Guest column: The great urbanization, threats/opportunities

Home Columns Guest column: The great urbanization, threats/opportunities

Second of two parts

by Jim Gould

In part one, we addressed the impact of Asia’s fast urbanization on the global economy, its estimated 30 billion square feet of new floor space a year in just China and India alone, and its unprecedented demand for flooring and raw materials.

Some say China’s economy is slowing or it’s just “a bubble” and dismiss it as neither threat nor opportunity. That “slowing” economy is still growing at 7%—more than twice that of the U.S.

Unlike a democracy where progress requires a negotiated majority, China’s government is free to create and implement its plans with little challenge. Consider only 15 years ago its 10th Five-Year Plan set a goal of 7% annual growth and in that time it has grown from obscurity to the world’s largest consumer of autos, energy and timber products.

While the U.S. continues to debate its energy strategy, China has become the world’s largest producer of wind turbines, hydroelectric power and solar panels with more nuclear power plants under construction than any other country.

Beyond China and India, Asia’s urbanization is so profound it cannot happen without consequences to the rest of the planet. McKinsey & Co. estimates the coming decade will be the first in 200 years when emerging markets contribute more growth than developed ones. As this “great rebalancing” takes place, Asia will be home to over half of the world’s new construction.

This will create a hard surface opportunity three times that of the entire U.S. hard surface market. China’s timber demand already exceeds what several countries can produce; it will likely have to redirect raw material and manufacturing to meet its domestic need. Increased demand will create shortages of material, higher prices and, in turn, innovation and new technologies. Manufacturing hubs will shift to the East, perhaps to Indonesia where costs are lowest.

With this in mind, we have to ask ourselves: As growth increases the needs and production capacity of emerging markets what opportunities will emerge for Western companies? Who will fill Asia’s demand for finished flooring? Who will provide the raw materials? Where will it be made? How will this impact the flooring industry worldwide?

Some may see only threats while others may see opportunity. If you are open to exploring then begin now to study the possibilities. Read everything on how other industries are approaching emerging markets. Partner with a guide that knows the market and visit first hand; expensive lessons await those unfamiliar with cultural, business and governmental differences in the East.

Gaining overseas exposure

Take a note from Asian manufacturers at Surfaces and use an international show to gain exposure, exhibit products or find customers. Both Domotex shows in Germany and Shanghai draw 40,000 attendees each from around the world.

Buyers also need to foresee the possible ramifications these global forces will have on their businesses. Higher prices and possible shortages are just two. Partnering with suppliers positioned for the future is important. Understand your suppliers’ strategic plans to address these issues and make sure your long terms goals are on the same path.

Just to be clear, “the future” is not 10 years away. As Honeywell used to advertise, “Someday is today,” these are not futuristic dreams but today’s reality.

To read more, visit the Floor Covering Institute blog: blog.floorcoveringinstitute.com.

Must Read

NWFA launches new program

St. Louis, Miss.—The National Wood Flooring Association (NWFA) has launched the NWFA Engineered Wood Flooring Refinishable Program, which identifies these wood products with wear...

CARE carpet charges increase in California

Dalton—Differential assessments currently charged on all carpet sold in California are expected to increase on Jan. 1, 2023. California law requires CARE, as the...

COREtec’s Soft Step is patent pending

Dalton—COREtec’s new attached underlayment, Soft Step, is patent pending. The leading waterproof brand launched the innovative underlayment in early August as a solution to...

How to attract great talent during a labor shortage

(This article was originally published on forbes.com and has been edited for content and style.) The pandemic has been hard on businesses in a multitude...

Daltile launches Synchronic collection

Dallas—Daltile launched its new Synchronic porcelain tile collection that delivers a stylish, minimalist concrete visual and embodies the popular interior design trend Noble Simplicity—where...

Mohawk releases new ESG Report

Calhoun, Ga.—Mohawk's 13th annual Environmental, Social and Governance (ESG) Report highlights the company’s internal and external partnerships that are driving its commitment to achieving...
Some text some message..
X