Asian mfrs. step up U.S. presence
By Thomas Russell -- Furniture Today, April 10, 2006
High Point — High PointAsian connections: This is the second of a two-part series about the various types of sourcing relationships that are being used to bring in furniture from Asia. The first part of the report appeared March 20.
— As they look to further boost exports, more and more Chinese manufacturers have seen the need to establish a presence in the United States.
In some cases, they have created U.S.-based marketing arms. Others have purchased an existing company with a well-known name and reputation in the U.S. market.
The partnership provides the manufacturer with key services ranging from product design and development to sales, marketing and logistics. The marketing companies, in turn, have access to dedicated manufacturing that can provide a breadth of product.
Here are five examples of such partnerships. In four of these cases, the companies maintain separate names, giving the manufacturer and the marketing company individual identities.
According to company officials, the marketing companies don't have a direct ownership stake in the factories.
Universal and Legacy Classic
These two companies are case goods importers owned by Lacquer Craft Mfg. Corp. Lacquer Craft acquired Universal in 2001 and created Legacy Classic in 1999.
Today, both companies receive goods from a dedicated 4 million-square-foot plant Lacquer Craft owns and operates in Jiashan, just outside of Shanghai. The facility can ship about 1,600 containers per month of mostly bedroom and dining room furniture.
Universal President and CEO Randy Chrisley said the relationship gives his High Point-based company huge advantages in manufacturing consistency and quality, and in warehouse support and shipping, and ends up being a big plus for Universal's customers.
"Our customers can enjoy the use of our facilities rather than shopping at all these different factories," he said. "There are no limits in terms of what we can get out of (the plant). Stylistically, if you can think it, they can build it."
The plant doesn't make Universal's entire line. Universal also gets occasional items from production facilities to the south of the big plant and some decorative pieces from the Philippines.
Still, Lacquer Craft produces the bulk of its case goods line, which includes a wide selection of bedroom and dining room products.
The Jiashan plant also supports Whitsett, N.C.-based Legacy Classic. The latter has access to onsite warehousing, a big plus for its direct container business.
Legacy also has ties to Markor International Furniture Mfg., which has factories in the Tianjin area of China. Legacy President and CEO Kevin O'Connor couldn't be reached for this story, so it's unclear how much of its line comes from Markor.
Somerton Home Furnishings by Kingstone Furniture
Somerton was created in January 2005 as the marketing arm of Kingstone Furniture, a Dong Guan, China-based manufacturer, which has had a plant there for 26 years and got its start doing OEM work for various U.S. importers.
Kingstone created Somerton to extend its U.S. reach. The latter is based in Corona, Calif., and represented by Senior Vice President Ed Roth.
The 1 million-square-foot plant, which has lumber processing and dry kiln facilities, can make 400 to 600 containers per month of bedroom, dining room, entertainment and occasional furniture, Roth said.
The facility can run 12 groups at a time, and ship any combination of those groups in a container, he said.
"We cut to stock, so we deliver on our promises," Roth said, adding the factory still does some OEM business.
"That's one of the most important things you can do in this industry — make a commitment and fulfill it," he said.
"The most important thing is to be able to keep promises. Your word is your bond, and we are trying to live up to that."
Fairmont Designs
Fairmont Designs was created by Sunrise Furniture Group in 1984 as the manufacturer's global marketing arm. Today, Fairmont has four major business groups, including a U.S. residential furniture division based in Buena Park, Calif. The other groups provide cabinetry for home construction, contract furniture for hotels and residential furniture for the Chinese market.
In residential, Fairmont got its start selling occasional and formal dining room furniture, and moved into bedroom in 1997, said founder and Chairman George Tsai.
Sunrise has two factories in the Dong Guan, China, area. They each are about 1 million square feet and produce a combined 600 containers per month of bedroom, dining room, occasional and home entertainment furniture exclusively for Fairmont Designs.
Tsai said he avoids OEM business because it would get too complicated to incorporate it into a complex designed to produce solely for Fairmont Designs.
A 1 million-square-foot plant Sunrise owns near Shanghai makes about 500 containers a month for the other three Fairmont divisions.
The company did some sourcing outside its factories during the '80s but found it to be unreliable, he said, adding that dedicated factories give greater control over quality and delivery.
"It's an indication the company has long-term commitments to its business," he said.
Tsai admitted being a manufacturer brings certain headaches, but believes the advantages far outweigh those headaches. In his view, he gets the best of both worlds, turning a profit on both the manufacturing side and the U.S. marketing side.
Odyssey International
This Scottsdale, Ariz.-based company was created in June 2005 as the marketing arm of Techlink Plastic Inds. Based in Kunshan, China, a city just outside Shanghai, Techlink's 2 million-square-foot plant produces casual dining and home office and home entertainment products for Odyssey. The plant also does an unspecified amount of OEM business.
Along with providing Odyssey an opportunity to delve into the container-direct business, the plant is vertically integrated and makes many of its own components.
And thanks to an onsite warehouse, Odyssey President Cole Mehlman said the relationship with the factory helps his company improve the flow of goods and better manage production and inventory costs.
In turn, Odyssey helps the manufacturer better serve the North American market.
"By having an American office, they understanding the styling and price point requirements for the North American retail market," Mehlman said.
Despite some concerns about rising labor costs and currency fluctuations in China, he is pleased with the sole-source relationship his company has with Techlink.
"They essentially can make anything and are willing to invest the money to purchase machinery," Mehlman said. "If there's a category we feel we are missing, they will look into it and will make the investment to allow us to get into that category."
The Country Company
This Vietnamese-based manufacturer has a marketing arm in the U.S. that bears the same name, based in Sacramento, Calif.
The Country Company currently owns and operates a 135,000-square-foot plant in the Binh Duong Province of Ho Chi Minh City, producing 75 containers a month of rustic bedroom, dining room, home office and home entertainment furniture made mostly from recycled pine.
The company is building a multi-million dollar, 400,000-square-foot plant in the Ho Chi Minh City area that initially will make 175 containers of product per month.
About 85% of the products made in the existing plant are produced for the U.S. marketing arm; the rest is OEM business.
President Ted Dash said owning a factory makes his company unique among Vietnamese exporters, giving it a direct link to U.S. customers. "It gives us more credibility and more security for the flow of goods," he said.
"It really gives the customer confidence in who they are dealing with."
Dash also believes the relationship helps secure the company's niche in recycled, solid-pine furniture.
"We have made a serious commitment because we want to continue to keep growing," he said, noting that he and partner John Tran make four to five trips to Vietnam a year.
"Every single day we want to make the product better.... It is a difficult product to produce. We have learned how to do it cost effectively."
The company also wants to diversify into a more contemporary line, and its new factory will be key in accomplishing that goal.
"You must be diversified," Dash said. "We know that rustic pine isn't for everyone. That's why we are going into other products as well."
