(April 30, 2007) — One century ago, a Turkish man started a trading business importing silk and spices from China to the Near East and Europe. Today, the same family business, now named Irak Plastik AS, ships goods along the same route. What's changed is the content. Irak is currently sourcing plastic household items from China.
Instead of locally grown spices and silk worms, China is now processing resin from South Korea and other international suppliers and exporting the final products back to the global market. That's how globalization defines the manufacturing sector in this era.
Then, what drives the flow? The U.S. market is saturating, with competition between domestic producers, as well as with counterparts from lower-cost countries. To shift from a price-cutting race, producers are using design and innovation to differentiate their products, add value and raise margins.
One company trying that strategy is Shanghai Great Concord Industrial Co. Ltd., which exhibited for the first time at the recent International Home and Housewares Show in Chicago. Here is a plastic processor that combines strong design and engineering capability in Japan, resin sourcing from South Korea and Taiwan, and efficient manufacturing in China. The products sell very well in Japan, where quality and style is emphasized. Wouldn't it only make sense for them to win the U.S. market as well?
No. The company, which displayed hangers, storage and organizational items, was disappointed by the response. Low traffic at the booth showed the lack of interest from U.S. buyers.
Shanghai Great Concord's products are more like gadgets than regular hangers and containers. The hangers can fold for portability and for inserting them into collars without overstretching clothes. Vice President Robert Lee calls them “smart products.” Design is the selling point and the focus is on details and versatility.
Lee was puzzled by the lack of interest. He concluded that his firm's products don't fit the needs of most U.S. consumers.
The items are small and delicate with a cute Japanese style. I have a hard time picturing them being used in a four-bedroom house with a two-car garage in suburban Chicago. Unlike Tokyo and Osaka, Japan, space is not so much an issue in the United States. We don't squeeze everything to its minimum size.
The flattening of the world, be it in finances, transportation or technology, does not erase local characteristics. Different consumers have different needs. Different markets demand different functionality and style. Color trends vary from Beijing to Boston.
Certainly global competition and industry overcapacity have given retailers power, but the supply chain doesn't end there. The ultimate drive still comes from consumers.
It may sound cliche, but consumers need solutions more than products. They want products with the best combination of ease of use and value, that are customized to fit their closets and that blend well with their decorating scheme. Local producers are more likely to know those criteria and how to meet them.
Sun is an Akron, Ohio-based Plastics News staff reporter and China specialist.