Pakistan’s tile industry reinvigorating after imposition of anti-dumping duty on Chinese tiles

LAHORE: Pakistan’s decision to place anti-dumping duties on Chinese tiles is paying dividends as one of the country’s oldest tile manufacturer in Karachi is set for return to profitability after years of incurring losses.

Cheap Chinese tile imports had flooded the Pakistani market and made life miserable for Pakistan’s marble industry which was in dire straits and jeopardy.

China-Pakistan Economic Corridor (CPEC) has led to a construction boom in Pakistan, with local companies unable to take advantage due to major incentives on offer for Chinese imports flooding the market with cheap goods. Not only this was a source of concern but could have hit domestic manufacturing severely.

Shabbir Tiles and Ceramics Limited owned by House of Habib family has been in operation since 1841 and incurred four straight years of losses. Now the company as mentioned above is set to achieve a profit in next financial year.

In an interview to Bloomberg, Chief Executive Officer Syed Masood Abbas Jaffery, Shabbir Tiles and Ceramics Limited mentioned “We have got an industry which has been affected by a lot of Chinese imports. The overall construction industry is in a growth phase and so is the tile industry.”

Before the imposition of anti-dumping duties in October, tile imports from China had doubled in last five years and now constitute market share of around 50 per-cent of the industry, said Shabbir Tiles Chief Finance Officer, Waquas Ahmed.

He added the anti-dumping duties imposed on Chinese tiles will help enhance production to around 90 per-cent capacity by start of July 2018.

As per World Steel Association (WSA) data, the imposition of duties on imported steel helped local production to rise by 23 per-cent, touching 3.6 million tons in 2016, the highest increase among 40 countries globally.

Although Pakistan’s economy is growing at its fastest in over a decade, but that has been the country ratcheting up a record current account deficit and worsened external position.  In a bid to reverse these indicators, the government imposed additional import duties on more than 700 “luxury” goods including cars and tiles.

As CPEC infrastructural benefits trickle down, rising Chinese machinery and other imports are contributing to Pakistan’s rising trade deficit with China.

In an interview to Bloomberg, CEO Artistic Denim Mills Ltd, Faisal Ahmed remarked “Chinese goods will continue to flood the market, they can’t all be stopped.”