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EMILCERAMICA: A GLOBAL SUCCESS FOR ITALIAN TILES, FROM THE US TO CHINA
Over 45 years of history, more than 200 million euros in turnover (206 million in 2006, an 11.5% growth compared to 2005), around 1,100 employees: the figures for Emilceramica (www.emilceramica.it) are impressive, but they are not enough to describe the peculiarity of this Italian ceramics group, bases in the historic tile district of Sassuolo, near Modena. Over the years, the company has changed radically, moving towards the export market.
We ask its CEO, Sergio Sassi, what are the current challenges for the ceramics sector and what is the outlook the firms in this industry have to face.
As in many other sectors, in the last ten years the market in ceramics has moved on. The companies that want to stay competitive had to change their tack and admittedly only a few managed to adapt and take on the opportunities offered by globalisation.
Competing on the global markets must require a cultural shift. Yet it should be easier for an industry that has started to look beyond its boarders several decades ago.
Exports certainly form part of the DNA of our district, which started to sell its products abroad in the Seventies; today exports account for 70 to 72% of our revenues. The main markets are currently France and the US, even though exports to the States have been hit by the recent crisis in the housing market.
What is Emilceramica doing, in particular, on the export front?
We acted on two fronts. On the one hand, we entered a mature economy such as the US, where, however, ceramics are relatively uncommon. In the next few years the US is set to become the biggest market in the world, and we have a plant there that produces 16 million square meters of tiles, which we control with the US firm Dal-tile, through a joint-venture called Dal-Italia. The ceramics are designed in Italy, produced partly in Sassuolo and partly in the US, and then
sold through Dal-tile's retail network. On the other hand, we set our sights on Ukraine, where costs are lower (both in terms of raw materials and for transport via rail) and which is close to Eastern European markets, which are full of promise.
Internationalising operations requires joint venture agreements with foreign partner?
Not necessarily. We are also present in the US with EmilAmerica, which is fully controlled by us. It is a retail company to sell our products directly on the local market. We have three warehouses in Virginia, California and Florida where we stock the five to six product ranges that are most popular in the US. This kind of retail structure allows us to hold on to our position in a difficult moment for the US clients and saves our clients money and time, for they only pay for storage costs and they avoid waiting 40 days for shipping from Europe, receiving their order within 40 hours.
You have not mentioned the Far East so far. Have you neglected this enormous market?
Not at all. Last June we reached an agreement with a Chinese partner to create EmilMajor, a joint venture that from 2008 will open three stores under an Italian-Chinese brand. The plan is to start with Shenzhen, Beijing e Shanghai, and develop the network - if the market responds favourably - with 20 more stores in the next 20 years. The next step is to develop our presence in smaller cities, perhaps through franchising agreements.
Retailing your products through local agreements is a model that you will apply beyond China. In the next few days it seems you are launching a new initiative in Romania. Can you tell us something about it?
We have created the "Ceramica Royal" brand, to sell our products on the Romanian market. We want to develop a commercial strategy enhancing our 'Made in Italy' credentials: we are looking to create an alliance with other Italian producers of bathroom equipment - such as Telco (whirlpool baths) and bathroom furniture makers - to target the higher end of the Romanian market. We will open our first store in Costanza on 16th November. In 2008 will open others in Bucharest, Timisoara and Cluj. The aim is to replicate the business model applied to China, targeting smaller cities at a later stage. The defining characteristic of our Romanian initiative will be our stores, which will have a definite Italian flavour to them: for example, they will offer a taste of Italian food specialties like the Balsamic vinegar from Modena, accompanied by Italian music.