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From NC to China: Reviving the state’s furniture industry

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This is a 3-part series on North Carolina's furniture and agriculture export relationship with China. Nicole traveled to Beijing in April as fellow through the International Center for Journalists.

BEIJING, CHINA-On a Tuesday afternoon in mid-April, the sounds of Joe Nichol's "Revelation" play softly through furniture store speakers. It's country-western music at its finest, describing the American spirit in times of strife.

Customers peruse the second floor of C&U International's showroom, looking at living room and bedroom sets, new designs by Hickory, North Carolina-headquartered Baker Furniture.

But this furniture store isn't in North Carolina. It's not in Music City where you'd expect to hear a bit of Nichol's tunes.

It's in Beijing.

"We are focused on the American furniture in our showroom so we want to put the American feel here so our customers can feel the American culture." said C&U sales director Yang Wang, who uses the American surname "Johnson" when dealing with Western customers. "And right now most Chinese people like the American music."

C&U International is located in Beijing's Chaoyang Business District, and is licensed to sell Baker, Lexington and Century brands.

C&U's marketing strategy launched into place two years ago, when the popularity of American-brand furniture sky-rocketed. The new trend is leading manufacturing jobs once lost to China right back to the United States, with North Carolina becoming a huge beneficiary of jobs and export revenue.

"There's a lot of money out there in China and they're interested in investing--and investing in the United States." said Michael Padjen, director of the International Trade division's furniture export office with the NC Department of Commerce.

As it stands now, China is the fifth largest importer of North Carolina-made furniture, behind Canada, Japan, Saudi Arabia and the United Arab Emirates, but the fastest growing importer of the goods. Padjen says growth is at 260-270% a year. Last year, Padjen says North Carolina exported $40 million worth of furniture to China, or 23 percent of all U.S. furniture exports to the country. Forty percent of those exports are shipped out of North Carolina and Virginia ports.

"It's a huge market. They have more smokers than we have people. They have more babies than we have people. They have more consumers, and that's a huge opportunity,"said Vasyl Taras, an international business and management professor in the University of North Carolina at Greensboro's Bryan School of Business and Economics.

The trend toward buying American in China is in sharp contrast to headlines that described the Piedmont's furniture industry in the late '90s and early 2000s. That's when companies like Thomasville were closing down local shop and shipping jobs overseas to China. Two years ago, the story began to change.

"China may not really be a threat," he said. "China may be our hope."

The market points back to China's growing middle-class, an upper three to five percent of the 3 billion population with an outstanding buying power and desire for western goods.

"This is the customer that’s been to Europe or America before. They have the experience there so they like our furniture so they come here," said C&U's general manager, Feiyan Wan.

Brand consciousness drives American-made product sales.

"Here in the United States, I don't even know who made my furniture. I don't even care. In China, they do," said Taras.

Wan and Wang said their customers don't mind the six month wait to receive custom case goods, either. They like to ensure and prove the product is from America.

Ed Morris, Baker's director for Asia Pacific sales, said the customer is also willing to pay--most times about 15 percent more than the furniture would be sold for in the United States.

"They don't mind the price," said Morris, who is based in Hong Kong. "When they first have money as a culture, they're going to spend it on an outward display."

"It's genuine wealth for sure," said Morris, who points out the stately, classic designs are most popular.

This is what we found in a wealthy Chinese business woman's $6 million diplomatic compound condo.

Because her husband works for the government, the couple did not want their names used.

We were able to see half a million dollars worth of Baker and Lexington brand furniture recently delivered to the couple from C&U International. The North Carolina brands set atop marble floors and beneath a Swarovski crystal chandalier.

The couple's designer said they like the furniture to be unique.

"The customer like the American couches so when they buy the American brands, they can feel the freedom of life," she explained. "Just like the American couches. Freedom."

WHY NOW? IT'S DOLLARS AND CENTS

Morris said his company's effort to market to China really ramped up three years ago with the recognition of the growing middle-class. Baker is now sold in seven Chinese cities, and Morris says they plan to be sold in up to 22 cities by 2015.

"It will certainly be by 2015 our second largest market outside of the United States," said Morris. "It could overtake that."

Recent headlines have highlighted furniture jobs returning to North Carolina from China, or being created because of China's demand.

"China is getting more expensive to manufacture. Asia is getting more expensive to manufacture," said Padjen. "You've got choices. At that point, you either move to another country with low cost labor, but you've got issues with training. You've got issues with quality. You've got a lot of other issues. Or you look at the difference between that cost and cost of making it in the United States."

"When you look at $125 sofa from China, to get it to North Carolina and try to resale it, the freight is $125," added Klaussner Furniture Industries' VP of International Sales, Bones O'Briant. "So at $250 we can make that sofa here."

From foam to frame, all of Klaussner Furniture's goods are made in North Carolina. The Asheboro-based company is approaching the end of a multi-year plan to get their furniture in the Chinese market by 2013. It would mark a huge potential turnaround for the company that's most recent plant closure resulted in 130 jobs lost in 2008.

"We'll hire more people. We'll grow. We'll help our town. Hopefully people will even move to Asheboro," said O'Briant. of a move into the Chinese market. "We're confident we can, too."

On Friday evening at 6 p.m., Nicole takes a look at North Carolina's $542 million a year agriculture export business to China.