A year after acquiring a powerful local rival, HNI Corporation, the second-largest office furniture manufacturer in the world, has opened a Lamex showroom in Shanghai.

US-based HNI, also a leading producer of gas and wood fireplaces, purchased Lamex, a privately held Chinese office furniture maker, for $70 million last January. It plans to grow the subsidiary as a means to tap the fast-growing Chinese market.

China, with relatively low labor costs and large consumer demand, has seen an influx of international furniture companies, especially when furniture import tariffs fell to zero in 2005 in line with its WTO commitment.

Lamex was founded in Hong Kong in 1977. It entered the mainland in 1990 and established a plant in Dongguan where today more than 2,000 members make products for local as well as global markets, generating sales in excess of $70 million.

"Lamex is really the majority and core of how we prepare and invest in the Chinese market," said Stan A. Askren, HNI's chairman, president and chief executive officer.

He said the company is investing in China to grow Lamex and make use of its strong branding, satisfied customers and dedicated employees.

According to HNI, the size of China's office furniture market is something like $2.5 billion to $3 billion one of the largest in the world. Behind this demand is the construction boom in China's major cities that has resulted in a plentiful supply of prime office space.

Meanwhile, with China's gross domestic product growth rate remaining at 10 percent or above, as well as the inward flow of foreign investment, the market demand for new offices from both Chinese and foreign companies is on the rise.

"We purchased Lamex for its brands, sales model and market presence, and we will use our other brands, products and platforms to supplement Lamex," said Askren.

"We share with them the best practice of the US or the rest of the world, let them pick ones that make sense for this market, which ranges from management practice, marketing, branding, selling, products and technology," he added. 

                                                                      (China Daily 01/26/2007 page14)

(For more biz stories, please visit Industry Updates)