By Matthew Spieler
SALEM, N.J.—Mannington Mills is entering the Chinese retail market. The manufacturer has entered into an agreement with Chinese flooring company Elegant Living to both produce and distribute Mannington branded products to China’s growing end-use market.
Kim Holm, president of Mannington’s residential business, who made the announcement during his keynote address at Elegant Living’s annual distributor conference in China, told FCNews that while specifics of the deal were still being ironed out at press time, he expects the company’s wood, vinyl and laminate products to be distributed in China.
The deal calls for Elegant, itself a major producer of wood flooring in China, to manufacture hardwood products under the Mannington brand name for the Chinese retail market. Holm said these products “will be held to the same high-quality standards that we use for domestic production.”
The products that are manufactured in China, he added, will be co-branded as “Elegant Living —Mannington.”
Mannington should feel comfortable that Elegant will be able to easily meet the mill’s quality since the two have been doing business together for more than six years. Like many U.S. companies, Mannington was sourcing some of its running line goods from Chinese manufacturers, which gained a reputation for producing private-labeled products.
And, in a twist on how things have been done, the Mannington- Elegant partnership calls for products made at Mannington’s U.S. plants to be shipped to China for Elegant to distribute. Holm said these goods will be the same it sells in America, noting, “We do anticipate producing specific products for China in the near future.”
The program will be phased in throughout this year to over 500 retail locations across China. While some stores are owned by Elegant—a typical custom in China in which the manufacturer is its own distributor and retailer—most are privately held franchises.
To accommodate these locations, Holm said special merchandising units are being created. “All displays are being developed jointly with Elegant Living.”
As far as how the products will be positioned, he noted price points “are being determined by Elegant and will be competitive in the market.”
While each company will be producing products for the venture, Holm stressed the deal is “purely a licensing and distribution agreement” and does not involve either company taking any kind of equity in the other.
While Holm noted the Elegant deal “has been in the works for some time now,” Mannington becomes the second major U.S.-based flooring manufacturer in less than a year to take its brand directly to the Chinese consumer market via a partnership with a company that is arguably just as well known in that region.
At Domotex asia/China Floors (DACF) last March, Anderson Hardwood Floors announced a distribution partnership with flooring manufacturer Power Dekor. Similar to the Mannington-Elegant it calls for Power Dekor to manufacture and distribute specific Anderson products—including ones made in the U.S. and shipped overseas—at 500 outlets across China.
Holm said Mannington’s decision to venture into Chinese retail “was made in looking at the long-term prospects of China.”
Unless you have been living under a rock for the past decade, you are familiar with how much China has grown not only as a manufacturing hotbed, but in an urbanized sense as its major cities expand with people coming in from the countryside.
As a result, the ranks of the country’s middle class is swelling to the point its numbers are almost greater than the entire population of the U.S., with many of these people below the age of 30. Armed with newfound wealth and more freedom than their parents and grandparents ever had, this sector of society is buying up luxury items and desiring Western looks and products. What was once a non-existent portion of China’s population less than a generation ago has risen to become a major marketing opportunity.
Executives from U.S. companies who have been visiting China in recent years have seen this trend, and couple that with a stalled U.S. economy, see this as a viable avenue to produce extra revenue. Even though China’s economy has slowed from its double-digit growth days, the country is still experiencing the type of growth any nation would gladly have. So, like Holm noted, the long-term prospects of China, especially with regard to selling product in that massive region, look good.