Reporter: Mr. Kang, how do you do? Today we will first talk about the Living Style Cup "National Interior Wall Art Design Competition". Living Style has named the competition for three consecutive years. As far as I know, there are many competitions in the home furnishing industry, but why did you only choose the wall art design competition?

With the help of wall art design competition to promote the brand and attract new designers

Alan Kang (Jia-Xiang): This is the third year of the Wall Art Design competition. For three consecutive years, we have cooperated with Sina Leju to do a title action. In fact, let's go back to the brand of Living Style first. Its positioning in the whole Shanghai Suwalper Wallpaper Co., LTD., and even in the whole wallpaper industry, because it is a purely high-end brand, and its products all come from the United States and Italy., and some of them are British products. Globally, its style design or production technology should be the top in the world. When the first session was held, this brand had just been launched to the market for less than a year, because our product positioning has two regrets. First, we need to promote the brand to a wider audience, let more people know the brand of Living Style, and even know the Shanghai Suwalper Wallpaper. The second part is because I think wall art design is relatively rare in the entire home furnishing industry circle, because most of them are interior design competitions or comprehensive-scale competitions, and relatively few are just for wall art design. We also hope to discover more rookies and young designers who are interested in wall art design through such design competitions. Of course, I also hope that through such a platform, the product will be promoted to a new generation of designers or more experienced designers who are more interested in wallpaper applications.

Reporter: It's a mutually beneficial process.

Alan Kang (Jia-Xiang): Yes, that's right.

Reporter: It has been successfully held for two years. From these two years, apart from the two purposes you just mentioned, what do you think companies have gained the most from it?

Alan Kang (Jia-Xiang): In the past two forums, if I remember correctly, more than 400 design works were collected. From the first session, there was only the space group, which was the design of the wallpaper application group, to the second session for the application in addition, we bring the pattern group, that is, the pattern design, into the category of this competition. During this process, I will talk about it in two places. The first one is about our company itself. We have also held a lot of activities. For example, last year, we traveled to seven cities and held forums. Every forum About 100 to 200 designers were invited. In this forum, let more designers know about our brand and the product of wallpaper, because wallpaper is a relatively new industry. Although many designers study interior design and furnishing design, they don t know much about wallpaper. Not very thorough. Let's make more progress on some product characteristics in terms of technology, and then understand. We have also learned a lot from designers. What kind of needs and ideas do designers have for products like wallpaper, we can implement and improve them. It is also because of this that the so-called master cross-border design wallpaper came out later.

Reporter: You mentioned cross-border design, we can have a good chat. Through the competition, company recommends wallpapers to designers, and in turn, designers give feedback to the company, which also attracts many designers to engage in wallpaper design. What do you think of the phenomenon of cross-border design wallpaper derived from the design competition? Based on this, what do you think will be the future trend of wallpaper design?

The intervention of cross-border design triggers the change of domestic wallpaper style

Alan Kang (Jia-Xiang): Wallpaper design actually starts from the origin of wallpaper, which is craft production. The origin of wallpaper has been about 200 years. During these 200 years, the development process is the leader of Western mainstream design, because most of the consumer groups who used wallpaper in China in the past few years belonged to relatively High-end villas, or relatively high-end real estate, use wallpaper as a product, so the designers of relatively high-end villas have a certain understanding of wallpaper.

But because in the past few years, most of the popular styles of wallpapers follow the style of decoration, which are more European or American, and some are even more pastoral. But in recent years, I think the design of wallpapers has changed, for example, because Young people's needs for personalization and the use of wallpapers in small spaces are slowly emerging, so the design style of wallpapers has begun to undergo some changes. During this transformation process, we also had some exchanges with these designers, who are our real front-line consumer groups. In fact, they have a lot of ideas that go beyond the original wallpaper design framework. So, after we had such an idea, we realized whether it is possible to design cross-border. Change the wallpaper design to a new style, new idea, and new field.   In the first wave of this time, we have launched about ten designs, some of which are made by some famous designers in the field of interior design and furnishings design.

For example, Mr. Bai Qing-Cong helped us make a series of wallpapers in blue and white porcelain color, like Mr. Dai Kun helped us to design the Oriental series of wallpapers. I think this is to find a breakthrough point for the design of wallpapers. Let's first reflect on that all products must have a new point in the design to let more consumers, or more general designers think that the original wallpaper is such a thing. I think this is our original purpose.

