Current Issue

Practical Perspectives

By Nicole Liang

Seasoned manufacturer-retailers comment on the domestic furniture market in China.

We interviewed two manufacturers who have extensive retail presence throughout China.

De Rucci Beddings Co Ltd, a mattress and bedding specialist based in Dongguan, Guangdong, China, sells its products out of more than 60 stores mostly located in furniture malls in eastern China. Among them are a few showrooms and specialty stores.

Lorenzo Ltd, on the flipside, is a foreign player in China who manufacturers and retails classic leather and wood-based collections. Headquartered in Singapore, its products are manufactured out of China and sold in at least 32 wholly owned stores and 20 Licensed Retailing Systems ('LRS') stores in six countries including Singapore, Taiwan. Malaysia, China, Brunei and Myanmar.

De Rucci Beddings Co Ltd
China Chief Consultant /
General Manager
Wang Bing Kun

“I personally agree with Professor Xu Meiqi’s views. Our company is involved in both manufacture and retail of De Rucci brand of products. In China currently, companies either focus on product development and production, or sales. The conflicts between retailers and manufacturers are growing. Manufacturers are depending lesser on retailers and turning to reach the end-user market by opening showrooms and flagship stores. Or, some are setting up integrated furniture malls by themselves. Many options are available and viable, so we won’t put all our eggs in one basket.

Indeed, the consumer market in China is fragmented. De Rucci’s products are targeted at the middle class and power executive, as well as overseas markets with comparatively higher spending power. In view of the complex market needs, we believe in focusing on our target markets. At the same time, we are exploring the possibility of further expanding upstream and downstream.”

Lorenzo International Ltd
Executive Chairman /
Group Managing Director
James Goh

“Manufacturers do have sales channel limitations in China. Most of them are confined to and rely on huge furniture malls to market their products. All these furniture malls are extremely enormous in size, so the mall owners have difficulties addressing the various specific needs and expectations of each retail shop within the mall.

In addition, most furniture malls are located in city area. With higher commercial operations costs, the rent is never cheap. When transaction cost rises, there will be a call for higher revenue, and this leads to price competition.

In my opinion, it is advisable to stay away from retailing in mega malls. Instead, operate your retail store independently and also handle your own marketing and promotion programmes.

And in a country like China, we cannot cater to everyone. The income and demand gap will always be there in most developing countries and this is the problem encountered by most businesses. As such, we only focus on and cater to the middle to middle-high market segments and customers.”