1/23/2021 Sector industry
profile for
attracting FDI
Ceramic industry of Bangladesh
Submitted To,
Mohammad Mubarak Hossain,
Lecturer,
Department of International Business,
University of Dhaka.
Team Profile
Name Roll No
Mehedi Hasan Sharif ZR-030-072
Afsana Akbar SN-030-062
Md Yeamin Hossain BE-030-021
Labiba Binte Mahabub Medha FM-030-017
Tanjina Zahan Oyshi SN-030-040
Abdullah ZR-030-076
Md. Rafi Ahamed BB-030-103
Sadikuzzaman BB-030-106
Sohidul Islam ZR-030-065
Sifatuzzaman BB-030-329
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Table of Contents
Introduction......................................................................................................................................4
Overview & History of Ceramic Sector in Bangladesh...................................................................5
Global Outlook of Ceramic.............................................................................................................6
Export destinations and international competitors..........................................................................7
Domestic Market Situation..............................................................................................................7
Global Market situation...................................................................................................................8
SWOT analysis of the ceramic industry of Bangladesh..................................................................8
PESTEL analysis of the ceramic industry of Bangladesh.............................................................10
Ansoff’s growth matrix for evaluating Ceramic Industry.............................................................13
Investment scopes in the ceramic industry of Bangladesh............................................................15
Reason behind foreign investors is interested about invest in Bangladeshi “Ceramic Industry”..16
Factors behind the growth of the ceramic industry in Bangladesh................................................16
Future of the ceramic industry in Bangladesh...............................................................................17
Conclusion.....................................................................................................................................18
References......................................................................................................................................19
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Introduction
Ceramic industry has every potential to become a big foreign exchange earner for the country
which is suggested by its growth potential for both domestic and export market. Demand for
ceramic is primarily initiated by the increase in construction activities in the world and rising
demand for new residential houses in buildings. Asian countries (esp. China & India) dominate
the global market for ceramic tiles. Ceramic industry in Bangladesh is now a potential sector to
boom. Growing demand for sanitary wareand tiles due to huge commercialization has made this
sector more attractive in the near future. Bangladesh entry into ceramic export market is very
new as compare to Jute and Tea. But the industry has witnessed a rapid growth since 1991. For
its quality products, this sector has already earned a good name in the global market. Ceramic
products have a $20 billion global market, of which Bangladesh has 17% share. Ceramic
industry of Bangladesh is a booming sector and the growth potential of both domestic and local
market indicates it may become one of the big foreign exchange earners for the country. Hence,
let's try to investigate the overall scenario of ceramic industry of Bangladesh.
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Overview & History of Ceramic Sector in Bangladesh
The ceramics industry is a booming manufacturing sector in Bangladesh. Over the years the
industry has flourished immensely. While it caters to 85 percent of the local demand it also
exports quality ceramic products to international markets. The growth trend is an indication of
the industry's potential to be one of the top foreign exchange earners of the country. The
ceramics industry in Bangladesh started its journey in 1958 with the establishment of a small
manufacturing plant for porcelain tableware by Tajma Ceramic Industries in Bagura. Currently,
there are more than 60 ceramic manufacturers in the country. Another 20 will hit the market by
June 2018. The local ceramics industry mainly produces tiles, tableware and sanitary ware (Das,
2019). According to Bangladesh Ceramics Manufacturers and Exporters Association (BCMEA),
the yearly production capacity of the local ceramics industry is as follows: tableware (250
million pieces), tiles (120 million square metres) and sanitary ware (7.5 million pieces).
Figure 1: Ceramic industry market share
Source: Ashoke (2018)
Value addition in ceramics stands at nearly 65 percent. To cater to the increasing demand of
ceramic products all major Bangladeshi ceramic companies have been expanding their plants and
operations. The local industry is also actively exploring the potential of manufacturing advanced
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ceramic products such as industrial ceramics for spinning and textile factories, medical ceramics,
ceramic plate for bulletproof jackets, and so on. Bangladesh's ceramics industry has carved a
niche in the global market. According to BCMEA, the industry earns more than USD 42 million
through export. Of the different ceramic products, tableware is exported to more than 50
countries including the US, Canada, European Union, Australia; tiles to India, Nepal and Bhutan;
and sanitary ware to the Middle East, especially to the UAE.
Global Outlook of Ceramic
The global market of ceramic products, according to a recent report, is predicted to be worth
USD 407.72 billion by 2025. The key drivers of this market growth are basically the emergence
of various applications of “advanced ceramics”. For example, use of advanced ceramics in 3D
printing technology and dental implants. Raw materials and energy are the major constituents of
the manufacturing cost structure of ceramics.
