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Business

Luxury the Path to Survival for Porcelain Makers

Germany's historic porcelain manufacturers are threatened with extinction unless they capitalize on the qualities of craftsmanship that will also place them squarely in the category of luxury labels only.

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Tradition has its price

Irina Haberland's desk lamp is tilted at a precise angle. Her pattern sample is within view. Relying on visual judgement and light brushstrokes, the porcelain painter fashions delicate butterflies and berries on a ceramic bowl. The paints she uses have been mixed according to a secret recipe. Only an expert could immediately tell whether the pattern was painted in the 21st or the 18th century. Europe's first and oldest porcelain manufacturer in the eastern German city of Meissen cultivates the tried and true craft of handmade ceramics, without compromise.

Meissen porcelain is the stuff of legend. The factory was founded in 1710, and by the mid 1700s, Meissen porcelain adorned royal palaces and aristocratic homes across the continent.

Manufaktur Fürstenberg

Part of a collection of Fürstenberg porcellain owned by Duchess Anna Amalia of Weimar

Though Meissen dominated the industry, seven major German factories were also established during the 1700s, all of which enjoyed princely patronage. One of these was the Fürstenberg porcelain manufactory, founded in 1747. Today, though, the company is at an all-time low.

"Our porcelain is a luxury product, and there's just not much demand for luxury products in Germany now, given the current economic situation," said Fürstenberg's business administration manager, Stephanie Saalfeld.

Tough economic times

Porzellanmanufaktur KPM

Manufacturing porcelain at KPM in Berlin

Over the past several years, Fürstenberg has had to continually let staff go. In 1996, the business still had over 200 employees. Now, the number is down to 150, with another 40 positions to be cut. "The whole porcelain industry has problems," Saalfeld said.

Meissen is no different. In 2003, the company was just barely turning a profit. It cut 100 jobs, and an additional 60 are also threatened. In August of last year, all departments implemented reduced working hours.

Searching for a way to stop the decline, some porcelain manufacturers have turned to more streamlined, mechanized production techniques, which make products more affordable. "Fürstenberg is operating to a larger extent with mass-production," wrote the Cologne-based consulting firm BBE in its 2003 report for the glass, porcelain and ceramics industry. "The larger porcelain manufacturers have integrated much of what was done by hand into their machine-operated processes."

But mass-production is something the 900 porcelain artists working at Meissen wouldn't even dream of doing. That would see their unique selling point go down the drain. "Individual craftsmanship is still synonymous with top quality," read the BBE report. That's good news for Meissen, which doesn't try to compete with the more affordable mass-produced brands.

It's a strategy that market experts say another prominent, troubled factory -- Berlin's Königliche Porzellan Manufaktur (KPM) -- would be well advised to follow. KPM is facing insolvency, and a decision is expected to be made soon about possible salvation in the form of privatization.

Luxury the way to go

Porzellanausstellung in Sanssouci Terrine

A 240-year old terrine from the house of Meissen, part of the first china collection at Potsdam's Sanssouci Castle.

"The best thing for KPM would be a clear decision in favor of luxury," said Thomas Kastl, head of the consumer goods trade fair "Ambiente" in Frankfurt. He points to the fact that, next year, the last trade barriers on the porcelain market are set to fall. "Then there'll be a flood of high-quality, cheap porcelain from China on the market. Without a strong brand-name strategy, German products will be pushed out of the market," Kastl said.

"The middle price segment is destined to disappear. There'll be only cheap products, and really expensive products," predicted Professor Gert Gutjahr from the Institute for Market Psychology in Mannheim. Experts say that right now, KPM wouldn't stand a chance against Chinese manufacturers, whereas Meissen would. "Who cares about the price when they're buying a hand-painted, exclusive product?" confirmed BBE.

"It's only going to become more difficult to determine differences in the quality of the products," Gutjahr explained. Whether a coffee service set is produced by Fürstenberg or KPM, or in a no-name factory in China is irrelevant. "The know-how is so evenly spread now," Gutjahr said, adding that every factories in both Germany and China have the same machines needed to manufacture porcelain.

Branding is everything

What separates the cheap products from the more expensive, is the value of the brand. "In the German Patent Office, there are around 700,000 protected trademarks listed. Of those, 60,000 are still active on the market," Gutjahr said. "Only 200 are what we'd call strong brands, and of those, only about 20 are truly sought after." These desired brands typically have a long history, as their reputation develops slowly, over several generations. "On average, you're talking 80 years," said Gutjahr.

Meissen has existed for almost 300 years. Royalty, nobility, statesmen and popstars have eaten from the plates marked with the famous blue swords. The company has 200,000 items in its repertoire and an extensive archive of molds stemming from various epochs. Prices are high, with small painted figurines starting at around €1,000 each, and five-piece dinnerware settings ranging from €450 to €4,500, depending on the complexity of the pattern. But maintaining high prices could just be the best way of securing the company's future.

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