Sosuco eyes Asean as Chinese tiles corner Thai market
Play
SOSUCO and Group (2008) Co Ltd, a producer of floor and wall tiles, is coping with an influx of cheaper products from China by shifting its market focus to Asean, especially Myanmar, and rolling out new designs and patterns.
“Myanmar is a future market for our wall and floor tiles that still has a lot of room for growth,” said Sosuco Managing Director Kittichai Kraikokit.
Sosuco, a subsidiary of Siam Cement Group, now has a 16-per-cent share of the Bt30-billion Thai market for floor and wall tiles.
He said annual demand for floor and wall tiles per capita in Thailand was about 3.3 square metres. But products imported from China accounted for 40 million square metres, 20 per cent of the total demand of 185 million square metres.
“In particular, the [market for] floor tiles used for bedrooms and living rooms has been eaten up by Chinese products, accounting for 90 per cent of total consumption,” Kittichai said.
Therefore, the company has shifted its focus to markets outside this country.
Currently, demand for floor and wall tiles in Myanmar is about 30 million square metres a year, or less than 0.5sqm per capita. About 40 per cent of these products are imported from Thailand, 20-30 per cent from China, and the rest from other countries.
The company expects the Asean market to boost the proportion of its overseas sales from 20 per cent to 25 per cent, Kittichai said.
In addition, he said Sosuco had focused more on developing tiles for exterior use, such as for garage floors and outdoor walls. The company competes with its Chinese rivals by using digital printing technology to make natural-looking products, such as the floor tiles in wood or rock patterns.
“We cannot compete with Chinese polished-granite floor tiles for bedrooms and living rooms, which are much cheaper than ours,” Kittichai said.
“With more than 40 designers, we roll out 600 new designs and patterns a year in a bid to beat our copycat rivals and also in response to changes in consumers’ buying trends.”
Even though Kittichai is fairly optimistic that the economy will recover next year thanks to the government’s stimulus packages and policy to invest in infrastructure projects, he does not expect growth in the tile market. One reason is that many property developers have been slowing down launches of new projects.
He said Sosuco now enjoyed only 6-9 per cent gross margin a year.
Next year, the company targets revenue of Bt5 billion and plans to focus more on marketing to spur demand for exterior tiles.
