The rapid growth of Chinese exports have had a profound effect on the UK stone industry, making stone an economically viable option where once it would not have been considered. NSS reviews the inexorable progress of the Chinese juggernaut.
The extraordinary growth of China has been instrumental in the low-inflationary growth of the West for more than a decade by supplying an ever wider range of low-price alternatives to Western manufactured products – stone among them.
The graphs on these pages show just how much of an impact China has had on the UK stone industry – especially, but not exclusively, on hard landscaping, interiors and memorials.
They do not tell the whole story because the figures from HM Revenue & Customs do not take into account Chinese stone making its way to the UK via Italy, Spain, Belgium or any other country. And to some extent, the growth of stone from China will be a matter of substitution as buyers in Britain become less cautious about dealing directly with oriental suppliers.
The value of imports from China have grown six-fold the turn of the millennium, although the volume of imports has grown at an even greater rate. In other words, the mean prices of stone from China has fallen. It was £413 a tonne in 2000, fell to a low of £166 a tonne in 2003 and rose to £290 a tonne again last year due to the weakness of Sterling (Chinese stone being priced in US$), which accounts for the continuing increase in the value of Chinese stone imports in spite of a lower volume.
Imports of stone from China have consistently out performed the mean growth rate of all stone imports, hence the increasing proportion of stone from China compared with all stone imports by value, in spite of some granite coming out of Xiamen at less than $10/m2 FOB (sometimes a lot less).
The fall in volume of stone coming to the UK from China seen last year might continue this year as some importers are reporting they are currently shifting their allegiance to India, where stone is priced in Sterling and is currently generally less expensive than Chinese stone for UK buyers because of the exchange rates.
And, of course, India, Turkey (especially with Travertine), Brazil and the traditional European suppliers, notably, of course, Italy, have also made their contributions to the expansion of the stone industry in the UK… but more of that in future editions of Natural Stone Specialist.
What has made China so potent a force in the world is its size. It is the third-largest country after Russia and Canada. It claims an area of 9,596,960km2 (3,705,406 square miles), although that includes Taiwan, which thinks of itself as independent of China, and Dongsha, to which Taiwan also lays claim. China’s right to some of the other islands over which it claims sovereignty is also disputed.
China’s territory includes several large islands off its 3,500 mile coastline, including Hong Kong, which Britain handed back in 1997.
As well as being huge in terms of land, China is also huge in terms of population. It says it has 1.3billion people – 20% of the World’s population and still growing. However, it is not growing as fast as India’s and the population of India will exceed China’s at 1.52billion in 2040 if they both continue their current growth rates.
According to a report by the China Council for the Promotion of International Trade published last year, China is the world’s largest producer of dimensional stone with an output of 28million tonnes, two-thirds of which (18.5million tonnes worth US$3.6billion in 2007) is exported. China also imported 7.5million tonnes of stone worth $1.2billion in 2007.
In 2006 it produced 900million square meters of marble and 1,500million square meters of granite.
The three big stone areas of China are Fujian and Guangdong provinces in the South, and Shangdong in the North (see the map on the previous page).
Fujian is the largest of the stone provinces with the port of Xiamen at its heart, the equivalent of Carrara in Italy. Each year a major stone exhibition is held in Xiamen (next year’s is 6-9 March) that is increasingly becoming one of the major international events of the stone industry. By 2007 it was already big with 850 exhibitors and 50,000 visitors. In 2008 it had 1,000 exhibitors and 71,000 visitors. This year there were 1,211 exhibitors and 86,713 visitors.
Shuitou, which is near Xiamen, is home to China’s 10 largest stone companies and has become an attractive centre for other stone companies to locate to. It is also now becoming the primary centre for the production of engineered quartz.
With Xiamen and Shuitou, Fujian province claims 60% of the stone market in China. It has around 15,000 manufacturing companies and 5,000 companies importing and exporting stone. Together they employ about 500,000 people.
The second largest stone centre is Guangdong and third is Shandong.
Fujian and Shandong are the largest areas for production and Guangdong is the most important centre of processing imports, most of which are of block (Italy says China is now its biggest customer for raw block).
