Optimism reigns as U.S. economy slowly improves

Home Inside FCNews Optimism reigns as U.S. economy slowly improves

by Matthew Spieler

Shanghai—With the U.S. economy starting to once again show signs of life and the Asian market continuing its strong growth trend, the 14th annual Domotex asia/ ChinaFloor (DACF) was filled with plenty of optimism.

The upbeat spirit was seen by both visitors and exhibitors and across all product segments on display—even by those who were not selling or buying products. “It’s been too busy,” proclaimed Bert Van der Stock, managing director of Flooring Industries, the division that handles the Uniclic licensing for Mohawk/Unilin. “I haven’t been able to leave the booth for the entire show.”

Thomas Baert, president of Chinafloors/Lamett, added, “All the big guys showed up so from that point we are very satisfied. We’ve actually been very busy as our LVT business is starting to take off in conjunction with our wood and laminate programs.”

Generally, the more optimistic an industry is, the better a show does and based on preliminary numbers DACF did not disShanghai—With the U.S. economy starting to once again show signs of life and the Asian market continuing its strong growth trend, the 14th annual Domotex asia/ ChinaFloor (DACF) was filled with plenty of optimism.

The upbeat spirit was seen by both visitors and exhibitors and across all product segments on display—even by those who were not selling or buying products. “It’s been too busy,” proclaimed Bert Van der Stock, managing director of Flooring Industries, the division that handles the Uniclic licensing for Mohawk/Unilin. “I haven’t been able to leave the booth for the entire show.”

Thomas Baert, president of Chinafloors/Lamett, added, “All the big guys showed up so from that point we are very satisfied. We’ve actually been very busy as our LVT business is starting to take off in conjunction with our wood and laminate programs.”

Generally, the more optimistic an industry is, the better a show does and based on preliminary numbers DACF did not dispute the overall mood. Final figures were not available at press time, but officials said more than 1,100 exhibitors occupied a record 11 exhibition halls, filling up nearly 1.4 million square feet of space. And based on preregistration figures and first-day activity, more than 40,000 people were expected to attend the three-day show at the Shanghai New International Exhibition Centre. To put in perspective, last year’s show featured 1,060 exhibitors in 1.1 million square feet of space and saw 39,343 people attend.

Similar to last year, LVT had a great deal to do with the show’s excitement as companies were showcasing not just product but all sorts of interesting ways to install it—from click systems to magnets to suctions and more. And like last year, most of these methods will never find their way to U.S. stores as importers questioned their viability and or ability to justify the extra cost, such as the magnetic systems.

Jonathan Train, import product manager from SwiffTrain/ Earthwerks, said the company “continually checks out new opportunities and trade shows like this are where we see the future. With the magnetic offerings, I don’t see what extra qualities it brings to justify the additional costs. We continue to be confident in our LinkWerks products.”

Per Josefsson, business unit director for Välinge, which, like Flooring Technologies, licenses its locking technologies to other companies, which now include LVT makers, said, “Good discussions were held with the LVT producers and other visitors regarding [our] patents. We had several license agreements finalized during the show and are very optimistic about the future growth of market shares for our licensees in this field.”

One area of DACF that was once again filled with activity was the wood pavilions. In recent years this area was one of the most highly sought after as companies looked for certain handscraped and distressed looks that could only be produced with the shorter line runs Chinese mills use. But last year, the halls were almost devoid of people from the U.S., not because of the economy but rather the Chinese engineered wood flooring industry found itself bogged down in an antidumping case against a handful of prominent U.S. companies.

With a great deal of uncertainty surrounding the fate of many companies, people shied away, opting to put on hold any purchasing until they were more sure of how the case would affect prices. Near the end of last year, the U.S. made its final determination (FCNews Nov. 14), though appeals still abound, and though the result said dumping existed, the tariffs and duties added were not enough to put a permanent stop to business.

In fact, most people told FCNews business has not been impacted in a negative way due to the ruling. David Propp, director of sales and marketing for Layo Floor, the largest exporter of engineered wood floors to the U.S., said the decision is “not affecting us; we haven’t lost any business from it.” (Editor’s note: To see what other companies said on this topic, see the state of wood industry story on page one.)

Because of the dynamic growth taking place throughout Asia, in particular China, coupled with the fact China continues to be an important supplier of products, DACF has been viewed differently during the years. In addition to the large importers, the early years of DACF saw mostly mill executives traversing the exhibit halls seeking out sourcing partners—first laminate, then wood and more recently, LVT.

While this type of business is still taking place, most companies are set with their partners and now attend to strengthen relationships and go over new design ideas.

As Michael Liu, president of Elegant Living, told FCNews, the company has formed solid working relationships with numerous manufacturers depending on the product category. “We now have design teams that work specifically with each partner. We work hard to earn their trust by providing the best service and best products and have created mutually solid relationships through the years.”

In addition to sourcing, what is being seen more of is American flooring companies going to China looking for ways to sell products to Chinese consumers. Western brands are big business as China’s population is migrating to a higher level of living and the people favor items with a European or U.S. name. In fact, China is already the world’s second largest luxury market and according to a detailed report, “China Briefing: The Growing Opportunity,” by Jim Gould, president of Floor Covering Institute, released in conjunction with DACF, upwards of 2.2 billion square yards of floor covering will be needed each year between now and 2025 to meet the needs caused by the urban migration in China, which currently stands at 47% but is expected to reach 70% within 40 years.

One area where this is most seen is the carpet side as U.S. mills continue to make headway into the Asian market. Mannington Mills’ Alex Jauregui said the company has developed a good customer base in places like Australia, Taiwan and Hong Kong and DACF is a good venue to see people from these areas, not to mention mainland China, “where we are slowly gaining greater penetration. “It’s amazing how much wealth is in China and they want to spend. And the people do respect Western names as they are perceived as a higher status.”

At Mohawk, which was showcasing its new SmartStrand Silk, Dustin Beadle said the new products “were doing well. We think they will be as big as the original SmartStrand.”

Like Mannington, the company was mainly focusing on the contract side, as most Chinese consumers still are not in the habit of using broadloom in their homes. “We understand and are sensitive to the fact there are cultural differences, Beadle said, “and realize we need to play to our strengths.”

Still, he emphasized Mohawk is committed to the market “long-term. We have a warehouse here and are working on creating a brand,” rather than get into a price war.

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