New relationships mark changing imports arena
Tom Russell, Associate Editor -- Furniture Today, March 19, 2006
There's no doubt that most furniture importers view their Asian furniture manufacturers as partners in a mission to bring affordable product to the U.S. market. Up to now, many of those partnerships have been arms-length relationships that allow a great deal of flexibility for both the importer and the manufacturer.
Not only can importers move production to new source factories, manufacturers can solicit additional customers to fill in production gaps if a line isn't doing well at retail. Whatever the reason, many importers are comfortable with that flexibility, noting it helps them achieve the best price on a given line.
But as outlined in our two-part Asian Connections series that begins elsewhere in the paper this week, some importers are creating more entrenched alliances with their manufacturing partners. These range from dedicated and sole-source plant relationships to ownership stakes in factories. Such relationships are indeed changing the dynamics of sourcing overseas. In essence, the furniture importer is taking on more of a manufacturing role.
To industry watchers, all this should have a familiar ring. For years, a number of U.S. furniture manufacturers have developed their own retail networks. Likewise, retailers long have helped design product that is exclusive to their stores. Whether we're talking about product design or distribution, this blurring of roles is helping each segment control more of its own destiny.
In the same respect, importers with dedicated manufacturing say the entrenched relationships give them more control over the quality and consistency of product. It also gives them some control over delivery, particularly with those plants that have onsite warehousing.
This isn't to say the relationship is headache-free. By aligning more closely with manufacturers, importers also buy into their problems, ranging from rising labor costs to materials and equipment purchases. And more than one importer with dedicated manufacturing in China has lamented antidumping issues and duties.
Such issues ultimately can affect profitability. At the same time, the importer can share in the glory — and financial rewards — when the manufacturing side of the business is doing well.
One model isn't necessarily more effective than the other. As one importer noted, keeping an arms-length relationship with manufacturing helps each party do what they do best, focusing on core strengths. For the pure-play furniture importer, that means designing and delivering the best product at the best price. For those companies, flexibility likely will remain a key part of the equation.
But it's also likely the industry will see more importers looking for dedicated plants or even plant ownership stakes. As we all know very well, importing is an ever-changing arena. Through both individual news stories and in-depth coverage, Furniture/Today, as always, will keep you informed as those changes occur.
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New relationships mark changing imports arena
Mar 27, 2006
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