Figure 2: Forecast of future ceramic market potential
Source: Light castle (2019)
Raw materials stand at 22%, followed by energy which is responsible for 21%, labor and
overhead costs at 16% and 13% respectively. The remaining percentage,28% is attributed to
transport, distribution and depreciation (De Rassenfosse and Jaffe, 2017). Manufacturers face
constant criticism over energy consumption and carbon dioxide emission which is why the
global market is on the pursuit of more sustainable methods of production. The traditional
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ceramics product had the highest share in terms of revenue, about 59.6% in 2018. The leading
segment, however, is advanced ceramics, mainly due to its biomedical applications. Asia Pacific
was the region with the highest revenue, about 39.6% in 2018, driven by India and China
mostly. Major players dominating the global scenario are AGC Ceramics Co. Ltd., Imerys
Ceramics, Carbo Ceramics, Inc., 3M, Corning, and Kyocera Corporation.
Export destinations and international competitors
Ceramic products have been exported to more than 45 countries. The largest export destinations
are the United States, Italy, Spain, France, New Zealand, the Netherlands, Australia and Sweden.
China and Thailand are amongst the major competitors in the international market for
Bangladeshi ceramic manufacturers. However, the low labour costs of the local manufacturers
has put Bangladesh in a strong position. The sector earned USD 68.8 million in the fiscal year
2018-2019 through exports according to Export Promotion Bureau (EPB), making ceramics the
7th most exported item. Moreover, the industry has been enjoying exponential growth in exports
consistently, about a 26% growth in the last 3 years.
Ceramic products are currently exported to more than 50 countries including USA, Italy, Spain,
France, New Zealand, the Netherlands, Australia and Sweden. The strengths of the exports of
this industry are attributed to the variety of products at competitive prices, and the compliance to
the international quality standards. Sector representatives stated that Bangladeshi ceramic
products are earning more limelight globally, pertaining to the trade war between the US and
China (Ahmed, 2018). Ceramic is amongst the 100 items from China that the US government
has hiked tariffs on, allowing our ceramic industry to capitalize on this golden opportunity.
However, industry rivalry continues to thrive, with the largest rivals being China and India. The
cheap labour costs however serve as a competitive advantage for our country.
Domestic Market Situation
Total domestic market consumption for ceramic products was around BDT 54.5 billion in Fiscal
Year 2017-18, of which 80% was locally produced and the rest imported. To keep up with these
skyrocketing figures, the local companies have been amplifying their plants and operations. The
sector has also lured foreign investment mainly from China and the Middle East. These joint
venture partners include RAK Ceramics, Fu Wang and China-Bangla; the largest being RAK of
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the UAE, maintaining an 80% share of the local sanitary ware market. The ceramics industry
sector has attracted foreign investment. The investments have mainly been from China and the
Middle East states. Some of the major joint venture partners are RAK Ceramics, Fu Wang and
China-Bangla, of which the largest is RAK of the UAE, and who have about 80% of the
domestic sanitaryware market.
Global Market situation
The global market of ceramic products, according to a recent report, is predicted to be worth
USD 407.72 billion by 2025. The key drivers of this market growth are basically the emergence
of various applications of “advanced ceramics”. For example, use of advanced ceramics in 3D
printing technology and dental implants. Raw materials and energy are the major constituents of
the manufacturing cost structure of ceramics. Raw materials stand at 22%, followed by energy
which is responsible for 21%, labour and overhead costs at 16% and 13% respectively. The
remaining percentage, 28% is attributed to transport, distribution and depreciation.
Manufacturers face constant criticism over energy consumption and carbon dioxide emission
which is why the global market is on the pursuit of more sustainable methods of production. The
traditional ceramics product had the highest share in terms of revenue, about 59.6% in 2018
(Lemma, 2018). The leading segment, however, is advanced ceramics, mainly due to its
biomedical applications. Asia Pacific was the region with the highest revenue, about 39.6% in
2018, driven by India and China mostly. Major players dominating the global scenario are AGC
Ceramics Co. Ltd., Imerys Ceramics, Carbo Ceramics, Inc., 3M, Corning, and Kyocera
Corporation.
