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In difficult times, quality and personality hold the aces
By Nie Peng (chinadaily.com.cn)
Updated: 2008-10-29 17:06

Yang Jianwei, head of Beijing Innovation Furniture Co Ltd, said on Tuesday that his company's consistent quality and unique design, as well as their high-end positioning, had helped it cope with the crisis.

He said the crisis had a slightly bigger impact on orders from the US market, which were picking up in recent months. In Europe, only the German market had been slightly affected.

Although Europe was feared to be experiencing a harder time than the United States, Yang said his company's positioning made all the difference.

Unlike many other Chinese furniture exporters, which have gained market share through narrowing profit margins, Innovation targeted only the middle and high end market segments and had space for price fluctuations, Yang said, adding their products were among the most expensive in the Chinese market.

"Others will be dealt a heavy blow when exchange rates fluctuate or when people simply stop buying…Our targeted consumers are different. They're young, make decent money, love fashion and have a high demand for a good living environment."

Responding to a question about their sales in China, Yang said industry insiders told him sales of board furniture dropped by 30 to 40 percent in China owing to the sluggish housing market, but his company's sales revenue had actually seen a 15 percent rise year on year.

"Our furniture is not essential for the home but is for highly personalized consumption, and our customers' purchasing power hasn't been affected yet," he explained.

Yang said his parent company in Denmark has invited its global distributors to Beijing to visit the production facilities in the coming days and see for themselves the quality and design of their products, and why they are highly priced.

Yang said his company would not make an attempt to grab the low-end market segments because that "proved unsuccessful in the past".

"You simply can't have the whole cake,"he said. "You'll gain little if you divert your attention onto too many things. So we'll just focus on our own share and our sales targets."

However, In Professor Zou's view, MNCs may have to "make fundamental change to their value-chains and develop unique capabilities to serve the mid-market Chinese consumers… because the Chinese government policy to stimulate domestic demand will mainly enlarge the mid-market segments," he said.

"To compete effectively in the mid-market with cheaper competing products in China, MNCs must think outside the box to develop a new business model that allows them to deliver high quality products with competitive prices. This may require MNCs to learn from Chinese competitors, as opposed to simply transferring MNCs' current practices into China."


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