Ceramic tiles produced by more than 30 Foshan companies displayed at the city's Creative Industry Park. Ceramic tile makers in the city exported $2.29 billion worth of products last year. [Provided to China Daily]

Foshan Ceramic tile makers find the going tough as stiff European duties cloud growth prospects

Winds of change are set to sweep across the industrial landscape in Foshan, a city in South China's Guangdong province, as stiff European duties and an increasingly shrinking global market are queering the pitch for ceramic tile makers.

Changes are already afoot as some companies in their quest to find new markets are moving up the value chain with high-end products, while others are setting up joint ventures with overseas partners.

But for a city that lives and breathes ceramic tiles, it is not an easy task to bring its pillar industry back on rails, especially since most of the companies still make low-end ceramic tiles and are not financially strong enough to invest huge amounts on research and development of new products.

At the Casa ceramics and sanitary ware mall in Foshan, a major shopping hub for construction ceramics, the studios of most of the ceramic companies are shuttered. There is an uneasy silence in the air, compared with the hustle and bustle of the last few years. Most of the 300-odd construction ceramic dealers and original equipment manufacturers decided to seek greener pastures elsewhere when the European Union earlier this year imposed stiff duties of nearly 70 percent on Chinese bathroom, kitchen and paving tiles.

Foshan Taoyu Ceramics Design Studio is one of the few studios that is still operating from the Casa mall. Xu Liyu, director of the studio, says that while business continues to be good, the buying patterns have changed vastly.

Xu, who has been in the ceramic tile design business for more than 10 years, says that companies need to adopt a design-oriented approach for survival.

"Earlier buyers came to us to purchase what the rest of the world wanted. But they (buyers) are more choosy now and insist on exclusivity in purchases," she says.

Unable to cope with the flood of orders, Xu's company has been hiring more designers and is constantly on the lookout for more.

At the same time the company also takes steps to ensure that the design approved by a client is not duplicated. "Once a design draft is approved by the client, I delete it from my iPad so that even by mistake it cannot be copied."

According to data provided by Foshan Customs, ceramic tile exports to the European Union declined by nearly 16.5 percent to $120 million (91 million euros) during the first seven months of this year.

But the real challenge for the ceramic industry is to make inroads into the highly competitive high-end ceramic tile market.

Yu Cong, executive director of the Foshan-based HCC Building Materials Co, a leading ceramic tile trade company, says the export business has never been as bad as this year.

"We shipped nearly 700 containers of ceramic tiles every month in 2010, but the number has fallen to 350 containers per month this year," Yu says, adding that she is contemplating job redundancies. Most of the company's problems started with the stiff EU duties, she says.