Statistics from UN COMTRADE indicated that in 2020, Pakistan’s import volume of ceramic goods reached US $81.17 million, the lowest in the past decade. Total import of goods in 2020 was US $45 billion, while ceramic goods accounted for 0.18% of the country’s total import.
Pricing is important, but not in the long-term, especially now since the world-wide rising cost of energy has put a threat to the price advantage of Pakistani ceramics.
“From 2002 to 2007, the ceramics industry was flourishing. After the gas crisis occurred, the industry started declining. From 2014 to 2015, the situation has hit its worst. Indeed, the situation since 2018 got a little bit better, but the global gas fluctuations spurred a new round of crisis, started in the last 5 months.” Rana Shahzad Hafeez, President of Pakistan Ceramics Manufacturing Association said, “Meanwhile, business owners need to face heavy taxations, including heavy import duty of raw materials, additional tax on gas fee and tax on electricity.”
“The situation right now is that we are not able to provide the same quality products as compared to other countries. At the same time, our cost of gases, electricity, etc. is very high. In the near future, we will not be able to compete with them if nothing changes.” Mazhar Iqbal added.
Benchmark European gas prices jumped 24% on June 15th, closed at 120.33 euros. The market has rallied 52% over the past week, how can the ceramics industry survive in a worsen environment?
“Look, if we have better machinery here, then you will see better results. If we have an automatic production line, we will achieve a higher production efficiency. Our labor is still cheaper and the country is rich in crucial raw materials.” Mazhar Iqbal said.
According to our research, all evidence suggests that besides governmental level support, the industry is in dire need of technological innovation and standardization to resist risks.
In China’s “Porcelain Capital”, Jingdezhen, similar problems occurred in the late 90s, small workshops left the industry to seek other ways of living. Larger enterprises focused on investing in technological upgrades. Now, a full-automatic ceramic equipment in Jingdezhen can produce at least 300 ceramic products per hour, which is equivalent to the daily output of a semi-automatic equipment, and the deformation rate of products has been reduced from 15% to about 5%.
The trend of intelligent production line is also reshaping China’s ceramics industry. A three-layer drying kiln, equipped with sensors, real-time transmission of raw material proportioning, and intelligent adjustment of fuel/gas consumption benefited a brand owner from China’s Shandong province, “After the intelligent transformation, the cost was reduced by more than 15%—by saving energy consumption, the product excellence rate was increased by 3%, and the enterprise profit margin was increased by 10%.” the owner of Unity Ceramics, Chen Shiwei, told a local newspaper.
Under the framework of CPEC, besides from introducing Chinese capitals into the market, Pakistan can also embrace technology investment from China and adopt the standardized training protocols—compared with the traditional apprentice training methods, the standardized training protocols can enable workers to engage with standardized production in a shorter time, greatly reducing the time of personnel training, thus stimulating employment and turning low-end technical talents into high-end technical talents.