Transportation costs cause great pressure on the stone industry

There is the “World's Largest Stone Exhibition,” the Xiamen Stone Exhibition, which is said to have 166,000 square meters of booths, 140,000 merchants, and 2,000 companies gathered. Although the organizers have used the outdoor booths one by one, there are still many companies. Due to insufficient space, it is not possible to exhibit.

Shuitou Town, Nan'an City, Quanzhou City, Fujian Province, is the largest stone production and export base in China and even in Southeast Asia. It is also known as “China Stone City”. There are 1,500 stone companies of various types in Nanan with an annual output value of more than 30 billion yuan. Stone processing output and imports and exports account for 60% of the country's total. However, according to statistical data from the Nan'an Foreign Trade and Economic Cooperation Bureau, in 2013, Nanan stone export value was US$ 179.97 million, a year-on-year decrease of 9.14%, which is the second consecutive year after 2012.

The low profit and high inventory have become a status quo facing the Nanan stone industry.

“Almost every stone company has inventories, which are different from retail inventory of clothing. Once it becomes inventory, it will always be backlog, unable to rely on discounted sales, and selling a pile of stones. When the profit is less than 5%, the problem is It will be highlighted," said Liu Liang, vice president of the Nan'an Stone Association. According to industry sources, in order to return funds, many companies have compressed their profits and some companies have even less than 3% of profits.

Foreign trade exports fell sharply

Shuitou Town people "stone second generation" Chen Yaodong was ordered to take over the family business. For a full three months, he hired 30 summer workers to do a “find” survey of the stone in Nantou Shuitou Town. According to what he learned, as of March last year, there were a total of 974 stone manufacturing and trading companies in Shuitou Town (excluding Guanqiao and Shijing Town). Most of these companies only sell 1 to 2 varieties of small-scale traders, and the sales of stone prices are concentrated in the mid-range between 159 yuan and 500 yuan per square meter.

According to Chen Yaodong’s estimate, there are more than 1,000 species of stone in Shuitou. However, among the thousands of varieties, there are only 159 varieties that have been sold and have been in circulation for more than 5 years.

“Our company manages about 500-600 kinds of stone, but it is constantly developing new varieties every year, and the replacement rate is up to 20%.” Yingliang Stone of Liu Liang has a reputation in the industry, but the inventory problem still exists.

Although the profits of the entire industry have declined, some stone companies still can maintain a 15% to 20% profit margin. However, according to Chen Yaodong's bottom-line investigation, many Shitou enterprises in Shuitou have stocks of more than 30%.

In the past two years, the export orders of Nanan stone enterprises have generally declined, while the imports of stone blocks have not decreased.

According to the statistics of Nanan Bureau of Foreign Economic Relations, from January to May 2013, Fujian Nan'an stone export amounted to US$72.6 million, a year-on-year decrease of 19.06%. Imports of stone blocks accounted for US$189.24 million, a year-on-year increase of 24.30%.

In recent years, with the improvement of environmental awareness and the withdrawal of Fujian stone mines, the increase in labor costs and transportation costs, the cost of stone trading has risen sharply. According to industry sources, before 2008, the gross profit rate of stone trading could reach more than 50%. Today's better companies can still maintain profit margins of 15% to 20%, and even small companies can achieve a 10% profit.

It is reported that the export value of Conley Stone in Nanan in the first half of 2013 dropped by 60%. The rise in cost and price has made the head stone, which has always been known for its high quality and low price, rejected by some foreign buyers.

At the same time, it was learned that some of the large-scale brand stone companies began to adjust their domestic and foreign trade ratios. From the initial 7 (outside): 3 (inner) to later 5:5, the proportion of domestic and foreign trade of some enterprises has even been adjusted to 3 (Outside): 7 (inner).

The relevant person in charge of the Nan'an Foreign Trade and Economic Cooperation Bureau believes that the main reason for the negative growth of stone foreign trade is the influence of international and domestic economic adjustments. The first is the increase in the cost of land use for stone enterprises. In order to save costs, the company migrates to the central and western regions; the second is the process of enterprises going out to use local resources for processing and production. Some countries adopt resource control, and the export of stone blocks must be processed locally. As a result, the stone companies directly completed the export in the local area, reducing the domestic export volume.

Stone enterprises that were kidnapped by mines

Before 2008, the domestic stone industry could be said to be a "profiteering" era. At that time, the gross margin of the industry could exceed 50%, and the head stone products were also known to foreign customers. However, due to the low barriers to entry, large numbers of small businesses have flooded into the market. In addition, some large-scale enterprises have begun to extend upstream resources to control resources to seize more market share.

According to industry insiders, Nanan Stone's raw materials are heavily dependent on imports. In the past when market conditions were good, Nanan companies had seized high-quality quarries abroad. Under the strategic plan of controlling the upstream mineral resources, many companies have signed long-term agreements with foreign mines. Regardless of the production and sales situation, the imported stone blocks are quantified every year or even every month, and some Year by year.

However, as international demand has fallen, this model has experienced problems. A lot of raw materials still imported, and the demand for orders was insufficient, and the inventory became overstocked. The stone companies became "abducted." However, according to Liu Liang, good mines are still scarce.

According to Chen Yaodong's investigation, the high-end market for Shuitou Stone, which is sold at a price of 500 yuan per square meter, is controlled by less than 12 companies. In the painful period of the stone industry, the most difficult is the small stone production and processing enterprises.

Fujian itself is a province rich in stone resources. In the early stages of extensive development of the stone industry, mining of stone materials throughout the country caused great damage to the environment. According to incomplete statistics, there are currently more than 600 abandoned stone caves in Quanzhou, mainly in the coastal areas of Jinjiang, Shishi, Hui'an, and Nan'an.

According to the requirements of the Quanzhou government, all facing stone mines will be closed by 2015, and the overall exit will be realized. At present, with the exception of Hui'an, Quangang, and Nan'an, which have a small number of mining licenses that have not yet expired, the entire industry of decorative stone mining in other counties (cities, districts) has withdrawn. According to Quanzhou’s “Several Opinions on Further Promoting the Ecological Management of Mines”, Jinjiang City withdrew from the stone mining industry as a whole in 2012; in 2013, the investment area of ​​Taiwanese enterprises in Dehua County and Quanzhou totally withdrew from the stone mining industry; in 2015, Quangang District, Nanan City, and Hui'an County will withdraw from the stone mining industry as a whole.

Liu Liang said that the current development of the stone industry has gradually exhibited the "closer principle." The transportation cost caused great pressure on the stone companies. Some stone companies chose to set up a processing factory at the mine site, and then they would be exported and shipped nearby.