Chinese Floor Industry Analysis
2008-08-04

                                                                                                                                                                     Floor news                                                                                                                                        Chapter six-Chinese Floor Industry Analysis

From the early 1980s, China has gone through 20 years in floor trade. Despite they start late and have poor foundation, but they are developing rapidly. In 20 years’ time, China has formed a industrial system that has multi-industry types, many specifications. They cover from production to sale, the laying and after-sales service. Although in recent years, Chinese floor industry has maintained prosperity. Output and exports have achieved a healthy growth. Floor industry is experiencing turmoil, including internal and external problems at the same time. 

Internal crisis Objectively speaking, floor industry are affected by raw materials, labor prices rise, the export tax rebate policy adjustment, the appreciation of the RMB, the surge in oil prices. Subjective to say, the floor brands are in a jumble. Industry homogenizations are serious. The market is full of low-level competition. The current domestic enterprises use similar means of promotion . The star speak, CCTV advertising, price war has become a common floor business means. Low-level marketing enterprises means can only lead to a vicious competition. 

External crisis Foreign floor brands enter into domestic market with better quality and good reputation, compare to the already difficult industry environment worse.

Business opportunities It is such a difficult environment but also create tremendous business opportunities. For a time, a number of risk investors continue to struggle in floor industry in China. There are three important reasons: first, China has a huge consumer market escalation. Second, the industry is full of competition, less government intervention. They can win the competition from companies with the real core competencies. Third, the industry has a certain floor of regional monopolies and the radius for sale. The Chinese local brands have some local enterprises. There is a huge acquisition integration space. In addition, with shares in the development of the real estate industry, the future development of the national economy on the floor will strengthen. Moreover, as China’s technology standards developed, the China-made floor is becoming popular in the international market.

In both the merits and demerits of such an environment, what to do? 1. Capital restructuring, establish a brand giant Economists believe that a mature industry concentrated around the brand is the industry occupy top four overall market share of 60 percent. But not a floor industry's market share exceeded 5 percent. In June this year, the World Bank Group International Finance Corporation and Morgan Stanley in USA invest 100 million dollars to “nature floor” to set up the floor Holdings Limited. Capital strength is bound to these brand-name enterprises to a higher floor of the platform integration of resources. Through the power of capital, the Chinese industry confusion will be broken. The reorganization of the merger will hasten brand giant enterprises.                                           

2. Industry extension, innovation to win business opportunities With raw material prices continue to soar, another industry competition is reflected in the products. The most affected is hardwood floors, it is the total number substantially reduced. At this time, multi-layer parquet and the three-tier Parquet's market share begins grow, or even close to the position of the first floor-laminate floor. However laminate floor keeps 5% -6% annual growth rate, the dominant position is still relatively stable. Many hardwood floor businesses start find a way out. For example, once as a solid wood floor authority of the "Nature", as early as last year, has begun to aim at the market of laminate floor.

3. Development of multi-channel marketing, enterprises breakthrough single model Now the floor industry can no longer rely on conservative model. The breakthrough in the current marketing model enables enterprises set foot on a higher level. "On the whole home" mode makes a certain floor manufacturer to overcome the barriers to marketing. They have made a good return on the market. Although some of the innovative enterprises also try at the initial stage, but we see their determination and courage.

The author believes that if the Chinese floor industry wants to maintain a good development, the above views are obviously not enough. Always with the market, conform to social development is the purpose.