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Taiwan Includes Tiles in Quality Certification System

2012/01/16 | By Ken Liu

MIT Smile Logo
MIT Smile Logo
Assured quality will help Taiwanese tiles compete against substandard Chinese products

Taiwan's tile manufacturers have a new quality verification system; beginning this year; the government-administered “MIT Smile Logo”, an image with a smiling emoticon on the middle, is issued for tiles that pass tests for radiation volume, anti-slipping, and release of lead and cadmium.

The verification system was introduced early last year when Taiwan and mainland China were still negotiating the Economic Cooperation Framework Agreement (ECFA). The system encompasses 12 product categories, including garments, underwear, towels, swimming suits, bedroom ware, household appliances, and tiles, to assure the quality of these Taiwan-made products for consumers on the two sides of the Taiwan Straits.

With the implementation of ECFA, Taiwanese consumers of products falling in the 12 categories, not to mention local manufacturers of the products, face a greater threat from substandard products imported from mainland China and, sometimes, Southeast Asia.

According to D.Y. Yu, a former director general of the Taiwan Ceramic Industries Association (TCIA), prior to the signing of ECFA Chinese tiles had been constantly trickling into Taiwan via third-area transshipment, despite an import ban, in the guise of artificial stone. “At that time,” he laments, “illegal tiles already took up around 40% of the domestic market. Now, I'm afraid that our opening to mainland Chinese tiles under the provisions of ECFA will further damage Taiwan's tile industry.”

In the 1990s Taiwan was recognized as the world's No. 5 tile supplier, but now the island has dropped out of the top-suppliers list and its profit margins for manufacturers have fallen from a peak of 50% to almost nothing. Now, Yu says “I'm afraid that the margin will decline and even go into the negative zone because of ECFA. And we've fallen to under 25th place in the world ranking.” The mainland has leapt forward, in the meantime, and now stands second in the world as a tile exporter.

In the heyday of Taiwan's tile industry around 20 years ago, more than 100 ceramic-product manufacturers on the island generated NT$20-30 billon (US$689.6 million to US$1.03 billion at NT$29:US$1) in annual revenues. Today, with the encroachment of mainland China-made ceramic products, the number of tile manufacturers in Taiwan has shrunk to only 40 to 50 and their revenue has nosedived, falling to less than NT$10 billion (US$344 million) in 2009.

Dangerous Quality
Yu points out that the issue of Chinese-made tiles is not just about market competition but about quality as well. “The mainland's tiles are substandard and, in some cases, involve the radiation or poisonous heavy metals,” Yu stresses. “And there is no one to hold responsible for consumer rights in regard to these illegal tiles.”

Yu blames some of this problem on Taiwan's own ceramics manufacturers who operate factories in the mainland. “The mainland's ceramic-product manufacturers would not have been able to emerge so quickly had Taiwan's manufacturers not enthusiastically invested there,” he laments.

Taiwan’s ceramics manufacturers are struggling to defend their domestic turf against substandard tiles from mainland China. Pictured is a house interior furnished with Taiwan-made tiles.
Taiwan’s ceramics manufacturers are struggling to defend their domestic turf against substandard tiles from mainland China. Pictured is a house interior furnished with Taiwan-made tiles.
The mainland lifted its ban on Taiwanese investment in tile manufacturing there around 18 years ago, luring at least 50 Taiwanese manufacturers to set up plants in the mainland, each with a capitalization of more than US$1 million. These investments nourished the mainland's own tile-manufacturing industry, Yu says, and all but 10% of the Taiwanese investors have been forced to close down as a result of their competition

Yu believes that if Taiwan's manufacturers had not taken their sophisticated manufacturing skills to the mainland along with their investments, it would have taken the mainland's manufacturers at least 10 years to catch up—instead of the three years actually spent.

According to Yu, cheap tiles from mainland China have even forced major Taiwanese suppliers Roma International Group (R.I.G.) and Caesar Sanitar Co., both of which have set up production in the mainland, out of the island's tile market. However, Yu notes, Caesar has grown prosperous in Vietnam after moving its Taiwan's production lines there: “To the industry's surprise, Caesar has become prosperous in Vietnam. No one would have expected success at that time.”

The Sun Power Ceramics Co., Yu says, is another success story about how a Taiwanese tile manufacturer fell only to rise again. The company folded up around six years ago and one of its shareholders flew to Bangladesh to try his luck at re-establishing the company there. “He made it in Bangladesh,” Yu explains, “where there is a population of 90 million. In that country, ceramics manufacturers can make money when 3-5% of population can afford to buy ceramic products.”

Drawing from the Caesar and Sun Power cases, Yu advises Taiwan's ceramics manufacturers to take manufacturers in advanced economies like Spain and Italy as their arch competitors, and give up competing on prices with mainland Chinese suppliers. “To this end,” he explains, “we should work together in many aspects, such as technological R&D, brand-name building, and global marketing.” He cites the example of Japan's ceramics industry, noting that manufacturers there have formed an alliance around the common brand “INAX”, joint procurement, and joint marketing.

Joint Brand
“We can promote the ‘MIT Smile Logo' as a common brand for Taiwan's ceramic products in the international market, since MIT [Made in Taiwan] has been increasingly accepted worldwide as a mark of good quality,” Yu says.

So far, 16 of the island's ceramics manufacturers with a total of 57 kinds of products have been certified with the logo. Approved manufacturers include the Champion Building Materials Co., Hiland Ceramics Co., Sanyo Pottery & Porcelain Industry Co., White Horse Ceramic Co., Advanced Century Industry Co., Hwa Tai Ceramic Co., Horng Jou Ceramic Co., Grand Ceramic Co., and Golden Tile Co.

The island's ceramics industry began coming together in 2007, when TCIA and the Small and Medium Enterprise Administration of the Ministry of Economic Affairs (MOEA) convinced many local manufacturers to form an alliance. The alliance has built a website to offer the island's consumers convenient access to quality Taiwan-made ceramic products as well as associated after-sales services.

The TCIA counts on teamwork to help its member companies bring down production costs by making the most of each member's specialization to create economies of scale, minimize operating risks by sharing the expenses and fruits of R&D, share market information and resources, and elevate the Taiwan industry's profile in the global ceramics market.

At a time when eco-friendliness has become a dominant trend in many industries, the TCIA advises its members to follow that trend when developing advanced technologies. The association points out that ceramics manufacturers in the advanced economies are developing their products around the idea of consuming less energy in production, turning out products with fewer materials and no toxins, and making products recyclable. Italian manufacturers, the association notes, have introduced tiles that are only four to 5.8 millimeters thick, just one-third to one-half the thickness of traditional tiles, by using sophisticated technology. In spite of their slimness, the tiles are hard enough to take drilling and cutting.

While advising Taiwanese manufacturers to ditch price-cutting competition with mainland China, Yu does not ignore the market potential of developing economies other than the Chinese mainland. “Taiwanese ceramics manufacturers should form joint ventures to open plants in developing economies such as South Asia and Africa,” he urges. “I'm confident that with their good quality, Taiwanese-made ceramic products will be competitive there.”