Reporter: You just said that our domestic designers joined the wallpaper design, which changed the style of our wallpaper in the past. Is it a bit of a Chinese style change, such as the blue and white porcelain you just mentioned.

Alan Kang (Jia-Xiang): It can be said that in the current first wave of cross-border design, we have seen a lot of Chinese style elements appear, which is a part that was relatively lacking in the wallpapers introduced from the West in the past, but I think more should be on the side of these designers. He thinks what kind of products they need to use, and what he needs to use, so he will prefer to design such wallpapers to match his design style. I think this is the thinking that is really at the forefront of design.

Reporter: Do you think the design of the domestic wallpaper industry will be such a trend in the future?

Alan Kang (Jia-Xiang): I think wallpaper design will become more and more diversified in China, because the proportion of wallpaper currently used is still very low, and the gap between groups of needs is quite large. We just mentioned the so-called European-style and American-style wallpapers, which may be more suitable for use in villas. In the space, but we also see a lot of wallpaper usage styles that are differentiated according to age groups. For example, people over 40 or even 50 years old like to use warm colors and even design styles with a little flower. But among young people, we see a lot of abstract lines, and many of them are products with a little gray-blue tone, so I think this trend should mean that we need to design, produce, or introduce more wallpaper designs, which are more diverse. It will satisfy more and more people with different needs. Reporter: In fact, you also mentioned that there is still a huge gap between domestic wallpapers and foreign countries, and most of them may be imported from abroad. What do you think is the biggest difference between our domestic wallpapers and foreign wallpapers? As the leader of domestic wallpaper companies, how do you think companies should correctly guide domestic wallpaper consumption？

Alan Kang (Jia-Xiang): I think this topic is relatively persuasive for our company, because our company is also in the top position in terms of production all over the country. In terms of imported brands, it meant to introduce foreign brands, which were highly valued in recent years. From a point of view, it should be in the degree of change in design. In fact, the wallpaper abroad could be changed with many fabric, clothing trend and popular elements to a certain extent.

It is true that foreign countries are ahead of China in fabric and clothing at present, but for wallpaper, we can see that China has gradually trained some designers in recent years, and gradually kept pace with foreign countries in production technology. Mainly in the consumer market, because China's consumer market is currently the world's second largest wallpaper consumer market, if only in terms of quantity, so provide a lot of wallpaper enterprises so-called training opportunities, it can according to different price range, according to different styles, to design a variety of different product patterns out, to try the market, to test the market. I think after such action, China should be able to develop more mature wallpaper companies in three to five years, at least there will be two or three domestic, I think there will be at least two or three, can compete with the international wallpaper companies.

China's wallpaper consumption habits are rising and the market potential is huge

Reporter: But I read a set of data. At present, in Japan, South Korea, and European countries, the penetration rate of wallpaper in households may be 80%, but in China it is less than 5%, and there is still a big gap in consumption. As you said, we are the second largest wallpaper consumer country in the world in terms of quantity, but the gap is too big, not a little bit, and there is still a problem of guiding consumption.

Alan Kang (Jia-Xiang): Yes, this question is quite broad. Let me share a piece of data first. Our company has done some market surveys in the past year or so. We have gone to different building materials markets across the country and a few more important cities conducted questionnaire surveys. The objects of this questionnaire include dealers and general consumers. However, these consumers have conducted a series of statistical surveys according to age, income, whether it is the first decoration or the second decoration, etc. There are several interesting data. The first one is the future use of wallpaper by consumers, and I mean the future. Current use refers to the consumer satisfaction of using wallpapers now, which is more than 79%, and it is 79% in several important cities across the country. The idea of using wallpaper in the future is more than 40% of home paint users, who are interested and have ideas and hope to adopt it in the future. This is the first interesting data to share.

