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Western carpet sellers see huge potential in China market
Dating back 2,000 years, it's fair to say China's carpet weaving industry is at a very mature level, but now it is importing many products in the sector from the West.
"The demand for high-quality carpets as floor coverings in China has increased rapidly in recent years," said Bill Chipman, vice-president of Asia-Pacific and India at Shaw Industries. "It is just the right time to come to China because the clients here are ready for the products and the prices."
A carpet factory in Northwest China's Qinghai province. The demand for various carpets as floor coverings in China has increased rapidly over the past few years. [Photo / China Daily]
Having a nice carpet as a floor covering was traditionally considered a luxury by Chinese families. Before the country's opening-up in 1979, ordinary Chinese families considered it a bourgeois style of life, but now there is a fundamental change in attitudes with more people following global trends, industry experts said.
James Kong, design director of Infinity Design Engineering Co, a company offering indoor design for commercial buildings, said: "The design of the carpets gives people a refreshing feeling that I love a lot."
The carpets he refers to are produced by the world's largest carpet manufacturer, Shaw Industries Group Inc, whose commercial brand - namely Shaw Contract Group - continued to expand its presence in China when it opened a showroom in Beijing on May 10.
"We will continue the investment in China since we see our opportunities here in a growing carpet market, especially in the commercial-use segment," said Chipman.
The company has invested more than 100 million yuan in China since it started expansion in the market two years ago, it said.
So far, it has many clients including China Minsheng Banking Corp, Deloitte China, Coca-Cola Co, Hang Seng Bank and Honeywell International Inc.
Besides opening offices and showrooms in more cities in the coming months, the company will break ground in June on a carpet tile manufacturing facility in Nantong, Jiangsu province, a big part of its strategic expansion in China.
Kong said he is quite familiar with the brand and often recommends it to his clients.
"Shaw's carpets have very strong performance in design and quality. Their high prices may be the only disadvantage," said Kong. "I believe after the establishment of the factory in Nantong, the company's carpets will be very competitive in the market with prices more acceptable to customers."
Maggie Liu, regional sales director of Shaw Industries in Greater China, said: "Our investment in China has surpassed all of our competitors."
According to Liu, as the world's biggest carpet producer, Shaw has about a 30 percent share of the global market in the carpet industry and more than 30 percent in the US market. However, investing in the Chinese market as a long-term strategy only started two years ago.
According to Chipman, three other big US carpet manufacturers entered the Chinese market many years ago and have local production facilities but Shaw's products have been sold in China for more than 10 years.
He said the market among local Chinese companies soared in recent years because they care about their international image more than before and because most foreign companies traditionally prefer carpets as floor coverings.
He expects double-digit annual growth rate for the company's sales in China, saying it will focus on brand-building at the beginning and doesn't have any acquisition plans at the moment.
According to Shaw, China will have a market potential of 1.5 billion square meters of carpets in the commercial segment by 2014. At present, North America and Asia-Pacific have the same annual consumption of commercial-use carpets of 16 million square meters each.
By the end of 2020, Asia will become the biggest carpet buyer in the world, Chipman said.
"Even though China's economy is slowing down, it is still developing at a tremendous pace," he said. "There are huge business opportunities in the industry in the next 10 years."
However, China has very different traditions regarding floor coverings. Public figures show that in Western countries more than 70 percent of floors are covered by carpets instead of other materials such as wood, plastic or tiles. In China the figure is around 10 percent.
Furthermore, 65 percent of carpet use is for the home in foreign countries. In China, carpets are mainly for commercial use such as in hotels and businesses.
Kong said State-owned and private companies are new growth points in China's carpet market because most foreign companies which have established offices in China already use carpets as floor covering.
"Price competition is fierce in Beijing's market because there are not many newly-built commercial buildings now," he said.
Xu Dingmu, general manager of Sepa International Business Strategy and Communication Group, a Beijing-based private company, said his company would prefer carpet as the floor covering instead of wood or marble.
"My first consideration for the carpet is that it should be an environmentally friendly product," he said. "I would like to pay more for its quality and after-sale services such as cleaning."
Xu said during the redecoration of his company's offices he had no chance to talk to the carpet producer directly, which he would prefer to do.
"Usually, we will hire a professional design team to take care of all the redecoration of the offices but, if we have a chance to talk with the carpet producers, we will be able to get professional suggestions on our carpet usage and maintenance," he said.
"The style of the office can show the taste of the boss, so it is important - and if there is lots of carpeting it is crucial," Xu added.