Bryan Vardas discusses his experiences with Indian tile makers whose products are gaining traction in the Australian market, based on the latest tile imports data.
What are your first thoughts when you think of tiles from India?
Are they about quality? Are they about reliability? Or do your thoughts immediately go to consistency?
At the moment, tiles originating from India have a bit of a public relations problem. There seems to be a plethora of representatives from Indian factories making approaches to buyers in Australia and New Zealand, either through Messenger, WhatsApp and Linkedin inboxes or in person and unannounced. They all want to show the “very best, the very latest, and the very cheapest” that India has to offer, in terms of designs hot off the production lines.
Many of us are sceptical. We have heard the stories of poor quality, issues around supply, and problems communicating and with making claims. Often, we are reluctant to try Indian product. Not unlike that which was the situation with China twenty years ago. We want someone else to try it, to get it right, and to give us the confidence before we jump on the bandwagon.
On a recent trip to India in late March 2019, this brand perception was the topic of broader discussions. It was refreshing to hear the views of some of the better factories in India, and get their understanding of why the “Made in India” brand has come to have the image it struggles with.
Sell, sell, sell
It all seems to start with the approach of the factory sales representatives who are making their way to our shores, either electronically or in person. They see sales as a short game – get in and sell our product, get results, and do it quickly. Little time is taken to really understand the market, and the emphasis is pushing the products that do well in India. This is where the issues begin, and only a few of them get over this first hurdle, having already created a resistance from the local market towards their products.
There are just over 1,000 tile manufacturers actively producing tiles in India. Fifteen per cent of these factories are three years young or newer, and many of them have investors or partners from some of the leading European tile brands.
Italy’s Emil Ceramica has invested heavily with the Indian Simpolo group and formed a new brand called Nexion. Many more have done the same. They have the latest technology and IP, and taken the time to understand the game and do their market reconnaissance. These companies realise the importance of “getting it right” and are fixed on playing the long game.
But 70% of the manufacturers still push ahead with their plan to “peddle product” whilst leaving a trail of destruction along the way. When one considers the massive production capability of Indian tile manufacturers, and the urgency of this 70% to get to market quickly at any cost, it makes for a huge wave of product, disappointment, and damage to the “Made in India” brand. It acts as a double-edged sword to the remaining 30% of Indian companies who aim to get it right – but they can really shine against their competitors once they are given a chance to prove what they can do.
Recently there has been a correction in the Indian manufacturing base that will see a positive development in the way it approaches external markets including Australia.
Until February 2019, 70% of tile factories in India were using coal to fire their kilns. Of these, only 50% of these factories were licenced to produce using coal fired kilns – the other 50% were operating unlicensed and illegally. In February, the Indian government (as part of its efforts to become more environmentally compliant to global norms) placed an immediate ban on on-site coal gas generation.
Those who were using natural gas to fire their kilns to that point had more expensive products. It was lower end manufacturers who generally used coal until the bans were imposed, so the government directives will probably lead to higher prices of lower end products. However, the move to natural gas will give producers greater controls over the end product and a boost in quality as they raise their prices.
There is also a flow on effect as the same applies to suppliers of raw material. Many of these companies used coal in their processes which now must change.
So it seems that cheaper products which carried the greater risk of defects, will improve. Traditionally in India there has been the cheap and the good. Price can always be compromised, and the first question that many ask of India is, “How much?” Cheaper prices always come at a cost. It appears now that the very low end may be disappearing as quality improves, similar to when Chinese tiles first emerged on the global scene.
The transition is proving to be a quick one. A number of factories have already made the switch, and some of these are over the teething problems which are par for the course in implementing new production methods. At the time of our visit to India earlier this year, approximately 40% of the factories in the region were shut down to enable the transition to natural gas.
Once the transition is complete, there will be a huge volume of product made using “the best techniques, the best machinery, and the best raw material”. However, the best ingredients do not necessarily make for the best product. The biggest issue is ensuring that there are enough quality “cooks” to use the best ingredients to deliver a quality product.
As we drove through the region, it is evident that a number of leading European manufacturers are staking their claim in India and getting in on the ground floor. Some of them supply the IP and technology to manufacture product. There are also some major European brands whose logos and names are prominent on the cartons being produced and then being shipped back to Europe. We could see that Indian manufacturers are rapidly being taught by the world’s “best cooks” and are lifting their game at an astonishing rate.
As a result, the need for intermediaries is greater than ever. The market needs a filter to provide some protection from poor quality product.
Agents provide factories with local market knowledge of potential customers, and can act as a constant conduit for information flow. Knowledge about sizes, textures, colours and designs are carried by the agents who, through the correct networks and channels, ensure that the factory understands and responds. Trading companies, in collaboration with agents, collate, compile and manage the orders.
One major factor in securing and maintaining the interest of the factories is providing them with volume. It is more likely companies and agents with a broad portfolio can deliver this to factories compared to a single customer with specific needs.
The specialty of Indian producers is large format sizes which represents a relatively small sector of the Australian market, so the collation of orders for smaller format (600 x 600mm and smaller) is important.
Visiting tile production facilities in India is almost like having déjà vu. It wasn’t that long ago when we first considered China as a source of tiles. There were a lot of factories making cheap product that didn’t meet Australian market requirements in terms of design or quality.
A handful of factories could meet Australian requirements and expectation, but they did not come at the expected cheap prices. Over time, the very low prices seemed less prevalent as factories employed more environmentally sustainable production techniques, and more money was invested in technology and glazes. The process slowed to accommodate QC (quality control) processes which were not in place until these transformations took place.
They have taken time to better understand the market, and now offer credit terms, sampling, and back up stocks. It has been a long and steep learning curve, but one that provides a template for the Indian manufacturers to follow should they wish to fast track their progress that can lead to commercial success.
It seems we are back to the beginning of the process with India as the new protagonist, but we have over 20 years’ experience from having evolved with China. The Indian manufacturers are learning fast as internal pressures force them to become better from an environmental and technical standpoint.
Foreign investment has seen an influx of best practice and global thinking which is quickly being adopted. This, along with many countries introducing trade tariffs on Chinese products, is providing somewhat of a perfect storm for Indian manufacturers who are aligning themselves to the thinking and requirements of their overseas customers.
The push is great, the understanding is improving, and the door is no longer ajar. It is now up to the manufacturers in India to take the “Made in India” brand from where it currently sits, to be a well-regarded and sought-after commodity.
Pictured: In India, RAK Ceramics has one of the largest tile plants in Samalkot in Andhra Pradesh with a manufacturing capacity of 30,000sqm of vitrified tiles. It has also had a joint venture plant in Morbi since 2017 and a greenfield plant in North India operating since early 2018. Its products are available through a network of 12 company-owned showrooms and over 800 dealers across the country.