The second interesting data that can be shared is that most of the wallpapers in the country are used in the first decoration. About 93% of the wallpapers are used in the first decoration, and only 7% are used in the second decoration. I am referring to the replacement of paint for wallpaper, not wallpaper for wallpaper. From such data, it can be seen that the domestic consumption of wallpaper is still at a very, very shallow stage. Looking back at foreign countries, in fact, foreign wallpaper companies have also undergone a major reshuffle, and have also gone through such a development process. There used to be so-called counterfeiting and plagiarism, there used to be so-called vicious competition and price competition. At present, after nearly a hundred years of development, the foreign wallpaper market is now in a state of stable consumption. We share the data of last year here, and the whole world removes China. In other markets, the per capita usage of wallpaper in the rest of the world is about 0.7 rolls, which is about 3.5 square meters, and the average per person is 3.5 square meters, including Africa, including all places that may be less likely to use wallpaper, but if you add China In other words, the per capita consumption is only 0.27 volumes, and the world is about 1.5 square meters, which is a very large gap. Therefore, the Chinese market space can be said to have huge room for future development, but if you learn from the development process of foreign countries, it must go through a stage of reshuffle, and then gradually several benchmarking companies will emerge in the industry. , these benchmarking companies have a large enough business scale, can formulate some industry standards, can formulate some standards for publicity and advertising, and can let more consumers know wallpaper through more media, so through these leaders Enterprises can gradually popularize this wallpaper. I expect that within ten years, the penetration rate of wallpaper should be able to reach a relatively mature standard, that is, 18% to 20%. More than 20%, it needs to rely on the efforts of leading companies. The gap between the North and the South, the East and the West, and the economic development conditions will also have a great impact on the proportion of use.

Reporter: But as far as I know, I am not very familiar with the wallpaper industry, but in the past two years, the wallpaper industry can be described as a huge profit industry, just like the floor and wooden door industry at the beginning, many people frantically poured into it. But we have also seen that the penetration rate of domestic wallpaper in home decoration is so low, and there are so many enterprises, and there is a serious overcapacity. In addition, you just mentioned that there are price wars, and various phenomena such as imitation and plagiarism. Do you think the wallpaper industry has reached the stage of reshuffle at this stage?

Alan Kang (Jia-Xiang): In fact, there is no doubt that the second half of this year, this year is the whole household industry, not only wallpaper, may be the whole household industry is relatively not optimistic year, wallpaper just met such a time point, in terms of our capacity estimate, probably now the proportion of excess capacity is nearly three to four times.

Reporter: So high?

Alan Kang (Jia-Xiang): Yes, three to four times overcapacity. But under such circumstances, you will feel more and more that reasonable profits need to start to appear, because the excess capacity of three to four times can still support the survival of so many companies, which means that every company, I mean not only production Enterprises also include all front-line sales companies. The relatively high profits of these enterprises will in fact lead to intensified competition in the entire industry in the future. Such intensified competition will go through a two-to-three-year reshuffle. In such a reshuffle stage, high debt ratios, the lack of core competitiveness may be design, maybe channel management capabilities, or the lack of strong cost advantages. After this wave of reshuffle, I think profits will begin to decline. These leading home furnishing companies have similar turnover, profit margins, etc., so that there is a way to maintain the survival of the entire industry. To build a brand wallpaper enterprise, the core competitiveness and management capabilities are particularly important

To build a brand wallpaper enterprise, the core competitiveness and management capabilities are particularly important

Reporter: In the first half of the year, I talked with the leader of a materials association. He said that in domestic indoor materials, including wallpaper diatom mud and paint, no company occupies a particularly large proportion of this industry. At the same time, the wallpaper industry is particularly chaotic at this stage, and the overall market is not good in 2011. As a leading company in the industry, what do you think of this situation?

Alan Kang (Jia-Xiang): The home furnishing industry is the same. Unlike other industries, the home furnishing industry can achieve the so-called monopoly. In most cases, the market is king, that is, the competition of distributors or distributors will determine us. Competition between suppliers and manufacturers. The question you just mentioned is, in such an environment, what kind of company can support it.

Reporter: Before the reshuffle is like the darkness before dawn, it is very difficult, and it is quite difficult to persevere until the end.

Alan Kang (Jia-Xiang): I want to go back to the companies I mentioned just now that can survive, and let’s talk about it in more detail:

The first one is to have core competitiveness. Core competitiveness is actually very important. Taking the wallpaper industry as an example, its product design and the ability to innovate, because 1,000 to 2,000 new products are launched every year. The ability to maintain the launch of products and the ability to accept consumers. When consumers' tastes change, can you follow the market changes at the fastest speed? This is whether your design can keep up with the market, which is one of the core competitive factors.

