By Matthew Spieler
SHANGHAI—A rapidly falling U.S. dollar coupled with rising importing and raw materials costs are certainly making business conditions tough, but they were not enough to curb the enthusiasm of both exhibitors and attendees at the 10th annual Domotex asia/ChinaFloor (DACF) market here.

Many, in fact, decided to focus on the positives rather than the negatives. For the 1,014 exhibitors from 40 countries (approximately two-thirds did come from mainland China), DACF gave them the opportunity to show attendees they are committed to helping them not only get through this tough period but succeed. This was especially true for Chinese manufacturers, who let it be known the country is no longer a place to just source inexpensive, low quality flooring products.

“There is a stigma in the West that China is only good for poor quality and cheap prices,” said Thomas Baert, president of laminate and wood producer China Floors and a founder of the market, “and that high quality can only be gotten in the U.S. and Europe. The truth is top quality is not only possible in China, in many ways it is even higher than anywhere in the world. The opportunity at the high end is amazing.” This is especially true for high-end goods that are labor intensive, he added, such as the popular handscraped look. “These types of products can’t be done properly on the big machines like those in the West; this is the place for it.”

Anthony Serra, CEO of China Floorings Integrated, said Baert’s assessment is not only true with hard surfaces; the soft surface side has grown in quality as well. “Fifteen years ago it was all base grade, now manufacturers are capable of producing luxurious carpets.”

The main reason people and companies run into problems, they say, lies in the fact most do not understand, nor take the time to educate themselves on the differences in how those in the East do business compared with the way it is done in the West. This learning curve is certainly a two-way street. But since it is those in the West putting their reputations and businesses on the line by importing products, it behooves them to take the initiative to better understand with whom they are dealing and from where they are coming.

“The first thing you have to understand here is the culture, laws and relationships before doing business,” Serra explained. “You have to spend time in China to get what you want, or you will get burned.”

One of the best pieces of advice Baert could give for businesses to avoid being burned is, “You get what you inspect, not what you expect. Seeing is believing.” And, it is better to do it in China before the product travels overseas to your doorstep. “You want the product in a certain way, you have to let the supplier know exactly what you want and then follow up to make sure it gets done.”

Kelly Slater, senior associate with Bryan Cave, a law firm with offices around the world, including China, expanded on the concept by noting how important it is to do your due diligence. “I can’t stress enough the importance to understand and know your supplier. An ounce of prevention is worth a pound of cure.”

While the legal system in China is growing, she said it is far better to avoid the courts whenever possible. And the best way is to “think ahead and do your homework. Because China is a country of relationships, having them with the right people can go a long way.”

Local help

Since it is not feasible for smaller and mid-sized companies to physically have a person in China full time to keep tabs on suppliers, many distributors and importers have started working with traders—middle men. These companies are based in China, formed partnerships with manufacturers they have checked upon to guarantee quality, and employ professionals to inspect and transport products to their clients around the world. In most cases, these firms ensure the goods will reach your business on time and as ordered.

Pedro Medina, founder of China Link Group, said the 6-year-old company understands “it can be very frustrating doing business in China.” With clients in 26 countries—including distributors, importers and buying groups—last year the company established working relationships with 73 suppliers.

“Our selling point,” he explained, “is we are fully based in China. Quality control is the most important aspect. I’ve been here 13 years, and we have 33 people permanently based here. This includes seven professional inspectors who not only check every container twice, but film it as well. It can take three to six hours. Plus, we make it known that we guarantee the flooring is OK. If there is a problem we act quickly to rectify it.”

Rodrigo Riofrio of Briko Estilos De Vida in Ecuador, decided to use China Link after the problems he had trying to do it himself. “I would receive containers with boards that didn’t fit or weren’t what I ordered and was given all kinds of excuses. I was skeptical about using a trader because I thought they had ulterior motives. But a friend of mine recommended I give it a try, and I will never again go back and do it myself.”

