Companies eye alternate import sources
Producers set contingency plans to counter possible import duties on Chinese bedrooms
By Thomas Russell -- Furniture Today, April 5, 2004
HIGH POINT — Kemp Enterprises used to show case goods from China and Mexico on the fifth floor of its Green Drive showroom.
At premarket last month, it made a subtle change. It moved its Chinese products to the sixth floor and consolidated goods from Mexico, Chile and Brazil to the fifth.
That's just one way the company is trying to deflect concern among retailers about possible duties the U.S. government is considering placing on bedroom furniture made in China. Kemp wants to assure buyers the products can be made elsewhere.
"We already have a contingency plan in the works," said Randol Smith, Kemp's vice president of marketing.
Right now, its production is almost evenly split between South America, Mexico and China. But the Mexico and South America plants can handle additional bedroom production if needed, Smith said.
Possible duties on Chinese bedroom furniture won't be determined until at least the end of April, after the High Point market. The U.S. investigation stems from a petition filed by a group of American manufacturers claiming China is illegally dumping bedroom product on the U.S. market.
At Kemp, the potential duties have led some retailers to delay orders and others to focus on bedroom furniture from countries other than China. The company is offering four new Chinese bedrooms but also has goods from South America and Mexico.
It can cost significantly more to produce an intricately carved piece of furniture in Mexico or Brazil than in China. But if duties are imposed, the Chinese cost advantage could shrink or even disappear, especially since shipping costs to the United States generally are lower from Mexico.
Hand-carved details, including those on bedposts and on the backs of chairs, are the strong suits of case good importer AICO. Most of its production is now done in China, but the company also has source plants in Malaysia and the Philippines.
AICO President Larry Rinaldi acknowledged the threat of duties has made some retailers cautious. Still, he said AICO is moving forward with four new bedroom, dining room and entertainment collections it plans to introduce in April.
"It's possible some other factories other than in China could make the bedrooms," said Rinaldi.
Bedroom samples are being produced in China and production is slated to take place there, but could be moved depending on the outcome of the antidumping issue.
During premarket, Rinaldi urged buyers not to be intimidated by the petition.
"There are some dealers that have exhibited reluctance to place orders past a certain time," he said. "We don't agree with that. We think you need to continue to service your client and continue to have the inventory."
Case goods importer A-America has had some retailer interest in its new and existing bedrooms produced in China. But many aren't committing to buy until they find out what the duties might be.
"You have a lot of dealers waiting to see what's going to happen," said Dave Pinamonti, senior vice president of marketing and sales. "I think people are trying to figure out what they should do over the next 90 days."
In the meantime, A-America can promote existing inventory from its U.S. warehouse and product made in its other source countries, Indonesia and Thailand.
A-America also has an advantage because two-thirds of its line is dining, and any duties would apply only to bedroom. Some dining collections tie into bedroom, but many can stand on their own.
The company will introduce some bedrooms in April, but will focus most of its efforts on casual dining.
Canadian case goods importer Hamilton & Spill also is emphasizing casual dining for April, as well as some occasional products. By the time its new bedrooms come out in the fall, company officials will have a clearer idea of how duties will affect the cost of those products.
So far, all of Hamilton & Spill's bedrooms have come out of China. But it sources other goods in countries such as Malaysia, Vietnam and Thailand, and the company is heavily promoting those products.
Pending the outcome of the petition, bedrooms introduced this fall also could be produced outside China, said Rick Verjee, executive vice president.
As a Canadian importer, Hamilton & Spill also can sell Chinese bedrooms in Canada without any duties that might be imposed on U.S.-bound product.
