Wallpaper maker has China covered23rd Jan '17
In the latest in the Routes to Growth series on trading in Asia, veteran exporter Andrew Brown tells Rebecca Burn-Callander how he got stuck in
Company: Graham & Brown Trading in: China Sector: Interiors
China offers huge opportunity, but is fraught with danger for the uninitiated, according to one veteran British exporter. And if the idea of having your products copied gives you chills, you’d be advised to steer clear.
Graham & Brown, the upmarket wallpaper and wall accessories business, has been selling in China since 2009, and now generates £3m of its £90m turnover from the People’s Republic.
There have been many tough lessons learnt along the way, says chief executive Andrew Graham MBE. “It’s a massive market with a seventh of the world’s population, but it’s not easy to build a business there.”
“You can’t just send someone from Europe, they won’t be taken seriously”
One big issue is that the Chinese consumer is very price conscious. Everyone is looking for a bargain and the cheapest products often win. This situation has been exacerbated over the past 12 months, when economic shocks have spooked consumers.
“The economy has softened over the past year and it’s more competitive than it’s ever been,” Graham says.
Graham & Brown has used its “Made in Britain” credentials to charger higher prices. “Because our products are manufactured in the UK, they are tremendously expensive vis-à-vis domestic products,” Graham explains. “But we’re only playing in the top quartile of the market.”
To get in front of affluent consumers, Graham & Brown sells its wallpapers through a network of showrooms across the country. It operates a soft franchise model.
The network of 300 showrooms all pay to sign up and are then taught the secret sauce to selling Graham & Brown ranges, as well as those from its guest designers, such as Kelly Hoppen, Steve Leung and Laurence Llewelyn-Bowen. These agents are found by attending big homeware and décor exhibitions in China.
Graham & Brown has also dabbled in e-commerce and sells some lines through Tmall, China’s answer to Amazon, but it’s not a strong route to market for the company, Graham says. “Ninety per cent of what we sell there is through bricks and mortar stores.”
To give the British brand more mainstream appeal, half of the products sold in China are made in the UK but the other half are now designed by Graham & Brown and sourced locally to offer a less expensive option.
The company has also tweaked its range to suit Chinese tastes. “In the UK and Europe, people like more flamboyant, contemporary products, but in China they are more classical,” says Graham. “We sell a lot of damasks and baroques [classic patterns], the kind of swirls we would remember seeing on our grandparents’ walls.”
The Chinese market also prefers classic colour combinations, such as green and gold. Red is popular because it is seen as a lucky colour.
Whenever Graham & Brown hits on a popular wallpaper design, however, it is soon copied by local manufacturers.
“They are brilliant at copying stuff,” Graham says, wryly. “A lot of our designs have been copied. You can create a range that sells well for 12 months but then everyone else starts doing it so you have to move on.
“If this happened in the UK, it’s easy to sue over copyright infringement, but in China it’s not easy to do that. If you can’t cope with being copied, this is not the market for you.”
To counter the effect of copycats, Graham & Brown refreshes its range often and is bringing out a line of furnishing fabrics and more expensive fabric wallpapers that are much harder to copy.
Graham says any entrepreneur hoping to succeed in China must find Chinese people they can trust.
“My bank introduced us to Wei Liu, who heads up our business out there,” he says. All of the company’s 30 staff in China are locals. “You can’t just send someone from Europe, they won’t be taken seriously.”
Over the years, Graham has travelled to China 30 times to meet partners and suppliers, although this has now settled down to around twice a year. “There’s no way to run a Chinese business from here,” he warns. “It’s a fantastic country – like nowhere else in the world – but it’s hard work.”