Joint interview with Mr. Franky, Manager of Shanghai Sihe Wood Company, by four media (International Wood Industry & Floor Covering News & Flooring Professional Magazine & Parquet International magazine)

Franky: Global economic crisis is over there, nobody really knows when it will recover. I think 2009 will still be very difficult because nobody knows how heavy all the stocks are everywhere; I feel positive about 2010 but it will surely become different approach. Chinese companies will have to penetrate themselves deeper into the overseas market.

We export more than 90%, our export goes down, every body fight for orders. We invest on own warehouse, we hire 4 people. We found distributors. We need to build dispatch form for export in US, 2 or 3 years, every body come to China, but that time has gone, every body know the factory, has experienced, I don’t mean negative, I am not here being negative, I just tell the reality. We are very strong in Canada, but we are never strong in America. We have to go a platform that takes time, but I think long term it is definitely the right direction. We were only working in Belgium, it was small. We merge by the end of this year, this is very important to build out local market. As for export, more sale and service is put in Europe and America.

Distribution model in US is different from that in Europe. In long term there are a lot of pressures now, all body has stock, we have stock, first thing we should get rid of the stock, you sell it at crazy price just for cash flow. We see a lot of small customers everywhere, they are not really buying, but if you are approaching to Europe, they really buy.

What Sihe is doing now is to increase domestic sales and give more service, fast reaction and no mistake in US. and Europe. We ship right stock over there; we try to run faster than before. We also try to brand one step by step.

In Europe the professional market is going down, but we strongly emphasize the DIY market there with direct sales and we are successful here.
 
Chinese society is very flexible, it is not like in Europe or America, if the industry disappear, we really struggle, it also struggle here in China when industry disappear, but what I want to point out China is really very flexible society. I can find FSC material, we can do production here in China, but we will have to move service to Europe and America. We produce products here according to rules needed, it is all about price, not really have to make money in Europe, if we can make money here, why do we have to make money in Europe. Here we still have competitive edge compared to the European or American sales organization. Actually in European market, we are not making money.

Marketing channels of Sihe includes three major lines: retail stores, project business and OEM, project are done with architect, OEM is done with branding. We have our own brand going to our own store. OEM just starts, project business takes biggest percentage. Retail store is very competitive. For US market, we are doing our own brand, it is tough, but I think it is on the right way.