Presented at the 74th Conference on Glass Problems, Columbus, OH, 2013

AN UPDATE ON THE TECHNICAL/TECHNOLOGICAL EVOLUTION (OR LACK THEREOF) OF CHINESE MANUFACTURERS OF FUSED CAST REFRACTORIES AND THE VALUE VS. COST PROPOSITION


ABSTRACT
As a consequence of an excessive leverage on pricing that low-cost manufacturers have put into practice when trying to penetrate western markets, they have dedicated an insufficient amount of resources to improve products and develop the deeply needed level of service.
Meanwhile, the cost basis of the so called "low-cost manufacturers" has been inflating (at least for the labour component), at a rate of an order magnitude higher than the cost increase of the western competitors, and only a minor fraction of this increase, until yesterday, has been transferred to Customers. This is now progressively changing at the point where China could turn into a much more "regular" supplier in pricing, and therefore it will became indispensable for them to fill up the quality/technology/service divide, to make some of the several players survive competition.
In the meantime, at least for a while, the advantage/risk ratio associated to low-cost procurement could decline, and some of the western Glassmakers, which made a strategic decision to provide materials from low-cost sources, could partially review their short term strategies and/or develop specific partnership options, including technological support to the supplier.
At least for a while, third parties will stay involved in the procurement chain, in order to provide services to be appended to the low-cost products, since the learning curve necessary to make these manufacturers capable to provide what western competitors are routinely offering, is still at the starting blocks.


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