Significant increases in various raw and auxiliary materials have led to a sharp rise in ceramic tile production costs. At the same time, the market competition is fierce, and even the most high-end slate in the industry has become a bargain, with shouts of selling for 100 yuan one after another. On average, the selling price per square meter is almost the same as ceramic tiles.
The reason for this is that on the one hand, with the maturity of rock slab production technology and the improvement of supporting processing services, the cost of rock slabs continues to decrease; on the other hand, the production capacity of slabs has surged in a short period of time, which is difficult for the market to digest. As a result, companies continue to fall into price wars in order to achieve a balance between production and sales.
The market economy is essentially a competitive economy. To compete, price war is indispensable. For an industry like ceramics that is highly fragmented and has relatively low barriers to entry, price war is almost the most effective means for companies to conquer the city.
In order to acquire more customers, companies have to hold wave after wave of promotional activities year after year. New store openings, huge holiday deals, factory sales, celebrity signings...the essence is nothing more than price reduction promotions.
Stone slab prices are plummeting rapidly, while production costs continue to rise. Since the beginning of this year, various chemical materials, natural gas, packaging materials, etc. have all increased significantly, resulting in high production costs for enterprises.
Among them, technological progress has enabled companies to reduce production costs to a certain extent by relying on economies of scale. For example, in the past, a slate production line could produce a few thousand square meters per day, but now it can produce more than 10,000 square meters, so the fixed cost sharing will be much less.
The advancement of technology has brought about a rapid increase in single-line production capacity. It has also enabled the quality defects that have plagued the production of rock slabs for a long time, such as cutting cracks, deformation after laying, and strength attenuation, to be overcome one by one, and the rate of high-quality products has been significantly increased. At the same time, the application pain points of rock slabs such as palling, transporting, processing, going upstairs, and paving are also gradually improving.
However, the most distressing thing is that in the face of fierce market competition, some rock slab manufacturers continue to increase single-line production capacity at the expense of quality and reduce costs without a bottom line in order to gain more market share.
This is also the real reason why the price of a piece of rock slab of the same specifications is very different between brand companies and non-brand companies.
The prices of rock slabs that continue to break through the bottom line have surprised many people in the industry. Unless there are technological generation differences in production equipment, some new lines will have cost leadership advantages. Otherwise, in the same production area, with the same equipment, kilns, raw materials and production processes, the direct production costs should be similar.
Although brand companies will have R&D expenses and brand building expenses, and have higher requirements for quality control, this is not the real reason why some slate companies are able to sell at low prices. The real reason is that in order to cope with the price war, some companies continue to increase output and reduce costs under the existing production technology conditions in order to obtain lucrative profits.profit.
In fact, whether it is ceramic tiles or slate, its production cost is closely related to its production scale. For the same kiln, some people can produce 10,000 square meters per day, while others can produce 20,000 square meters per day. It's just that different companies have different positioning, different target customers, and finally adopt different production methods. There is no right or wrong here, only choices. As the saying goes, the right one is the best.
However, before there is a new round of iterative upgrades in technology, the practice of infinitely increasing production capacity and reducing production costs at the expense of quality is undoubtedly not conducive to the healthy development of the slate industry.
Manufacturers that compete at low prices will tell consumers over and over again that for the same product and the same color, if the brand manufacturer is so much more expensive, it is definitely a waste of money. But he would never tell consumers that in order to reduce costs, he also lowered quality control standards, causing many late-stage hidden dangers to product quality.
For example, cutting cracks, easy to absorb dirt, easy to break, etc. Nor will they tell consumers that the brand manufacturer’s slate firing time is almost twice as long as his. It will not tell consumers how much effort the brand manufacturer has put into developing a new product in terms of style and color. He only needs to focus on the popular products on the market and simply imitate them.
The over-dispersed characteristics of the building and ceramics industry have resulted in the industry being a mixed bag of good and bad things for a long time. Different enterprises have different ways of survival and development.
Whether you are building a high-end brand, a mid-range price-performance ratio, or a low-end price war, you should clarify your customers, channels, goals and strategies, and let ashes return to ashes and soil return to soil, instead of making a pot of porridge and taking low-end products. High-end products compete with high-end brands in an attempt to fish in troubled waters and pass off inferior products as good ones. As the saying goes, you get what you pay for. High prices may not buy high quality, but low prices certainly cannot buy high quality.
It can be predicted that the price of rock slabs will further decrease. Even if production costs such as raw materials and fuel continue to rise, it still cannot stop the downward trend of rock slab prices.
It’s just that this decline should be based on the iterative upgrade of process technology and the scale effect supported by equipment upgrades, and the quality of rock slabs can continue to break through and improve, not just when the technology is not fully mature. In the past, they used opportunistic measures to reduce costs and launched wave after wave of price wars, making the entire industry unprofitable.
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Author｜Wang Li
Cultural Director of Mona Lisa Group
Original title: "Reducing costs cannot be at the expense of quality"
(This article is reproduced from Ceramic Information)
