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The stone industry is currently facing a widespread downturn, an undeniable reality that has hit the world's largest stone production base particularly hard. Most manufacturers and processors are experiencing slower operations, declining sales, and some businesses are even on the brink of bankruptcy. Both producers and distributors are hoping for the end of this "cold wave" and believe that better times are just around the corner.
Looking at the broader economic landscape, especially the real estate sector, it's clear that the stone industry will continue to face challenges in the first half of 2013. Although there were some signs of recovery at the end of 2012, only those companies with strong brand agency systems—especially those producing composite boards—managed to remain unaffected by the real estate slump. These companies actually saw growth, creating their own "spring" in a tough market. However, for most enterprises and dealers, the situation remains difficult.
The government’s real estate regulations, which took effect in the second half of 2012, have had a delayed impact on the stone industry, typically appearing six months to a year later. This means that the current engineering projects for many stone companies are still based on real estate developments from 2012. With no relaxation in control policies, and with developers not acquiring land in the first half of 2012, the full effects will become more evident in the second half of the year. As a result, the first half of 2013 is expected to be even more challenging, with fewer projects and limited orders. Even if conditions improve, developers may not be eager to start new projects, leaving the industry in a tough spot.
The real estate crisis has accelerated the redistribution of stone market resources. The “shuffling†within the industry is a natural outcome of its development stage, but the recent real estate slowdown has pushed this process forward. In 2008, during the global financial crisis, many stone companies closed down, just like other sectors. While the government introduced stimulus measures that provided a rare opportunity for adjustment and growth, the industry didn’t fully benefit from these changes. Instead, the number of stone enterprises grew rapidly, leading to fiercer competition. Now, as overall stone demand declines, the industry is entering another round of restructuring.
In the current crisis, ensuring cash flow and securing payments should be the top priority for all stone companies. Many enterprises need to rethink their strategies and innovate to survive. For example, our Wanli Stone Group has maintained a strong performance this year, with significant increases in sales and tax revenue compared to last year. This success comes from proactive adjustments made throughout the year.
Brand agency and customization are two key strategies that can help the industry move out of the "winter." While the brand agency model is becoming a trend, its implementation varies depending on the industry's characteristics. For products like ceramics or sanitary ware, branding is a natural direction. However, for more customized and non-standardized materials like stone, traditional channels still play a vital role.
Previously, we focused heavily on sales. This year, we shifted our emphasis to collection security, making it our top priority. On the international front, we’ve targeted emerging markets, especially the rapidly growing ASEAN region. Domestically, we’re focusing on central and western China, where policies like the "Rise of the Central Region" and "Western Development" provide support. These areas are less affected by real estate regulations and have more infrastructure projects than the heavily regulated eastern coastal regions.
Many people say it's hard to standardize the stone industry. This is due to the nature of the material itself, which often lacks consistency and stability. Unlike ceramic tiles, which can be mass-produced with uniformity, stone is inherently variable and unpredictable. Standardization in the industry is therefore a complex challenge. However, this very variability is what makes stone unique and appealing. Industry experts believe that standardization and customization can coexist. Low-end products with minimal color variation can be standardized and easily accepted by customers, while high-end clients prefer more personalized and distinctive options.