These three provinces account for about 85% of Chinese stone output, says the China Council for the Promotion of International Trade, but stone also comes from Sichuan, Shanxi, Hebei, Inner Mongolia, Yunnan, Guangxi, Xinjang, Anhui and a number of other smaller production areas.
According to Chinese stone companies who helped with the compilation of this report for NSS, granite is extracted from 27 areas in China, mostly in the East, Central and Southern parts of the country. The fact that it comes from so many different sources accounts for the variety available.
Marble is even more widely distributed and is extracted from 29 areas, again mostly in the East, Central and Southern parts.
Sandstone, which started making early inroads to the UK market along with granite as paving products, comes from Sichuan province, Yunnan and Shandong. Limestone comes mainly from the North-East.
Slate is extracted from Jiangxi and Hebei provinces and is available in black, red, green, grey, yellow and silver crystal. Colourful slate was another of the Chinese products that came into the UK market early on and became popular as a low cost natural flooring product before the role was ceded to travertine.
Anyone in the stone industry wanting to buy stone directly from China will have no problem finding companies in China wanting to sell stone of all kinds as any product you want. You probably only have to open your email in-box. Otherwise, a search engine will produce plenty of websites of Chinese companies.
But as the wholesalers already selling Chinese stone in the UK will happily explain to you, it is not as easy as it seems to get what you expect from China.
Rogerio Moutinho at London wholesalers MGLW says he started visiting China to look for stone suppliers five years ago and it took him two years just to find his way around the industry there. Now he has good contacts in China and is more confident he will get what he orders.
“It’s not that I’m cleverer than anyone else,” he says, “but when you go there more often you’re bound to eliminate some of the bad elements.
“I don’t think anyone in their right mind will buy anything without making at least one inspection. But if you’re buying just one container for £4-5,000 you will spend half of that going to check it out.”
He says it not that Chinese suppliers will try to cheat, but that their home market is less demanding than the UK market, so they will not necessarily understand the quality expected.
“There are good companies supplying the stone in China,” says Rogerio, “but in a container you might have 10-15% that’s not really right. You have to build that into your costs.”
Then, of course, there are the additional risks of fluctuating exchange rates and movable delivery dates, depending on what else the ship bringing the container is carrying and where it will be stopping on the way.
Every additional risk carries with it a demand on management time.
“It’s not that clear cut looking to buy abroad,” says Rogerio. “Most companies would be better off making sure they have a really nice factory with good machinery and masons and doing a good job – because that’s what people remember. They don’t remember whether the stone cost an extra £100 or not.”
Hailin Williams, who runs wholesalers Rainbow Bridge in Rotherham, South Yorkshire, says as well as a language problem with China there is also a cultural difference, so even when you think everything has been agreed you can discover when the container arrives it is not what you wanted.
Hailin, who is Chinese, came to England in 1992 when she was with Jardine, one of the oldest British trading companies in Hong Kong. In Britain she established Rainbow Bridge to sell British wool and whisky to Hong Kong. One of her school friends was running a stone business in southern China and one of her friends in Yorkshire was a stonemason. She brought them together and saw the potential of selling stone in the UK.
Most of her sales are memorials, but she says: “My friends in the factory in China make everything – worktops, paving, garden furniture. We are really trying to start to promote this.” She says her big advantage is being able to speak to the person she needs to speak to, not just someone who happens to be able to speak some English.
If all the practical issues of importing from China can be overcome one way or another – and the growth in imports clearly shows they have been – there remains the ethical and environmental issues.
China has not been subjected to as much criticism as India on this front but there remain concerns about health and safety standards in quarries and workshops, the environmental damage of quarrying and the pollution produced by carrying a heavy, bulky product thousands of miles to market.
Both the BRE’s Green Guide and hard landscaping company Marshalls’ carbon footprinting of its consumer products (see last month’s NSS) show how transport can detracts from stone’s otherwise favourable green credentials. So far the price advantage of Chinese stone has overridden environmental concerns, but if environmental arguments predominate, the poorer carbon footprint of Far Eastern imports could reflect badly on the whole of the stone industry’s green credentials.