materials key customers. some with gs meetin e arrang and see visiting the suppliers we wanted to t an improvement over it being The show was held on two levels this year and I though to navigate and not miss anything. held across one floor as it felt more condensed, easier year that I visited showed that some the in earlier show But it wasn't perfect and a Coatings ms at Chinese exhibitions and organisers have thought about some of the eternal proble d to visit for a day as I really needed neede only I them. actually done something positive about my visitor's badge I was a little for to see a few specific potential suppliers – applying online why charge so really sum trifling a – 5 surprised I was asked to pay RMB2 same exhibition the at Held idea. good a be to out turned this on it? But hold even busier than China halls in Pazhou the Coatings show turned out to be fee was that the 'visitors of ce entran the paying of tage advan the Ceramics but

*The views expressed in this piece reflect those of the author, and not of the magazine or its staff

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questionable value' don't want to pay and so don't go. Instead, some of the reasons for attending exh people with dubious ibitions hung around outsid e tying to beg, borrow or badges. Secondly having buy the visitors only a day to get around the exhibition and having of kilometres to cover it wa , therefore, a lot s a pleasant surprise to find following a path to exactly that the carpets were col our coded so where you wanted to go – or not go was simple. The easy and yet so effective se things are so other organizers could tak e note – but many don't see m to want to.

One of the rumours at the Bangkok exhibition was tha China for ceramics in 201 t there will be yet anothe r show in 8 competing with Ceramics China in Guangzhou. As see anything confirmed unl of writing, I can't ess people are confusing the Foshan bathrooms and show but several people alleged that there would sanitaryware be a tile show and this wo an unwanted confusion (un uld obviously be less it was very well organi sed!) with the major Ceram That show does need bet ter market focus but having ics exhibition. another show at another at different times would dev location even alue both shows. Making it even harder to decide wh money visiting or exhibiting ere to spend .

On the subject of devaluing a show, there were also com Ceramics (a show that rea plaints about the move of lly is getting more and mo Indian re important and therefore highly influential). However it should be , it seems that the organi sers have decided to locate year in Gandhinagar rath er than Ahmedabad. This the show next move has been resisted of pretty good reasons. Firs before for a couple tly Gandhinagar has only a couple of hotels which both very full and no dou will, therefore, be bt with inflated room rate s. Secondly, if you aren't in those hotels (which are going to be staying already 80% booked up & one at least may not be the the ceramic executives of our world desire) then you standard are going to have to travel minutes every day, there and back from Ahmedab about 45 ad.

Which is another cost in inconvenience especially time, travel and if you are an exhibitor. So why do it? The rumour is pressure rather than nee its government ds for space in which cas e the good work done buildin Ceramics up could be som g Indian ewhat undone.

Having discussed exhibit ions and the value of the m compared to other ways it's clear now that everyth to advertise ing from a nicely printed and informative brochure, site, a high ranking on Go an effective web ogle or a popular business to business web site offe alternates to exhibiting; nev r cost effective er mind the very simple pre close deals it actually to mise that the best way to visit your customers and make and meet all levels and functio companies. Consequently ns within their , the organisers of exhibit ion s have their work cut out be aware that the most hea and they must rd conversation at every show ever is 'Are you bus today? Was it as quiet as y? Many visitors yesterday?' the risk that peo ple will opt out should me organisers trying to make an exhibition things easier for exhibitors and visitors and I'm not so we are seeing that at the moment. In fact its very mu sure that ch a mixed bag – if you del a client as a bag of materi ivered it to al there would be phone calls and protests – but wit people often just stop com h exhibitions, ing. One very senior exe cutive in a multinational com suspended exhibiting rec ently said that he filled in pany that has the 'comments' section of but very much doubted the the feedback forms comments were read sin ce the same mistakes are again. For me, I think at lea made time and st we'll have to look at wa ys to maximise the return spend and I'm not sure wh on marketing ich exhibitions will get the vote.

Until next time Your humble servant William Hunter

www.asianceramics.com

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