He said the overriding benefit is peace of mind in all facets of the transaction. “I still negotiate the prices, and China Link works to give me what I want— it even changed factories to meet my needs. It is truly working for me; it is my partner, an extension of my business—like I have my own people inside the factory.” And if a problem arises, “they tell me beforehand so that there is always a layer of protection.”

Increased attendance

While official attendance figures were not available at press time, officials did expect an increase of approximately 6% to 38,000. Andreas Gruchow, senior vice president of Deutsche Messe, one of DACF’s co-owners, called the market an “international platform,” saying in addition to exhibitors coming from 40 countries, “more than 8,000 buyers from 79 countries have shown their clear intention to place orders,” based on online registration.

Mark Ellis, CEO of European Granite & Stone distributors in Pinellas Park, Fla., came to DACF looking to expand his offerings with wood and/or laminate and was part of a special North American contingent visiting the market. The trip was not only “beneficial and worthwhile” in that he was able to “find some things I was searching for that are readily available here and allow for big profit opportunities at home,” but in terms of learning about the different ways things are done in China compared to the U.S.

For that reason, he was thinking of trying a trader like China Link. “It seems to make sense. If they can guarantee the condition of the product like they say and at a competitive price, it’s worth trying just to eliminate some of the risk.”

Gary Wolffe of Smooth & Easy Plus in Bermuda was also part of the delegation and called the event “an eye opener. It’s a bit beyond what I expected, but I’m still interested in sourcing a variety of products from here. Now it’s just a matter of sorting things out.”

Natural Cork’s Philippe Erramuzpe, COO, and Piet Dossche, CEO, were spotted visiting current suppliers while searching for possible new ones. “The big advantage of a few years ago is no longer there. Inflation is higher here than the U.S. and the dollar is sinking so something has to give. Right now, we are sharing the burden with our suppliers because we’ve developed relationships for the long haul; things will change, they always have.”

Despite the changes, they were quick to note, “There are still opportunities here. You just need to be more creative, dig deeper and find good partners. China is maturing and becoming more disciplined by looking at warranties, adding value and respecting intellectual property.”

U.S. commitment

Recognizing that interest in sourcing product from Chinese manufacturers remains at an all-time high, those who have set up offices and warehouses in the U.S. had their American leaders on hand to help show their commitment to serving the market despite intense economic pressures.

Ira Lefkowitz, CEO of Ark Floors, the U.S. division of A&W, said the company’s commitment to America is “very strong. It’s just more difficult right now, which means you need to be a little innovative and showcase your advantages like we are doing with our handscraped products.” The company is so devoted to the U.S., he showed how the parent firm updated all its product literature to match the look and style its American division is using.

At Sihe, which recently opened up its Verde Floors division in Atlanta last fall, Randy Cox, vice president of marketing and technical services, said the company has not wavered in its support and intends to work with traditional flooring distributors to penetrate the U.S. market. “We spent time with them to discuss what needs to be to worked on in the U.S., and they have been very receptive.”

This includes, he added, creating a product line specifically for American consumers. “It also includes a complete merchandising program. The challenges have not been a real detriment because the company is very excited to be in North America and duplicate the success it has had in the European market in recent years.”

Savio Chow, director and president of Nature International, told a group of more than two dozen who visited the new Shanghai factory, “We intend to make Nature a worldwide brand.” Earlier this year, the company set up shop in the U.S. with industry veteran Judy Grillo overseeing the operation.

Not all companies were there to cater to importers, some came to DACF to get in on the burgeoning Asian market, specifically China. Jeffrey DeSantis, owner of first time exhibitor Amici Imports, was not only “glad” the company attended, “but decided we were coming back next year within two hours. We’ve been very well received by people from all over the world—Japan, Korea, Lybia and more.”

The rug maker noted while the company offers “unique styles,” the world has become relatively “flat” when it comes to color and design. “When you design today, you have to do it for a global audience since colors and designs travel from place to place so fast compared to years ago—and this includes Asia. This is an important show in which to participate with all the excitement taking place in the Chinese and Indian markets.”