The "World's Largest Stone Exhibition," the Xiamen Stone Exhibition, is one of the most significant events in the global stone industry. It features over 166,000 square meters of exhibition space, attracting more than 140,000 merchants and 2,000 companies. Despite the use of outdoor booths to accommodate as many participants as possible, many firms still face challenges due to limited space, which prevents them from showcasing their products effectively.
Shuitou Town, located in Nanan City, Quanzhou, is known as the "China Stone City" and serves as the largest stone production and export base in Southeast Asia. The town hosts over 1,500 stone companies, contributing an annual output value exceeding 30 billion yuan. A significant portion of the country’s stone processing and trade comes from this region. However, according to data from the Nanan Foreign Trade and Economic Cooperation Bureau, stone exports from Nanan declined by 9.14% in 2013, marking the second consecutive year of decline after 2012.
Low profit margins and high inventory levels have become a major challenge for the local stone industry. According to Liu Liang, vice president of the Nanan Stone Association, nearly every company has excess stock that cannot be sold easily, even at a discount. When profits fall below 5%, the issue becomes more pronounced. Some companies are forced to compress their profits further, with some earning less than 3%.
Export orders have dropped significantly in recent years, while imports of raw stone blocks have continued to rise. From January to May 2013, Nanan’s stone exports fell by 19.06% to $72.6 million, while imports increased by 24.3% to $189.24 million. Rising costs—especially transportation and labor—have put additional pressure on the industry. Before 2008, gross profit margins could exceed 50%, but today, even top companies struggle to maintain margins above 15%.
Chen Yaodong, a second-generation stone business owner in Shuitou, conducted a survey revealing that only about 159 out of over 1,000 stone varieties have been in circulation for more than five years. Many companies continue to introduce new products annually, with a replacement rate of up to 20%. Despite this, inventory remains a persistent problem, with many companies holding over 30% of their stock unsold.
Some large companies have started shifting their focus from international to domestic markets, adjusting their trade ratios from 7:3 to 5:5 or even 3:7. This shift reflects the growing challenges in exporting, including rising costs and competition from foreign producers.
According to officials from the Nanan Foreign Trade Bureau, the decline in stone exports is partly due to global economic adjustments. Companies are relocating to central and western regions to reduce costs, and some are processing raw materials locally before exporting. In certain countries, resource control policies require stone blocks to be processed domestically, reducing the need for direct exports from China.
Historically, the stone industry was highly profitable, with gross margins exceeding 50% before 2008. However, low entry barriers led to market saturation, and many small businesses flooded the sector. Large companies also began acquiring upstream resources to secure supply chains. As a result, many Nanan-based firms signed long-term agreements with foreign quarries, importing large quantities of stone blocks regardless of current demand.
This strategy backfired when international demand dropped, leading to overstocking and financial strain. Companies became "abducted" by their own imported materials, struggling to sell excess inventory. Despite these challenges, good-quality mines remain scarce, making it difficult for companies to adjust their sourcing strategies.
In addition to economic factors, environmental concerns have also impacted the industry. Fujian Province, once rich in stone resources, now faces numerous abandoned quarries, particularly in coastal areas like Jinjiang, Shishi, Hui’an, and Nanan. Under government regulations, all open stone mines in Quanzhou are scheduled to close by 2015, with several counties already withdrawing from the industry.
Liu Liang noted that the stone industry is now moving toward a "closer principle," where proximity to sources and reduced transportation costs are becoming increasingly important. Some companies are setting up processing plants near mines to minimize shipping expenses and improve efficiency. This shift highlights the ongoing transformation of the industry in response to rising costs and changing market dynamics.
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