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CERAMIC·BATHROOM October 18-21,2018

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An Overview of Bangladesh's Ceramics Industry

Time:2018.08.09  Views:

Bangladesh is traditionally a promising market for the Chinese manufacturers. In their supply lines ceramic products are major ones, because of its matching to the economy of the Bangladeshi consumers. Despite tariff and non-tariff barriers that makes the Chinese ceramic products’ landing cost more or less 200 percent higher, China is , as always, the largest ceramic supplier to Bangladesh. The Bangladesh market offers lucrative opportunity to the Chinese companies. About US$100 million worth of Chinese ceramic tiles, tablewares, sanitarywares and technical and refractory ceramics are in high demand every year among the Bangladeshi consumers. In recent years, lots of new ceramic factories have gone on stream to substitute imports, but the very high level of annual GDP growth rate at seven percent to around 8 percent has been pushing ahead the domestic consumption by a robust 15-20 percent a year.

 

General Environment

With some 6% annual GDP growth sustained over the past decade, Bangladesh’s economic and business policy, specially, “Look East” adopted last decade to optimize economic and strategic gains helped make GDP grow to 7%. Bangladesh has put forward a series of pro-investment fiscal policies, such as, avoidance of double taxation on the basis of bilateral agreements, allowing 100% foreign equity, attractive tax holiday for the manufactures, concessionary imports of capital machinery and raw materials etc, attracting loads of investment from China, India and other foreign equity that Bangladesh becomes a new tiger economy in Asia.

Higher growth of GDP and steady and stable increase of purchasing power and accompanied consumption, most particularly, in housing and building sectors that consume building ceramics. The overall growth of Bangladesh’s manufacturing industry sector is over 10% a year. Currently the annual growth of building and construction sector is around 10% a year.

SourceTradingeconomics.com(Bangladesh Bank)


Machinery Advantage

In the newly set up ceramic factories in Bangladesh, usually the complete plants or kiln and machinery are coming mostly from China, although, Bangladesh is still a traditional market of such suppliers from Japan for tablewares, and from Italy, Germany, Spain and other European sources for tiles and sanitarywares.

However, the companies using European technologies, especially, kiln, press, glazing machine, etc, from SACMI of Italy, SAMA of Germany, and other established Western brands, do still seem to enjoy extra advantages when it comes to convincing international customers of the quality of their finished goods, as well as using that as leverage in domestic markets as a quality stamp. Almost all the manufactures use a considerable number of Chinese machinery and equipment along with the European ones. Tile and sanitaryware manufacturers buy more machinery from China, but the supplies from Italy, Germany, Spain and other European and American machinery sources remain continues as the demand is rising with setting up of new plants and expansion of the existing ones. Operators at Star Ceramics Ltd that manufacture tiles and sanitarywares believe that mixed technologies can ensure required edges.


Growth Potential

Bangladesh’s ceramic industry is experiencing highest growth in its history at the moment. This has attracted many suppliers of technology and machinery-equipment, although, it is still very small compared to Bangladesh’s total industrial procurement of machinery and raw materials that needs spending of a huge amount of US$20-US$25 billion a year. However, the increasing demand for ceramics in the domestic markets and possible increase of exports is expanding the manufacturing capacity in all segments of tiles, sanitarywares and tablewares.

The ceramic sector, with a domestic market size of around US$400 million this year, has experienced a 200% growth in production in five years, from 2012 to 2017, with value addition of about 65%, according to Bangladesh Ceramic Manufacturers & Exporters Association (BCMEA).

The sector caters to 70-80% of the local demand, said BCMEA President Shirajul Islam Mollah. In fiscal year 2016-17, ended on June 30, Bangladeshi manufacturers produce mainly traditional ceramics, such as tiles, tablewares and sanitarywares. At present, there are 62 ceramic manufacturers, of which 26 companies make tiles, 20 produce tablewares and 16 manufacture sanitarywares. They have employed over half a million workers directly and indirectly, and about 40% of the ceramic factory workers are females. The ceramic manufactures’ total investment has exceeded US$1 billion, said BCMEA. Tile production capacity is 120-150 million square meters a year, while sanitarywares’ annual production capacity is more than 7.5 million pieces, according to BCMEA.

Edited from Asian Ceramics

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