SWOT analysis of the ceramic industry of Bangladesh
The SWOT analysis of the ceramic industry of Bangladesh is given below for analysing the
strengths, weaknesses, opportunities and threats of the industry:
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Threats Strenths
Opportunities Weaknessess
Figure 3: SWOT analysis of ceramic industry of Bangladesh
Source: Rehman et. al. (2020)
Strengths
The main assets of Bangladesh's economy are good macroeconomic stability characterised by a
high growth rate of 7.1% in 2017 and a satisfactory level of public debt. An open and diverse
economy. Also, very low-cost workforce is available here. Moreover, Bangladesh is in a
strategic geographic position as a gateway to countries in the Asia-Pacific region. A strategic and
competitive position in the value chain of the global economy. An economic and legislative
environment globally favourable to business
Weaknesses
Though ceramic industries in Bangladesh have been increasing rapidly, it has a lot of problems.
The main obstacles to attracting investment include complicated business environment by the
country's weak infrastructure, burdensome bureaucracy, rampant corruption, lack of transparency
and the slow pace of the judicial system. Exports that are not sufficiently diversified and highly
dependent on the textile sector (Rehman et. al., 2020). Instability of government policies
Inadequate enforcement of intellectual property rights testing facilities for quality control
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services. Also, there are lack of relevance of the research activities. The manpower working in
this industry are not that much skilled either. Moreover, the power supply in the country is
inadequate for the ceramic industry.
Opportunities
The ceramic industry is a really promising sector in Bangladesh. There are huge opportunities for
the industry to grow because of high demand. Also, the government of the country is giving
opportunities to foreign investors to invest in this industry. Moreover, the country has low-cost
transportation and labor at the same time.
Threats
As the industry is really promising, there is always a threat of new entrance in the industry. Also,
the competition in the international market is really tough. The cost of machineries might affect
the industry if the importing country increase the cost of the machineries that are used for
production of ceramic products.
PESTEL analysis of the ceramic industry of Bangladesh
The external environment of the business environment impacts how a business organisation
operates. This also deeply impacts the growth of the business. So, for taking decision for
analysing the opportunities of growth, an organisation must analyse the external environment of
the business. The PESTEL analysis of ceramic industry of Bangladesh is analysed below to
identify the possible impacts of the macro environment on the growth of the industry:
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Political
Legal Environmental
PESTEL
Economic Social
Technological
Figure 4: PESTEL Analysis;
Source: Mia (2019)
Political factors
Political factors play a significant role in the manufacturing and distribution of ceramics products
thus in the overall ceramic industry. The Government tax policy and political climate has a
contributory impact on ceramic industry in Bangladesh. The industry faces high import duty on
certain ceramic raw materials from 7.5 percent to15 percent (Mia, 2019). Since GSP system has
recently suspended by the US Government, ceramic product manufacturers have proposed
Bangladesh government to cut duty on imported raw materials and increase import duty on finish
ceramic products to support them to survive and remain competitive in the global market. The
government has assured ceramic manufactures to take effective measures to boost local ceramic
industry and thereby it seems government policies and regulations are supportive in ceramic
industry. In spite of suffering financial crisis due to political instability, the industry is
significantly contributing to the country’s overall development.
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Environmental factors
In terms of the environmental factors of the macro environment, the country is less concerned
with is environment. As the concern for the environment is less, the cost for ensuring
environmental safety is reduced. Also, the companies can use flexible business strategies and for
developing opportunities for growth of the business as well. Moreover, the environment for the
development of the business is suitable in the country. For example, Mymensingh has a rich
mine of white clay which can provide up to 2.57 million tons of clay, and white clay is one of the
prime raw materials used for ceramic products and is still imported. In addition to that
Chittagong, Sherpur and Netrokona districts are reported to produce surface deposits of white
clay.
Social factors
Demand for ceramic tableware has also increased significantly in Bangladesh among middle
income groups. This increased demand can be attributed to the fact that people have turned away
from the traditional practice of presenting jewellery at wedding ceremonies and have resorted to
the next best option, ceramic tableware. Therefore, societal values, attitudes, cultural factors, and
lifestyles are supportive for the development and growth of ceramic industry.
Technological factors
Trends in technology can affect numerous industry factors including the product or service and
how it is produced and delivers. As new technologies are innovated, the companies in BD are
able to increase their productivity and reduce their delivery time and by this way increase their
profit margin more than existing. The companies in general use the raw material of Bangladesh,
with importing the high- level glaze and technology from China, India, Malaysia and Italy (Joel
et. al., 2019). And those machines adopt the whole set of the raw material facility of China &
India. Major firms also import the moulding facility from Italy. Furthermore, they also import
press and in case of ceramic machines made in Italy deliver best services available.
Economic factors
The economy of Bangladesh is growing at a positive trend despite some of unfavourable events.
