Xilinmen eyes both Chinese, U.S. markets
By David Perry -- Furniture Today, October 31, 2006
Shaoxing, China — The new workers at the Xilinmen home furnishings complex here are lined up in neat rows on the company's basketball court. They are being drilled by one of the plant's security guards, who is wearing olive-drab fatigues and barking out orders.
The workers step out in groups of three, making a new line on the court. The goal of this morning exercise, a company official tells a visiting reporter, is "to create synergy and have unified action."
Later, some of those workers will take their positions in the company's recently expanded mattress factory, a massive facility on Xilinmen's sprawling campus, where furniture and bedding are made and later retailed in a company-owned home furnishings complex at the front of the property, and in other stores across China.
The buildings are stylish and contemporary, and the campus is crisscrossed by the canals and rivers that make Shaoxing a much-praised city in travel guides. There are six production buildings on the campus, turning out bedding, upholstered furniture and wood furniture. Bedding accounts for over half the company's sales. Total revenues are the equivalent of $150 million, with bedding making up $90 million of that total.
The company's strength today belies its humble beginnings. Its history is told in a series of pictures in the third-floor conference room in the headquarters building.
It all started with Ayu Chen, who launched a business from his home in 1984 with only $100 in working capital. He began by making sofas and then moved into mattresses. In those early years, he couldn't buy raw materials until he sold a sofa or a mattress.
But Chen, who had been an accountant in a furniture factory, counted his yuan carefully. Under his tutelage, the company grew steadily. And the decision to expand into mattresses paid big dividends as growing numbers of Chinese accepted Western-style bedding, still the minority sleeping surface in China.
The pictures show the steady growth of the company's holdings as building after building was added to the complex. Chen, an outstanding table tennis player, still runs the company he founded.
Today, Xilinmen is an Asian bedding power. "We are among the giants in bedding," declares Dongliang Shen, the company's CEO, who began his home furnishings career as a production worker.
Serving the sprawling Chinese market of 1.3 billion people is no easy task.
Yuewen Chen, Xilinmen's vice president of marketing (and no relation to Ayu Chen), said China's growing appetite for Western styles was a key reason for the expansion of the mattress factory.
"In the U.S.," he said, "the bedding market is mature. Here, the mattress is not the primary sleeping surface. But that time will come very quickly. We expect rapid growth of bedding products in China."
Western-style bedding accounts for less than 30% of the Chinese market, said Yuewen Chen, former chief editor of a daily newspaper in Shaoxing. He said that as the Chinese economy continues to develop, more consumers are turning to Western-style mattresses.
Is the market ripe for the entry of U.S.-made bedding?
"That's not a big threat," said David Zhong, Xilinmen's sales manager for North America. "The manufacturing costs in the United States are much higher than in China. It would be hard for them to ship to China. Some already have licensees in China and are growing here."
Xilinmen officials estimated they have a bedding market share in China of about 6%, a figure that is slowly climbing. They said their plant is well positioned geographically to ship mattresses and other home furnishings products throughout most of China — and to retailers as far away as the United States.
