Expanding growth and profit on China’s high end furniture market

A global company that provides products (high-end furniture) and services for efficient workspace solutions wants to expand their market presence in China.

In the first part of the project, ARC Consulting delivered a business plan to the customer containing key information:

  • Thorough review of China’s market potential
  • Description of the value chain
  • Competition
  • End-user mapping

ARC Consulting was then tasked with writing a road map to increase the client’s presence in the region. The objective was to leverage a network and capabilities of local players such as local distributors, project management (PM) and design turnkey companies to enhance market presence and accelerate growth.

Office space

The market research done in the first phase showed a positive outlook for the high-end furniture market in China and provided a clear picture of the market conditions. With the detailed report and information provided by ARC Consulting, the client was able to confidently decide to move forward knowing how and where to focus on. After a thorough analysis and decision process, the strategy chosen was to appoint one approved distributor to cover south China and appoint suitable sales partners (example, project management, design, real estate and property companies) for the other regions.

The next step was to set a road map to implement the expansion strategy.

ARC Consulting used a well-proven approach based on 3 key steps to find the ideal partners for the client:

  • Step 1: Preparation and Search
    • Use the data from the market research and further in-depth mapping of the industry to define pool of potential partners to contact
    • Prepare partner evaluation framework including questionnaire, knock-out criteria and interview questions
    • Contact potential partners and look for their responses
  • Step 2: Partner Evaluations and Screening
    • Evaluate and benchmark the identified types of partners based on responses
    • Build a long-list of potential partners
    • Conduct in-depth interviews with potential partners and filter to a targeted short-list.
    • Organize a specific workshop catered to the short the listed partners
  • Step 3: Partner Approval
    • Design customized negotiations agendas for each partner
    • Initiate contact and conduct negotiation meetings
    • Agree and finalize Memorandum of Understanding (MOU) with the right partners

The most important activity was to find a distributor in the south region of China. An initial pool of 64 distributors was identified to be worth consideration (office furniture distributors, in Guangdong province, properly registered company) and after first round phone interviews and emails to check on their professionalism and interest in working with our client, the list was narrowed down to 22. From the 22, a short list of 10 was selected based on their explicit interest to cooperate and right capabilities to support our customer.

The 10 short-listed distributors were then visited and rated against the following weighted criteria:  Sales channels, logistics, warehousing, assembly, installation, after-sales, investment capabilities and attitude. A key challenge found was that distributors with complete set of capabilities and that met the specified criteria well were usually already attached to leading brands, so their dedication for a new brand would be limited. In contrast, less developed distributors that did not have the hindrance of other principals, did not have the same market presence and capabilities.

ARC Consulting finally recommended 2 of the short-listed distributors for the client to consider seriously and sign MOUs.

For the other regions in China, ARC Consulting made many contacts with different stakeholders in the value chain to promote the brand of our client. In summary:

  • Over 70 senior managers at MNC project management companies (ie. Cushman & Wakefield, CBRE, Savills, Colliers, etc.) were contacted and presented with information about our client. Their contact information was provided to the customer for further discussions.
  • Discussions with 30 design and turnkey companies were conducted to understand their potential fit as a sale partner for the customer. The conclusion was that although not as important as the PMs, they are significant influencers in the purchasing process and thus it is important to keep them in sight when following-up with construction projects. The contact information was shared with our customer to build their database and network.

As deliverable for this second phase, ARC Consulting carried out a partner search and evaluation project to give our customer a good understanding of the options available to them. 2 highly qualified distributors were recommended to the customer to cover south China, and integrated contact information of different stakeholders from other regions is shared with the customer that contributed to build up their database and network.

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