Although economic factors are not in control of the ceramic industry but the country’s economic
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growth rate, market factors such as inflation and interest rate, total savings and investment are
supportive enough for the rapid growth of the ceramic industry. More than 40 thousand of
workers are directly involved in ceramic industry. As the construction industry including
residences, shopping malls and others is growing so fast, the ceramic tiles business is becoming
one of the booming and prospective sectors with a staggering annual growth rate of 20 percent.
Therefore, economic environment is favourable for the expansion of this industry.
Legal factors
The law of our country offers very attractive opportunities to invest in this growing sector. In our
country ceramic industries enjoyed GSP facilities for a long time. But unfortunately, we have
lost this facility. Although the govt. of our country is trying to get this facility back, it also has
given some incentives to ceramic industry to help run their business as before and save them
from sufferings due to loss of this facility (Chowdhury, 2017). In a budget proposal for the 2014-
15 fiscal to the National Board of Revenue, the association demanded the government to reduce
the raw material import duty to from existing 5%-25% on different raw materials of ceramic
industry. Currently, 5% import duty is applicable on basic raw materials, 25% on cover coat,
bond and silk screen, 10% on milk talc, magnesium sulphate and calcium carbonate, alumina
liner, filter cloth and other raw materials. The present investment in the country’s ceramic
industry is roughly Tk5000 crore and total annual capacity of ceramic tableware manufacturing
companies is 22.2 crore pieces, tiles 687 lakh square meter and sanitary ware 1.14 lakh metric
ton.
Ansoff’s growth matrix for evaluating Ceramic Industry
According to Khan et al., (2018); in order to sustain in market which is highly competitive, an
organisation needs to analyse the market to identify, analyse and select the market that is best for
the companies in the ceramic industry's growth. For analysis, Ansoff’s growth matrix is used.
Some of the growth opportunities of Ceramic industry are analysed below along with advantages
and disadvantages:
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Market
Diversification
Penetration
Market Product
Development Development
Figure 5: Ansoff Matrix;
Source: Khan et al., (2018)
Market Penetration
In this strategy, the same product in the same market as well as opinion of the customers are
developed. This strategy is effective for ceramic industry. This strategy requires the upgrading
the service little by little to increase the quality of the service while serving the same customer
base (Reza et al., 2017). Though this strategy is a costly and tough strategy, the quality of the
service will be increased due to this strategy.
Product Development
Development of new products and services is essential in the current market conditions. To
ensure growth, Ceramic industry has to bring innovation in terms of new product development.
This will be costly as this strategy requires research and development. That's why the companies
in the ceramic industry are not using this strategy by bearing in mind that the pandemic situation
can have negative impact on the growth.
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Market Development
Organisations in the ceramic industry of Bangladesh can use market development strategy as
companies in the ceramic industry and has low investment. This strategy can be really effective
for ceramic industry as the companies in the ceramic industry can minimize the cost by using
social media and digital platform to promote its services for developing new markets.
Product Diversification
Product diversification is considered to be one of the risky moves in business as this can have
positive as well as negative feedback. This strategy is not fit for ceramic industry as this has a
huge risk involved as well as the present products of the companies in the ceramic industry are
on maturity stage of product life cycle. So, the organisations in the ceramic industry should avoid
this as the existing products has already created demand in the market.
After analysing the Ansoff's growth matrix, the best strategy for Ceramic industry would be
market development. Also, ceramic industry uses strategy such as acquisition for growing their
business. The companies in the ceramic industry can always use merger and strategic alliance for
growth.
Investment scopes in the ceramic industry of Bangladesh
Although ceramic industry in Bangladesh started journey in 1960, it is just becoming a booming
sector for economic and playing a big role as a foreign exchange earner. Rising construction
works as well as beautification for residential buildings makes huge domestic demand for
ceramic products like tiles, tableware sanitary ware etc. The constant growing advances from 3D
printing technology to deep research and development to explore the potential of advanced
ceramics draws attention for huge global demand. This industry is considered to be competitively
attractive in the sense that industry members can reasonably expect to earn decent profits and a
nice return on investment (Bibi et. al., 2019). Every business should always consider
environmental management to be an internal and fundamental part of business strategy. All
companies in this sector are almost committed to making sure that comply with all the latest
ministry of environment legislative and BSTI standards that affect the activities of ceramic
industry. Their principle aims to continuously improve their approach to the prevention of
pollution and to achieve the highest possible environmental standard in all aspects of practice.
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They are establishing a waste water treatment plant to make a difference to the environment.
