In the current state of the hardware and sanitary products market, challenges are evident both domestically and internationally. According to data from the China Building Sanitary Ceramics Association, in 2012, while architectural ceramics companies saw a 2.93% increase in sales, the sanitary ceramics sector experienced a 3.08% decline, and hardware and sanitary ware companies only managed a modest 0.27% growth. However, the profit trends were even more concerning: building ceramics profits rose by 8.31%, but sanitary ceramics dropped by 5.55%, while hardware and sanitary ware suffered a steep 25.43% decline in profit. This significant drop reflects an unusual and troubling performance for the sector.
Industry insiders have noted that the hardware and sanitary ware segment is particularly vulnerable. During interviews with several companies, representatives admitted that business had been tough, with some predicting that the situation might worsen this year. While sales of bathroom products declined, the drop in profits was far steeper than in other areas of the industry. Experts suggest that this trend signals a saturated domestic market, where competition has become fierce, especially after many export-oriented firms shifted their focus to local markets.
The decline in foreign demand, particularly in North America and Japan, has further complicated matters. In 2012, the U.S. accounted for nearly 19.92% of China’s hardware and sanitary exports, but Japan fell out of the top ten. As exports declined, companies that once relied on overseas markets began competing more intensely in the domestic space, leading to a price war that has hurt overall profitability.
One company representative from a well-known plumbing brand told reporters, “Hardware and sanitary product development has not been optimistic in recent years. The sharp decline in foreign exports left many companies unprepared, and some resorted to aggressive price cuts to maintain sales.†This kind of competition, focused solely on lowering prices, has undermined healthy industry dynamics and created a cycle of devaluation.
Recent media attention on the “lead-tap†scandal has also raised concerns in international markets, affecting the export of Chinese hardware and plumbing products. Reports indicate that some countries have increased inspections of heavy metal content, which has significantly impacted export-oriented businesses.
Domestically, price reductions have become common, with small workshops taking advantage of the situation by flooding the market with low-cost, counterfeit products. A salesperson explained, “Customers first look at the price, then consider quality. Some small manufacturers take advantage of this by undercutting prices and selling fake goods.†This has led to a severe price war, with brands struggling to compete and consumers confused about product authenticity.
By the first half of this year, hardware and sanitary companies were still facing limited market opportunities, with profit margins dropping below 5%. Industry experts believe this indicates a saturated domestic market. Rising raw material costs have only worsened the situation. Copper prices, for example, surged by 32% within six months in 2012, reaching historically high levels. Steel prices also climbed sharply, remaining elevated through mid-2013. These increases made it difficult for companies to maintain low prices, as production costs soared.
With raw materials costing more, the ex-factory price of a product jumped from around 150 yuan to over 200 yuan, not including processing or logistics costs. At the same time, market prices continued to fall, squeezing profit margins to single digits. One dealer joked, “We’re just doing the work of the consumers.â€
As the market shows no clear signs of recovery, many large retail stores have reduced their hardware and sanitary product offerings. Only a few remain active, and some have completely pulled out of the category, signaling a deepening crisis in the sector.
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