According to incomplete statistics, since this year, there have been seven waves of price increases in many building ceramic production areas across the country. Nearly a hundred ceramic companies have issued price increase notices, involving Sichuan, Jiangxi, Hebei, Guangdong, Guangxi, Yunnan and other provinces. Multiple cities. However, behind the fierce price increase, the terminal transaction price of ceramic tiles has dropped again and again. Ceramic tile stores are engaged in price wars, and even many leading ceramic companies are secretly cutting prices one after another. The price war will become more fierce and thorough. The very crowded mid- to low-end ceramic tile market may be facing a more intense "fight", and the survival and profit margins of small and medium-sized ceramic companies will be even narrower.
High production costs
Seven waves of price increases came one after another
Affected by multiple factors such as rising prices of raw materials, natural gas, coal, and freight, many ceramic companies are facing greater cost and operating pressures. In late February this year, the first wave of price increases was launched, and as of the end of September, the building ceramics industry has ushered in the seventh round of price increases. The price increase categories include antique tiles, polished tiles, glazed tiles, porcelain tiles, and rock slabs. , medium board, etc. Among them, the price of ceramic tiles in the Linyi production area of Shandong Province rose three consecutive times in September. It can be seen that the price increase trend has not cooled down.
On September 3, a number of floor tile manufacturers in the Linyi production area of Shandong issued price adjustment notices. The notice showed that the prices of some of their products would be raised starting from September 6. The products of Linyi ceramic enterprises that have increased this time include 300×600mm and 400×800mm medium plate series, 600×1200mm, 800×800mm and other specifications of floor tile series, while interior wall tiles and large-size products are not within the scope of this price increase.
On September 17, Linyi Chengyu Ceramics Co., Ltd., Linyi Shunhui Building Ceramics Co., Ltd., Linyi Langyu Building Ceramics Co., Ltd., Linyi Jinchang Building Ceramics Co., Ltd. and other interior wall tile manufacturers collectively issued price increase notices . The notice shows that starting from September 22, Linyi Ceramics Enterprises will uniformly increase the price of each piece of its entire series of wall tiles by 0.1 yuan. The price increase of ceramic tiles is mainly caused by factors such as the recent increase in natural gas prices and raw material prices.
On September 21, many ceramic companies in Linyi, Shandong Province issued price increase notices again. This price adjustment mainly focuses on products such as medium plates and polished glazes. It is understood that the price adjustment range in Linyi is: 400×800mm all-ceramic mid-plate series will be increased by 0.1 yuan/piece; 800×800mm, 600×1200mm specification polished glaze series will be increased by 0.3 yuan/piece.
The previous price increase at the end of May attracted widespread attention in the industry, mainly because the five leading ceramic companies in the building ceramics industry collectively increased prices and raised the prices of some of their products.
On June 6, the ceramic tile division of Dongpeng Holdings issued a notice on the price adjustment plan for ceramic tile products, announcing that the prices of some products would increase by 3%-10%. Previously, Hongtao brands under Hongyu Group, New Pearl Group, Mona Lisa Group, and Marco Polo Holdings all issued product price adjustment notices.
Starting from June 1st, New Pearl Group will increase the price of ceramic tiles and small floor tiles by 6% based on the 2022 unit price; Mona Lisa will increase the price of 600×600mm antique tiles and 300mm size antique tiles from June 1st. ×600mm specification porcelain tiles and 400×800mm series medium plates will increase by 3%-5% from the existing price base, and other products will be determined based on actual conditions; starting from June 1, Marco Polo Holdings will increase the price of some porcelain tiles and supporting floor tile products. Prices will be adjusted, with ex-factory prices increased by 5%-6%.
Subsequently, some people in the industry speculated that the price increase of leading ceramic companies would lead to a large wave of small and medium-sized ceramic companies to join the ranks of price increases. But in fact, the terminal market has shown a different picture. No matter how fierce the price increase across the country is, the terminal transaction price of ceramic tiles has not increased at all, and has even dropped again and again.
Low-price competition has become commonplace
Ceramic tile dealers are miserable
There are multiple factors behind the resurgence of ceramic tile price wars. This year's epidemic has caused a decline in consumption power. In addition, the current construction and ceramics industry has entered the stage of stock competition. The demand growth rate has slowed down and there is overcapacity. The war for the market among ceramics companies has become more intense. Even the leading ceramics companies cannot hold back and are resorting to price cuts. way to join in. Low-price competition is still the most effective means of competition in this industry at this stage.
In the view of some industry insiders, leading ceramic companies should not take the lead in cutting prices, but should support prices. Some people in the industry also said that the leading ceramic companies are engaging in price wars behind the scenes, mainly to seize the market share of small and medium-sized enterprises, thereby solving the problem of imbalance between production and sales caused by the sharp drop in real estate project orders.
According to public information, as of June 30, the total accounts receivable of the three listed companies in the construction and ceramics industry reached 5.346 billion yuan. Some ceramic companies mentioned in their semi-annual reports that in accounts receivableIn terms of management, the company formulated corresponding accounts receivable management policies based on continuous evaluation, established a special risk control team to continue follow-up, and ensured the recovery of accounts receivable through various methods and channels. The balance of accounts receivable at the end of the reporting period was higher than that at the beginning of the period. A decrease of nearly 400 million yuan. It can be seen from this that due to the real estate thunderstorm, many ceramic companies have a large debt gap and a significant reduction in liquidity.
