Sri Lankan ceramics exporter Dankotuwa Porcelain recently indicated its intention to increase domestic sales, targeting the local hotel, restaurant and catering sectors. An outcome of the company’s recent signing of a "supplementary agreement with the BOI which allows them to exceed 20% of domestic sales in any year provided that the five year average remains at 20%". This follows a disappointing 2009 for Dankotuwa during which it reported a 30% drop in exports and its only bright spot was the retention of domestic sales numbers from the previous year.
According to company Chairman, Sunil Wijesinha, Dankotuwa's drop in exports was mainly attributable to a falling Euro, a repercussion of being dependent on the European market to the tune of 60% of all exports. "With the current low value of the Euro most of our European orders are at a loss, and therefore we have decided to focus more on domestic sales. [When] the Euro came down from Rs 170 we had to drop some low margin customers who refused to give price increases, and struggled hard to get better prices from new designs, and now it is not possible to get further price increases, because Bangladesh which is now producing a similar quality of porcelain has much lower prices, benefiting from low labour and energy costs", Mr. Wijesinha said in a statement issued by the company.
A further area of future concern for the company is GSP+. Dankotuwa says it is "eagerly" awaiting the outcome of GSP+ negotiations with Europe because, without this concession, it expects to lose out even more sales to Bangladesh, a country which enjoys duty free access to Europe, without any conditions, due to it being categorised as a Least Developed Country.