The second channel management ability, we are in the industry now, whether it is the wallpaper industry or other home furnishing industries, many companies are slowly making brands. Brand means service, word-of-mouth, and all commitments. Is the product environmentally friendly？  How long is the service life of your product? Is there any follow-up service that can solve any quality problems you have? This series is a part of the core competitiveness. Who can do these things well and make consumers sure, because after all, product wallpapers and all building materials in the home industry are not fast-moving consumer goods. Most of them will be replaced after five or even ten years after purchase. So, in this consumption process, the power of word of mouth is very strong. If you have made an advertisement, but you have no way to provide these good additional services, it is better not to do it, because the good ones will be spread by word of mouth. Bad ones will be spread by word of mouth, and this brand is easier to die. I think that in the so-called darkness before dawn, in addition to doing a good job in your core competitiveness, as a business leader, you should pay more attention to the soundness of the entire company system, financial soundness, soundness in management capabilities, and cost management. The soundness of advantages, etc., I think it still revolves around these points.

Reporter: You mentioned design, channel, brand, and enterprise management just now. Which of these factors do you think ranks first at this stage?

Alan Kang (Jia-Xiang): I think it's enterprise management.

Reporter: I thought it would be design.

Alan Kang (Jia-Xiang): I will put design in the second place, because you can determine the direction of your enterprise through business management. If you want my products to be the most popular, and my products are based on quantity rather than quality, I hope my products can be cheap enough that everyone is willing to use wallpaper and can replace paint. You must have very, very strong cost control ability. However, if your position today is I want to go very high-end, go to the designer channel, you must have the ability to cultivate and train a group of channel talents, they are able to communicate with designers, have a purchasing ability. I think in fact any business strategy, strategic level of things, after you have clear positioning, your business management to move in this direction, other things will follow.

Reporter: We may have talked more about the industry just now, let’s talk about the situation of our company itself. We have been saying that the entire market is not optimistic this year. Many companies say so, and some people say that the second half of this year may be even colder, and it may enter a low point next year. I don’t know that we will start from January to September this year. How is the overall situation?

Alan Kang (Jia-Xiang): In fact, there are a lot of listed companies in the household industry. We can see some clues from their financial data. I can conclude two points from these financial data. The first is that the household industry is not as pessimistic in terms of sales as everyone said, because there is still a certain demand for products in the whole market, which is only limited by the inflation this year. We have time to talk about inflation. It will be found that all raw materials, especially raw materials, include personnel costs, which have increased significantly. I found that most of the listed companies have been eaten up 15% to 20% of their gross profit here. We can say that the gross profit of most home decoration enterprises may be in this range. In other words, the rise of this cost will leave many home decoration enterprises in a situation of zero profit, that is, no value-added space.

The second point I summarized, we can also find that among the listed companies, some of them are ranked first or second in the industry, especially the first companies, and we will find that their performance continues to grow. Their net profit is still growing. So, I think in the overall environment, in fact, if you can climb to the second place in every industry segment, you will not be able to survive after the third place.

Reporter: This is your overall understanding. What about the wallpaper industry?

Alan Kang (Jia-Xiang): In the market of the wallpaper industry, people generally think that the profit margin is relatively good. I think that the wallpaper currently has a certain profit margin on the production side or the distribution side. Will it get worse in the next year? There is no way to see that kind of clarity, that is, things on the demand side. But I'm pretty sure that the supply side is already obviously in surplus, and there is also some price competition on the price. But no matter how you compete with your price, if the demand side does not improve, your price competition is meaningless, because no matter how low your price is, no one will recognize your product, so I think in the next year, The demand side is not sure, but the competition on the supply side will be very, very severe. From the perspective of our own business, of course, in terms of performance this year, there is not much difference, and there is not much difference compared with last year. Of course, the profit will be affected by some factors I just mentioned, but I think it mainly depends on the changes in the demand side. Other industry executives may see more and broader terminal markets, and they think that next year will be worse, but I still think it is just a channel change, because the demand is changing now.   For example, the original retail market is very prosperous. We can observe that the so-called building materials city and home furnishing city are very prosperous. Every day, they are crowded. When you go to the first-line market, you will find that maybe less than 1/3 of the last year, but for enterprises, the volume is still maintained at a certain level. Where do these volumes go? If we go to segmentation, in fact, many of them go to fine decoration, when it comes to direct cooperation with designers, I think these are trends that you can pay more attention to in the future.

Reporter: But I heard from my colleagues that there was a wallpaper exhibition in Shanghai some time ago, and after interviewing all the bosses, everyone talked about entering the second-hand housing sector in the future, and maybe the wallpaper will also target second-hand housing decoration.

Alan Kang (Jia-Xiang): Do you mean affordable housing or what?

Reporter: Second-hand house, second decoration.

