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CERAMIC·BATHROOM October 18-21,2018

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Malaysia: A Haven for Chinese Exports?

Time:2018.09.04  Views:

Output, consumption export and import of ceramic tiles in Malaysia had been keeping a comparatively steady growing until recent years when it began to meet some problems from home and abroad such as increased production cost, more supply than demand and so on. So, export of Malaysian tiles not only being confronted with challenge from other ASEAN countries but also with intense competition from China and other non-ASEAN countries.

Many believe that Malaysia’s ceramic tile industry is in a difficult situation with cost-increase problem caused by higher investment cost as well as unsteady market demand both at home and abroad.

A similar survey carried out one year ago by FMM Malaysia Ceramic Industry (MCIG) indicates that even if Malaysia’s GDP achieved a steady growing, it was not able to increase a market demand for consumption, not to mention a substantial effect on demand for building materials, and it’s a fact that the domestic ceramic tile industry didn’t achieve an improvement as expected.

It’s a comment made by Mr. John Chua, general manager of Malaysia Kim Hin Industry that “the domestic situation of ceramic tile consumption is not optimistic to ceramic tile manufacturers”.

Domestic demand for its ceramic tiles is going down over the past a couple of years, meanwhile, Chinese ceramic tiles are having an increasing market share in Malaysia.

ThereforeMalaysian ceramic tile manufacturers are taking measures to have cooperation with other ceramic tile enterprises and real estate developers, and while making efforts to cater the domestic market demand, they are working hard for export market.In order to improve domestic market demand for ceramic tiles, they are very busy with contacting real estate developers and construction architects for a common understanding. At the same time, they hope to have cooperation with export traders of ceramic tiles to open up export market.


Energy Issues

Malaysian government has cancelled energy subsidies, and at the same time, gradually increased the price of natural gas, electricity and petrol. It is disclosed by insiders that the price increase rate of natural gas 2016 in Malaysia was as high as 28%, and the lasting price increase of natural gas is regarded as the largest challenge to its ceramic tile industry. Taking its tile of USD 5/piece as an example, its energy cost accounts for 25-30%, cost of raw material accounts for 25%, and salary cost is about 35% that is higher than salary in other South-east Asian countries where the salary cost account only for 10-15% approximately.

In spite of the increasing production cost, Malaysia government, in accordance with its eleventh "Five-year Plan (2015-2020), is pushing their ceramic tile manufacturers by means of integration to improve their competitiveness, and at the same time, encouraging them to promote output by means of automation and technical innovation. It is reported that Malaysian Mosaics Berhad (MMB) that is well known for its MML brand product and the regionally popular White Horse brand tile both improved their ceramic tiles through investment for energy conservation technique to reduce unit energy consumption of production, and their products are quite popular with medium-high end market.

Besides these two enterprises, many other ceramic tile enterprises says they have started on projects of energy conservation and heat recycling for purpose of setting off the effect of natural gas price increase so as to keep competitiveness of their products. While the domestic ceramic tile market is facing existing challenges, ceramic enterprises will continue their effort on new product development and setting up more powerful sale network to enlarge their market share. Currently, their effort is focusing on brand image improvement and upgrading sales network abroad and new product development for target markets, all for a higher export volume. It is said by a manager of Guocera Group that their export volume is expected to take a higher proportion in the total sales amount of the Group in coming years.


Trade deficits

According to United Nations commodity trade statistics under the calculation rule of Geneva international business center, Malaysia’s import value of unglazed and glazed ceramic tile came to a figure of USD 160 million in 2016(Tariff Codes: 6907 and 6908), slightly lower than that of 2015. On the other hand, its export value kept going down in 2016, only USD 120 million in total, and lower than that of preceding years by USD 4 million. Its top export market countries Australia and Singapore began to have less imported ceramic tiles from Malaysia, but on the other hand, Malaysia began to have more imported ceramic tiles form China.

Maybe the above-mentioned situation is of certain effect of the intense price competition caused by the overcapacity of ceramic tiles in the whole world. Malaysia’s ceramic tile enterprise, Prestige Ceramics Sdn Bhd expressed that its income is reduced by 12.7% from that of 2015 due to dropped price and depreciation of Malaysian Ringgit in 2016. Some ceramic tile enterprises are depending on imported raw materials and export market and suffered a serious loss because of unforeseeable currency depreciation and an export decline.

However, some ceramic enterprises did avoid serious loss through practicable strategy. Guocera is an example. Its product keeps popular in target market and its main export target market is still in Australia, middle-east and some other Asian markets, and its continuous effort on export market did bring it new customers and new markets. Another example is GBH. When finding out that the market demand for its products began to decline, it paid more attention to contact with local ceramic enterprises of its export market areas. It is proved that to have a wide and reliable distribution network is a good way to reduce loss and make profit. GBH chairman says that the group has taken measures to strengthen distribution network, the number of distribution firms is increased from 13 in 2016 to 16 in 2017, and the number of project distribution firms is increased from 38 in 2016 to 52 in this year.

In view of export and import of ceramic tiles and sanitary wares in Malaysia, Malaysian enterprises are facing a general situation of declined export. Taking China as an example, comparing China’s export volume of ceramic tiles and sanitary wares to Malaysia, the import volume of the same from Malaysia is really nothing. In 2016, Chinas export value of ceramic tiles and sanitary wares to Malaysia came to USD 245 million, showing an increase of USD 35 million over the export value of USD 210 million in 2015, while China's import from Malaysia in the same period was only about USD 10 million. This situation is a serious challenge to Malaysia.

 

Import of ceramic tiles and sanitary wares during 2012-2016 (USD’000)

Year

2012

2013

2014

2015

2016

Total

268,807

273,991

331,978

345,616

364,469

China

115,814

147,584

181,640

210,617

245,602

Indonesia

19,203

17,974

25,784

31,230

30,871

Thailand

20,735

21,889

21,608

19,076

15,803

Japan

31,417

14,611

16,164

14,220

14,139

Vietnam

27,159

21,440

28,546

21,218

11,033

Germany

6,100

7,431

/

6,827

10,094

USA

10,101

7,458

10,180

7,146

5,609

India

7,405

5,795

5,289

4,574

4,919

 

Edited From Asian Ceramics



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