China has exported more than US billion worth of faucets in each of the past two years and is well on its way to shipping at least US.5 billion of the product this year. Figures for the first quarter of 2006 show exports already reaching almost US2 million. This is an increase of more than 30 percent over the same period in 2005.
Export sales have risen significantly since we reviewed the industry in September 2004. It should be noted, however, that export volume has actually declined, albeit by a moderate 5.3 percent.
The sustained rise in value is due primarily to the fact that suppliers have inflated prices by as much as 15 percent in the past year to compensate for shrinking margins brought about by rising material and manufacturing costs.
The following are some of the key trends we see in China's faucets industry:
• Most suppliers will be increasing faucet prices further in the next 12 months as raw material and component costs continue to rise.
• More high-end faucets will be available in coming months. These will come in complex shapes and constructions, or a variety of surface finishes that provide better protection against corrosion. Electronic features such as sensors will enhance water efficiency and purification functions.
• Investment in factory upgrades will concentrate on the purchase of additional or advanced machinery.
• OEM business will continue to dominate the industry, although more suppliers will be venturing into ownbrand production and exports. OBM trade will continue to target developing markets in the Middle East and Southeast Asia.
• The industry will consolidate further as a new national standard clamps down on suppliers that use substandard materials and manufacturin ...