By Sarah Zimmerman
SHANGHAI, CHINA—The fourth annual China Wood International (CWI) Flooring Summit, at the MinYa Hotel, here, was host last month to an array of experts (foreign and domestic) in an effort to further explore international cooperation on several fronts—sustainability, economics, finances, marketing, product, R&D, and more.

In welcoming attendees, Hongfan Li, president of CWI, pointed to challenges facing the industry today and heading into the future— “namely the foreign economic slouch and financial crisis”— as hurdles to overcome. “We invite global industry leaders to sit together and discuss this current situation, expanding on future trends of overseas markets and deepening Chinese international relations.”

Though cultural, professional and even legal customs still vary greatly between markets— including North America’s—the industry at large is unable to deny the impact China had and will continue to have throughout the hardwood segment. China ranked No. 1 in hardwood exports globally in 2007—361 million square meters. Hence, the importance of collaborative research, education and strategies between markets, experts said.

CWI did its best to provide venues for such activities during the four-day summit—Nov. 12 to 15—with individual presenters, several panel discussions, introductions to and tours of two leading Chinese hardwood flooring suppliers and varying networking opportunities.

Merging market mentalities

Guo Hui, vice president of Power Dekor—the leading wood flooring manufacturer in China for 13 years now, stressed the importance of such summits, which allow for a starting point, and are often the first building block in future relations. “Partnerships bring knowledge. Our partners understand their markets and can help us to enter those markets,” he explained. “But, we need to provide quality products, variety, support and a continuous willingness to learn.”

Dan Natkin, director of wood business for Mannington Mills, agreed when discussing China’s entry into the U.S. hardwood arena and Mannington’s own relationships, stating a need for constant communication. “Our cooperation with China has been very successful, but the key is making good partners,” he warned. “Always keep attention to detail, entropy and continue moving forward.”

As advice to Chinese mills looking to move into the North American market, Natkin stressed understanding regional preferences is a critical part of the globalization game—something almost non-existent in China’s domestic market. “You can’t take a ‘one size fits all’ approach and gain market share,” he said. “Partnering with someone who understands the market, style, design, sustainability factors, distribution channels, laws, etc. will create a better relationship and higher success.”

Furthermore, Janusz Zajdel of the European Federation of the Parquet Industry, pointed out the importance of meeting different market standards—not only in design terms, but also legal and moral standards. “Nothing is impossible, but it’s not a one-shot deal; this takes time,” he said. “Industry professionals need to work together to create individual market strategies.”

Natkin continued, noting the use of rapidly renewable forests, legal lumber and formaldehyde-free products are definites heading into the future. “It (green/sustainability) is a must in the U.S. market to have these things to be able to come to the game and play in the same ballpark.” He also advised China to look at the picture holistically, not just what kind of lumber you’re sourcing. “What can you do to reduce consumption of a valuable product (lumber)? How can you improve your sustainability rate?”

Raymond Hegarty of Unilin Group summed it up well: “Basically, what customers want from Chinese wood suppliers are legal, sustainable products; quality products, and a reasonable cost.”

Though many Chinese companies are in the learning or beginning phases of international relations, several success stories have already emerged. Anderson entered the Chinese market in 2004 in cooperation with Power Dekor. And, today, its annual output sales in China have far exceeded expectations.

Future forward

Jesse Xia, president of Anderson’s Asia and Pacific regions, explained how success happened so quickly for the company and its Chinese partner: Clarify the rules in the beginning. “There has to be a mutual understanding. Both parties must settle the ground rules before they start playing the game,” he said. “Survival and success—especially in today’s faltering economy— relies on taking the proactive road, understanding market development and, again, constant communication.”

Weng Shaobin, president of Power Dekor, agreed on the importance of good corporate relations/understanding between partners. “We entered our partnership with Anderson holding the mentality that we would be an earnest but persistent student going forward,” he explained. “Today, we set up meetings between Power Dekor and Anderson every three months to keep us on the same page in various areas,” he shared.

Xia also noted though price helps when entering a market, quality is still the key—specifically long-term. “Find a representative in your export country that will safeguard your quality.”

And, in helping the Chinese market broaden its expanse/ exports, Xia warned third-party certification is becoming more and more important. “It’s protection for your company, and strengthening your certification will afford you more opportunities for business in exports.”

Natkin, whose company, Mannington, already holds a relationship with Chinese supplier Elegant Living, added that in today’s slowed economy, success can still exist if partners are willing to hold a two-pronged strategy: 1. Invest more money than ever for great positioning when the market turns up (2010), and 2. Do not slow product development—“it is king at the end of the day.” He added that partnering with a strong, well-known Chinese company is the best advice. “There’s definitely an appetite for Western brands in China, but you absolutely have to select a partner that already understands the market.”

Michael Liu, president of Elegant Living, agreed those who can survive will be king of this economic crisis. “Investing more energy in quality, service and standards are three things all wood suppliers need to be doing.”

And, Natkin closed, saying, “Honor and respect already established relationships, and continue to innovate. Look two to three years out; don’t look for new customers because it’s a short-term fix. Get better, more sustainable products and partners.”

The future is bright from a cooperation standpoint, attendees said, suggesting more education, summits, continued relationship development and an increase in co-branding. And, though both sides of the “pond” are not necessarily willing to fold to the other’s exact specifications, all are at least willing to listen, bend and learn from each other prior to entering the other’s market. Long-term, experts said the path toward the three Cs—communication, cooperation and consistency—will lead to mutually beneficial growth in the global market.