Mark Lee is with Aries Consulting in Hong Kong, and can be reached at
IT WAS hard not to notice Lorenzo’s exhibition booth when you walked into Hall 5 of the 22nd International Famous Furniture Fair, which was held in Dongguan, PRC from March 16-20.
The Lorenzo pavilion was among the larger exhibition booths in Hall 5, occupying around 2,500 sq ft, and it was tastefully decorated.
Covering 5 halls and approximately 160,000 sq m, this Fair (commonly known as 3F) is considered one of the largest furniture fairs in China. This year, there were more than 500 exhibitors.
When I stepped into the Lorenzo pavilion, an all-familiar Singapore accent greeted me. “Morning sir, can I ask whether you are wholesaler or a retailer? We have the latest range of furniture which would suit your needs….”
A sales manager from Lorenzo made her self-introduction before I could open my mouth.
I introduced myself and met Mr James Goh, Executive Chairman of Lorenzo International.I asked about the size of the crowd.
“It is definitely smaller than in 2008 but we still see a lot of our usual customers and several new customers too. The crowd was larger in the morning but has dropped a bit after the lunch,” said Mr Goh.
“One piece of good news though: we are seeing much fewer furniture brand names participating in this year’s fair. This means that the consolidation in the furniture industry is already happening. Lorenzo is probably one of the few Singapore furniture brands that are participating in this fair!”
This year, Lorenzo brought in a whole new range of furniture design, catering towards the higher-end of the market. Scrutinizing the various exhibits, I realized that there were more wood-based products.
Mr Goh explained that wood-based products command better margins, and this was a strategy that Lorenzo was taking to avoid direct competition with the lower-end leather sofas.
"Do Chinese consumers really have so much purchasing power?”
I shot him a question – Do the Chinese consumers really have so much purchasing power?
Mr Goh chuckled and explained, “Singapore is a small market. Our 4 million population probably represents the same market size as that of Guangdong province or Fujian province. Investors in Singapore cannot visualize the size of the PRC market unless they come and experience it themselves.
”I believe China will be a powerful consuming nation for the next 10-20 years. There are 300 million consumers in China and that figure is expected to rise to 500 million by 2012. We are positioning Lorenzo to leverage on this tremendous growth.”
Echoing the same cautious tone that I heard throughout the exhibition, Mr Goh added, “However, each province has its unique characteristics. It would take a lot of effort and financial capital to conquer just one province. That is why Lorenzo is choosing to go through the Licensing Retailing Scheme (LRS) program. This will allow us to broaden our retail reach without incurring too much capex.”
Financials
For the financial year ended 31 December 2008, Lorenzo reported net profit of S$3.4 million on the back of 7.4% increase in revenue to S$95 million. The growth is underpinned by the increase in retail and Licensing Retailing System (LRS) business segments. To date, Lorenzo has 73 retail outlets.
