China's exports of ceramic sanitaryware have grown dramatically in recent years, soaring at an average 50 percent every year since 2001. This annual double-digit increase will continue, especially as more buyers opt for low-cost products from China and more suppliers concentrate on expanding their market reach overseas.

The emphasis on exports is a strategic measure to counter the slowdown in the country's domestic market. The slowdown resulted from macroeconomic policies implemented in 2004 that restricted investment in several industries. These included construction and real estate, which are the main drivers of domestic demand for ceramic sanitaryware.

China suppliers currently do not have the resources to compete directly with well-known sanitaryware makers such as American Standard, Kohler, Roca and Duravit on an own-brand basis. Backed by more than 50 years' experience in the industry, most of these multinational companies have wide sales and distribution networks that span several countries and regions. Most China manufacturers, on the other hand, have been in the industry for less than 30 years and started exporting only in the past decade. Even large makers are just starting to establish their brands overseas.

This is primarily why most manufacturers in China are focusing on enhancing their OEM capability to penetrate foreign markets further, especially the high-end segments of the EU and the US.

OEM orders currently account for about 70 percent of ceramic sanitaryware shipments from China. Major clients include Mansfield, Western and Wal-Mart of the US, Caroma of Australia, B&Q of the UK and OBI of Germany.

Bolstering the price advantage
China suppliers' ability to offer prices up to 50 percent lower than most of their overseas rivals will continue to be the main factor that will win more OEM orders. This competitive advantage, especially over large-brand companies that do not manufacture in China, is made possible by low labor costs, the use of indigenous raw materials and the abundance of fittings and accessories locally.

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