Moving From Mid-Market To Luxury On The Mainland Well-known as a mass-market, middle-class suburban furniture staple in the United States, Ethan Allen is one of many foreign companies reinventing themselves for China's consumer base with an emphasis on craftsmanship, brand heritage, and quality. On Tuesday evening, the company's Chairman and CEO Farooq Kathwari joined Asia Society New York for an in-depth look at the brand's China marketing strategy. During his talk, he touched on several important trends encountered by his company that we've been seeing across the China retail market: the growing power of a rapidly growing middle- and upper-middle-class consumer base, Chinese consumers' increasing focus on quality and craftsmanship, and the need for companies to differentiate themselves among a more competitive environment as the economy slows. Kathwari highlighted China's consumer base as an integral part of the brand's global profit strategy. "If somebody had said about five or seven years back we'll be sending container loads of lighting made in Passaic, New Jersey to China, they would have said it's a dream. That's what we're doing today." He noted that China now accounts for 15 percent of the company's wholesale business, and 70 Ethan Allen locations have been opened since the company began selling there in 2002. In order to appeal to this growing base, Ethan Allen has, like many other mid-range foreign companies, gone upscale in the country with a strategy of appealing to Chinese consumers' growing desire for craftsmanship and brand heritage. "The reason we are selling in China is because of our quality and consistency," he said. He noted that as Chinese consumers become increasingly interested in interior design, aesthetic choices are globally converging and the company does not see a need to make "China-specific" furniture. When asked about whether or not he held concerns about China's slowdown, Kathwari noted that it has made the furniture market, like other industries, more competitive. As a result, companies like his are making efforts to set themselves apart. "When there is a lot of competition, you've got to differentiate yourself," he said. "There is more competition … but if you have a brand that you can differentiate with quality, with service, design… and really be able to get that message across, you have an opportunity, especially at a time when there is a lot of chaos taking place."