Bangladesh offers a very handy and helpful environment for businesses including ceramic
industry. In our country, construction activities are growing with high living standard.
Furthermore, it is also easy to export to other countries. Various environmental situations are
analysed according to the ceramic industry in Bangladesh as a booming economic sector.
Reason behind foreign investors is interested about invest in
Bangladeshi “Ceramic Industry”
The ceramic industry is a growing manufacturing sector in Bangladesh. The industry started
during the late 1950s when the first ceramic industry plants were established. The industry
mainly produces tableware, sanitary ware and tiles. AS of 2011, there were 21 ceramic industry
units throughout Bangladesh, employee about 500,000 people. The ceramic industry sector has
attracted foreign investment. The investment has mainly been from China, and the Middle East
states. Some of the major joint venture partners are RAK Ceramic Fu Wang and China –Bangla,
of which the largest is RAK of the UAE, and who have about 80% of the domestic sanitary ware
market.
Technical expertise and skilled manpower in tableware and other ceramics. Clean gas reserves
in certain locations to fire kilns for competitive cost advantage ‘Bangladeshi ceramic tableware
has a good reputation in international market like North America and EU countries. The foreign
investors are wanted to invest in Bangladeshi ceramic because of low labour cost, productive
work force, skilled worker, tax benefit, good transport service, government support, friendly
business rules and regulation, low production cost.
Factors behind the growth of the ceramic industry in Bangladesh
This sector, being a heavily import oriented one, needs immediate assistance from the
government in providing zero duties on imports, export incentives and reducing supplementary
duties. The RMG sector enjoys zero duty imports, and ceramic being the next potential sector
should have similar opportunities for sustainable growth. Moreover, methods that would rely on
the national production of raw material production should be reinforced (Zhang et. al., 2019). For
example, Mymensingh has a rich mine of white clay which can provide up to 2.57 million tons
of clay, and white clay is one of the prime raw materials used for ceramic products and is still
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imported. In addition to that Chittagong, Sherpur and Netrokona districts are reported to produce
surface deposits of white clay. Lastly, in order to bridge the yawning gap between availability
and requirement of skilled manpower in the industry, this sector is in dire need of research and
development and sufficient training programs. Bangladesh should be evolving persistently in
order to serve the new realm of advanced ceramics so that the industry can truly maximize its
potential in no time.
Future of the ceramic industry in Bangladesh
The ceramic industry of Bangladesh could become a basic building block for the country’s
construction and housing sector; however, this sector is already contributing to the country’s
economic progress through export earnings, foreign currency savings and generating
employment. The industry people say this is possible provided the government supports this
sector with due diligence. The government has promised to extend all sorts of cooperation to
make Bangladesh the hub of ceramic goods production in the world. Bangladesh government has
already drawn a policy to prevent the import of low-quality ceramic products having health
hazard ingredients. To discourage import of tiles and sanitary ware items, supplementary duty on
imports has already increased to 45 percent in place of the existing 20 percent. Besides, the
government has also promised uninterrupted power and gas supply for this sector (Papadis and
Tsatsaronis, 2020). Moreover, the certain provisions of the Budget 2009-10, for instance,
providing accommodation for all by 2021, would have positive impact on the ceramic industry as
well. If the ceramic industry of Bangladesh can overcome the stated limitations, it has every
potential to grow and become a big foreign exchange earner for the country with its dazzling
products in the era of globalization. Ceramic sector in Bangladesh has opened a new era of
producing and exporting ceramic products. This sector has a great potential to earn export money
from 50 different countries over the world. The quality of Bangladeshi ceramic products
fascinated the international customers. Hence there is a great opportunity to invest in this sector.
Government and private sectors are advised to improve the quality of research and development
at different research institutions of Ceramic Engineering and Technology through increased
funding. Clear policies and strategies to establish link between Research Institutes and Industry
in Bangladesh are imperative for technical progress.
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Conclusion
After analyzing the external and internal Environment of Ceramics sectors in Bangladesh, finally
able to reach in a conclusion that sector is tempted with great prospects with its potentialities and
opportunities. Government already have taken some initiative to boom this sector which is
mentioned above discussion. So as the efforts can be made to reduce the costs of the industry,
profits are also going to show positive sign in future. Hence it will be one of the most probable
sectors within few years and will be able to ensure the competitiveness not only domestic market
but also foreign market.
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management on the firm performance in cement and ceramics industry of Pakistan-A panel
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Das, K., 2019. Upgrading Technology and Space as Collective Strategy: Creation of Jobs and
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