In addition, in order to achieve the advantages of large-scale production and accelerate the capture of market share, leading ceramic companies have invested in the construction of intelligent production lines and production bases. This can not only reduce the time and cost of logistics delivery, but also effectively improve production efficiency and reduce costs. At the same time, intelligent production can effectively optimize marginal costs, reduce the space for companies to maneuver in supply chain costs, and thus use the advantages of scale to form defensive barriers. Therefore, when the industry situation is so difficult, leading ceramic companies have to invest a lot of money to expand production even if they do not make much money.
It is no exaggeration to say that the homogeneity of products in the building ceramics industry is one of the worst in the home building materials industry. The products of various ceramic companies are copied from each other, and the differences are not big, and this will also affect the terminal The price war reached a climax.
The leading ceramic companies have the advantage of scale that small and medium-sized ceramic companies do not have. This advantage can be called a "nuclear weapon" in low-price competition. To put it simply, the factory production cost of ceramic tiles produced on a large scale by leading ceramic companies may be lower than that of small and medium-sized ceramic companies, and their production cost pressure-bearing capacity is much higher than that of small-scale ceramic companies. In this case, every time a small brand raises a dollar or even a dime, it is likely to lose some customers. When the prices are similar, most customers will choose the more well-known brand. This also means that once the leading ceramic companies start a price war, the mid- to low-end ceramic tile market will be quickly seized, and a large number of small and medium-sized ceramic companies will be eliminated.
Now that leading ceramic companies have also joined the "price melee", this will undoubtedly further intensify the reshuffle in the industry. Although many leading ceramic companies have previously announced price increases, in fact, only engineering bricks have increased. Industry insiders said that leading ceramics companies openly announced price increases, but secretly worked with dealers to secretly lower prices and engage in low-price competition.
A ceramic tile dealer revealed that originally 800×800mm ceramic tiles could be sold for hundreds of yuan, but now the price of 800×800mm glazed tiles is as low as 30 or 40 yuan, and sometimes they can’t even make back the cost. Dealers' profit margins have been greatly compressed.
The lower the price, the better the price, and the lower the price, the lower the price. As for the bottom line of ceramic tile prices, where is the bottom line? Still can't tell for sure.This kind of "game-like" transaction combined with the pressure of epidemic prevention and control has not only affected the confidence of some ceramic tile dealers, but also made it difficult for some small and medium-sized ceramic enterprises that follow the cost-effective route and the original route.
Industry reshuffle intensifies
How can ceramic companies survive?
In the current market environment, ceramic enterprises must not only expand rapidly in scale to strive for greater scale effects, but also explore more differentiated services to create greater value-added space. The direction to achieve sustainable development in the future. Simply relying on price cuts and price wars may not necessarily lead to more performance and market share. Under the collective siege of leading ceramic companies and facing the increasingly obvious oligopoly effect in the industry, how can small and medium-sized ceramic companies survive in the cracks and find a suitable way out?
Some industry insiders analyze that in order to survive, companies must understand competition and respond to competition. Observing competitors around you and existing competitors and constructing strategies based on this will limit thinking, define competition too narrowly, and ignore other strategic forces.
Michael Porter's three major competition theories provide ceramic enterprises with three solutions, allowing enterprises to find their own advantages and obtain a better competitive position in the fierce market competition.
The first is the "total cost leadership strategy." It is a strategy for ceramic enterprises to obtain competitive advantages by reducing costs through effective means, so that the entire cost of the enterprise is lower than the cost of competitors, or even the lowest cost in the same industry. This strategy is often more effective when there is little difference in product performance and quality. Therefore, ceramic companies must establish efficient and large-scale production facilities, go all out to reduce costs, strictly control costs, and pay high attention to costs in management to ensure that the total cost is lower than that of competitors.
The second is the "differentiation strategy". Ceramic enterprises provide consumers with differentiated products or services, forming something unique in the entire industry. Often when the cost gap cannot widen, it is more effective to produce better products than competitors to show the difference and attract customers. For small and medium-sized ceramic enterprises, this method is the fastest and most effective.
Finally,"Specialization strategy" refers to aggregation strategy and focus strategy. In fact, many companies have emerged in the building ceramics industry that specialize in segmented fields, such as focusing on a specific customer group, a segment of a certain product series, or a certain market segment, in order to gain market share in a certain target market. Competitive advantage. Home furnishing companies represented by Shangpin Home Delivery, Tucson, and Muli Muwai have taken this strategy to the extreme, thus occupying a great advantage in market competition.
How long will the price war last? There is still no way to know. But the price war is only a superficial phenomenon, and the underlying reason is the further increase in industry concentration. In this case, ceramic companies need to have a long-term thinking and look for opportunities in long-term market growth, rather than joining price wars one after another, which will only fall into the dilemma of "sell more and lose more". In the end, he was eliminated by the strong ones.
