Marketing Furniture in China: The Markor and Ethan Allen Story

While many American furniture companies are complaining bitterly about the fierce competition from Chinese imports of low-cost home and office furniture, some American companies have quietly begun their business adventure to take over some of China’s own domestic furniture retail market. One of Asia's leading furniture retailers, the Markor Group, opened its first retail store in Beijing in May this year. With 26 complete collections of 1,000 pieces of furniture as well as 4,000 accessories in every style, this 35,000-square-foot, three level store provides a one-stop shopping solution to Chinese customers. This is one of the four stores Markor, together with the largest furniture manufacturer and retailer in the United States, Ethan Allen, have opened in China since 2003. The other three stores in China are located in Urumqi, Tianjin, and Shanghai. As China is working towards the goal of fully liberalizing its retail market by the end of December this year in line with WTO commitments, it is gradually removing all restrictions on foreign operators. More foreign retailers are now entering the Chinese market than ever before to take advantage of this golden opportunity to expand their business there.

Recently, I interviewed Mr. Edward Grund, the President and General Manager of Markor Home Furnishings, the Retail Division of Markor International Furniture. The following is part of the written interview:

GUO: Can you tell me a little bit about your company?

GRUND: Markor was established in Urumqi in 1990, and entered the furniture manufacturing business in 1992. Markor is one of the leading furniture exporting companies in Asia producing quality products, which enjoy high acceptance in Europe, the Middle East and the United States. Markor International Furniture became a publicly traded company on the Shanghai Securities Exchange in November 2000.

GUO: What is Markor’s business strategy in entering China’s domestic furniture retail market?

GRUND: In 2001, Markor formed a partnership with a well-known American furniture company Ethan Allen to establish a chain of furniture stores throughout China. The agreement calls for the two companies to collaborate on the development of a retail format that will market two retail concepts: the Ethan Allen retail program and the Markor retail program. The first store opened in December 2003 in Tianjin. As we speak, there are currently six stores being opened or under construction in China.

GUO: Can you describe to our readers the current business environment in China?

GRUND: The emerging middle class and upper consumer market in China represents one of the highest potentials for retailers that exist anywhere in the world in my opinion. Personally I have been well received by business and governmental individuals wherever I have gone. The country is eager to develop and embrace “western” approaches and practices to business. While certain requirements to open a location are tedious and require patience and understanding, they are not insurmountable. Business and government leaders are proud of the progress being made but anxious to move forward at an ever increasing pace. The amount of new construction and development occurring is remarkable. Private consumption, home and automobile ownership growth is seen in every city I have visited. I have been fascinated to witness and experience this remarkable period in China’s development and advancement to a world power.

GUO: What are some of the notable cultural differences in doing business with Chinese?

GRUND: Personal relationships and contacts are an important part of conducting business in China. Business Entertainment is important. The ritual of exchanging business cards is never overlooked regardless of the level of the individual. Co-operation is an often used terminology for business dealings.