Economy, Business And Markets

Tough Times for Chinaware Industry

Tough Times for Chinaware Industry Tough Times for Chinaware Industry

The chinaware industry in Iran is experiencing hard times as almost 60 percent of active chinaware manufacturing units have been forced to close down in recent years due to decline in demand in the domestic market.

According to a report by Persian newspaper Forsat-e Emrooz, financial difficulties have pushed 13 of the 21 existing chinaware factories in the country into insolvency.

Domestic demand for chinaware has reduced in recent years due partly to the people’s reduced purchasing power as well as cultural factors such as a shift towards use of disposable and other types of dinnerware. In this condition, reviving the halted chinaware factories requires resorting to modern marketing strategies and aligning the products with the consumers’ tastes and preferences.

According to director of Iran’s Chinaware Industries, Mohamamd-Ali Dadras, currently about 60,000 metric tons of chinaware are produced annually, of which only about 20 percent are exported. Considering the production capacity of the non-operating factories, the figure could reach above 120,000 tons if all units were to become operational.

Major markets for Iranian chinaware include Iraq, Afghanistan and the Persian Gulf countries. Expanding the export markets to Europe and other countries could also open up new windows for investors in the industry.

 Reviving Factories Put on Hold

As the report suggests, for any investor planning to enter Iran’s chinaware market, it would be more feasible to revive factories put on hold rather than build a new one.

The report estimates that about $12 million would be required for purchasing a medium-tech chinaware factory with annual production capacity of about 2,000 tons and up to $30 million to buy a high-tech factory with up to 8,000 tons annual production capacity.

While constructing a new factory might require more or less similar level of investment as reactivating an existing factory, choosing the latter would give investors the benefit of time, saving them at least 2-3 years which is required for launching a new factory.

Dadras estimates about 20-30 percent as the average rate of return on investment in Iran’s chinaware industries, adding that improving the quality of production and eyeing export markets can help investors increase their profits from the sector. He also emphasized the importance of new marketing and advertising techniques in attracting foreign and domestic costumers to the products.

History of chinaware manufacturing in Iran dates back to about 35 years ago. Before the Islamic Revolution of 1979, three chinaware factories were operational in Gilan and Qazvin provinces.

The number of manufacturing units increased in the succeeding years to more than 20 but many of them were closed in recent years due to financial difficulties.