Alan Kang (Jia-Xiang): The second decoration needs to be promoted, and this promotion cannot be done by one or two companies, because the second decoration is a good topic, such as through the platform of Sina, or through more platforms such as home decoration magazines, etc. Because the secondary decoration is changed from paint to wallpaper, this is a psychological or physical change for many consumers. We said that we want to focus on the second-hand housing market and make a promotion, so that we can make fundamental changes.

Reporter: In fact, many consumers still have a lot of misunderstandings about wallpaper. Not environmentally friendly, not strong... Too much too much

Alan Kang (Jia-Xiang): Of course, we can have a hundred kinds of answers to explain your question just now, how is the wallpaper produced, what kind of things are matched with it, in fact, it is environmentally friendly, and it can solve the problem you just mentioned through good construction. But I think a core point is how to push such a concept to consumers.

Reporter: It's too difficult, we all ask such questions in home furnishing.

Alan Kang (Jia-Xiang): Yes, it's not impossible, but it takes a long time to make efforts. This long-time effort goes back to what we just said, that is, word of mouth. If two of the ten families around you use wallpaper today, and the effect is very good, and there is no problem, then the other eight families will start thinking when they decorate. Maybe this will be faster than your company spending one billion or two billion a year, and ten companies spending one billion or two billion a year. The whole publicity effect will be faster. I think it will take a long time to accumulate. This is also what we have been talking about brand building. I think that the way to build brands in China is to rely on money and a lot of advertisements, and then let consumers get a little red in the myriad of green, select it and choose this brand as the material for home use, but is this material really the best? In fact, no one knows. I think most brands still depend on time accumulation. The consumers who have really used this brand are satisfied, and then you also establish a good service system, which is far more important than others.

Reporter: But to build a century-old brand, there is a long way to go.

Alan Kang (Jia-Xiang): I think it's better to go back to what I just said at the beginning. In fact, the satisfaction of wallpaper use is basically high, and many paints are used. As you said just now, if you have decoration in your home, you will also consider wallpaper. Is your home using paint now?

Reporter: Yes.

Alan Kang (Jia-Xiang): Everyone is very interested in switching from paint to wallpaper. I think such a development method has a natural space. So, what we focus on is that at least during this period, some companies may increase their popularity by going public and do a lot of media advertising. He can let many consumers quickly understand the benefits of wallpaper. Wallpaper is a very good product. I think it is a big deal. Part still must go through the accumulation of events.

Reporter: Actually, talking about brands, this topic is too big for us to finish today. It is September now, and we may all pay more attention to the Golden Nine Silver Ten soon. I don't know if you are optimistic about this year's Golden Nine Silver Ten?

Alan Kang (Jia-Xiang): There is an old Chinese saying that if you have money or not, you must find a wife for the New Year, so this is why many people get married, buy a new house, renovate, or move a new house before the end of the year. This is the so-called rigid demand. I think no matter how the market fluctuates, there will still be a peak decoration season in September, October, and even November and December. As far as the wallpaper industry is concerned, gold, nine, silver and ten are not so strong. Most of us are in November and December, and sometimes one month in November and December can cover the previous two months or even two and a half months, because wallpaper is the tail of decoration. The wallpaper is different. Most of the Gold, Nine, and Silver Ten products are hardcover products, such as flooring and ceramic tiles, so they often say that it is our turn to enter the market in November and December. Personally, I am quite optimistic about November and December. Regardless of the ups and downs of performance, this rigid demand is still there.

Reporter: From September to December, with such a long preparation period, what big moves will we make?

Alan Kang (Jia-Xiang): We have plans for this year. First, in terms of channels, this year we Suwalper Wallpaper has made a new CI visual system, starting again, and reorganizing our nearly 30-year-old company. The products are divided into three brands, Suwalper is our core brand, and of course there is Living style, and there is another relatively affordable brand, these three brands. As far as Suwalper wallpaper is concerned, specialty stores are also in full swing across the country. I hope that through the period from September to December, with the launch of each of our specialty stores, we will also cooperate with local dealers to do some promotions. In addition, we have accumulated quite a lot of publicity resources from September to December, because these are all arranged in our annual advertising budget. From September to December, whether it is print, Internet, or other media Yes, we will spend a lot of time here to do a lot of publicity. We hope that through such publicity, we can seize the best quarter of this year and basically improve this year's performance to a higher level.

Reporter: Well, that's all for today. We hope that our products will be liked by more consumers.

Alan Kang (Jia-Xiang): Thank you.