Concerted Efforts by Flooring Enterprises to Shake-off the Shadow of the Financial Crisis

Concerted Efforts by Flooring Enterprises to Shake-off the Shadow of the Financial Crisis

-----Report on 2008 CWI Wood Flooring Cooperation Summit

The closing ceremony of “2008 CWI Wood Flooring Cooperation Summit”, organized by CWI and co-organized by WWF, GFTN-CHINA, CATALINA Research and PEFC, took place at Shanghai Minya Hotel on November 14th. Power Dekor Group was the exclusive sponsor of this summit. There were altogether 230 delegates participating from all over the world, including representatives from nearly a hundred famous domestic flooring enterprises like Power Dekor, Elegant Living Flooring, Sino-Maple, Der, Sheng Da Flooring and Vohringer, as well as delegates from the North America Association for Flooring, FEP, consultant companies and the media.

Li Hongfan, the director of CWI, said “although our previous conferences were very successful, this year’s event was challenging because of the global financial crisis has had major negative impacts on our flooring companies. As the host for the symposium, we gathered all useful opinions in order to help businesses to get through the current ‘severe winter’.” After much discussion, “we finalized six topics as the subjects for the summit, including ‘Sino-Foreign Situation and the Trend for Flooring’; ‘International Cooperation in the Sino-Foreign Flooring Industry’; ‘Internationalization of Flooring Enterprises’; ‘Flooring Companies Marketing and Innovation’; ‘Lacey Act and Legal Purchasing’; and ‘Forestry Certification and Green Sourcing’.

To lighten the export burden of companies, a special section was designed for delegates from flooring enterprises to deliver the Report on Rising Export Rebates to relative authorities and industry associations. Lastly, organizers of the summit arranged for conference participants to visit the manufacturing facilities of several leading domestic companies, including Power Dekor, and Elegant Living.

An overview of the overall environment currently facing the flooring industry

At the meeting, participants spoke frankly and raised a number of questions deserving attention and study.

Liao Yingmin, the expert from the State Council Development Research Center told us that in an integrated global market, no single economy, let alone the flooring industry, can expect to be immune from the results of financial turmoil throughout the world.

Henrik Stoldt, senior editor from the German Parquet International Magazine, concluded that the flooring market in Western Europe had almost come to a standstill, and growth was negative in countries like Spain in 2008. Although no formal statistics are yet available to tell the story, most flooring traders felt a chill in the market.

Michel Gagne, the director of Gagne Global Sourcing expressed the view that the market in North America was unlikely to improve by much until 2011. Now in the U.S. many enterprises were vertically integrating into the market resource network in order to become stronger, as large companies can become more competitive by absorbing smaller ones.

Tong Yuezhong, the deputy chairman of China Society for Real Estate and Housing, said that as the real estate market had entered into an adjustment period, and sales in the housing market have shrunk a lot, then the flooring industry would also be affected.

Qian Xiaoyu, the vice-president of China National Forest Product Industry Association confirmed that the flooring market was bad in 2008 and quite a large number of middle and small-sized companies had closed down.

Flooring industry has good development prospects

The participants admitted that the flooring industry, although encountering much difficulty in 2008, shows great promise for the future.

Tong Yuezhong predicted this outlook for China’s flooring industry based on the prospects for real estate. He said “China’s economic fundamentals are still good, as the increase in residents’ incomes and the process of urbanization will result in huge demand for houses. In addition, the national real estate market is actually a group of regional markets. When several of China’s primary or secondary cities experienced a market correction, many third or fourth-line cities were only just beginning to rise. Lastly, those markets which are adjusting will soon start “rewarming” gently as developers adjust their price strategies to comply with the rules of market development.”

Qian Xiaoyu also held that the new policies carried out by the Third Plenary Session of the 17th Party Central Committee (that there would be 20 billion m2 of residential space built for farmers, and another 400 million mu of lands to be made available for public construction of villages) would be good for the development of the flooring industry.

Wu Ying, the deputy director of MCKINSEY&COMPANY provided a positive attitude about the global market during her speech at the meeting. She said “Although the occidental market is badly affected by the economic depression, there is still huge demand in the occidental market and growth will continue as countries enact stimulus policies for saving the market. Right now, our first priority is to improve the channels as well as build brand recognition that will make our flooring products highly desirable. In addition, the reduction of costs will be key for any company’s long-run success.