15 Dec 2016
Guangdong Enterprises Tapping Belt and Road Opportunities: Yulan Wall-coverings Uses Hong Kong Services to Meet International Standards
In order to ensure that its products meet the requisite quality and fire safety standards of overseas clients, the popular mainland wallpaper brand Yulan relies on inspection and testing services in Hong Kong. Now, by employing Hong Kong’s professional services which deal with matters such as market and financial information, Yulan is actively expanding its markets in Southeast Asia, Eastern Europe and other countries along the Belt and Road. In doing so, the company is also promoting the long-term development of its international business operations.
Famous Brand Expands Global Business
Yulan Decorative Materials Co Ltd (Yulan Wallcoverings) is based in Dongguan, Guangdong province. It plans to take advantage of China’s Belt and Road Initiative and venture out into selected countries along those routes. The company is mainly engaged in the research, development, design, production and marketing of wallpaper, wallcoverings, fabrics and household goods. It has won much industry acclaim, including being named in 'Top 100 Chinese Home Furnishings Companies' and 'Famous Chinese Trademarks'. It has also been granted over 50 national patents for design and production.
At present, around 70% of Yulan’s business comes through domestic sales. Its main export markets include Southeast Asia, South America, Eastern Europe and Iran. Competition within the domestic market has intensifying in recent years as the number of mainland wallpaper producers has increased. Advanced countries in Europe and North America still have many competitive wallpaper production lines in operation. This poses pressures for Yulan in terms of sales of higher-end products. For this reason, the company hopes to open up further export markets to enable its long-term development.
Wallpaper production is not considered to be a labour-intensive industry. It relies mainly on machinery. Yulan mainly uses imported materials in its production processes, including backing, plastics, matt vinyl and moulds brought in from Europe, the US, South Korea and other countries. As far as the production of higher-end products is concerned, the company only has a limited overall cost advantage over its European and North American equivalents. Therefore it has to keep improving its R&D capability and quality management in an attempt to improve the competitiveness of its products. Yulan also plans to boost its production capacity on the mainland in order to expand domestic sales and exports.
Meeting Demands of 'Belt and Road' Buyers through Hong Kong
In practice, wallpaper export trade faces many restrictions. For example, wallpaper may not be appropriate in territories such as Australia where humidity is particularly high. Equally, some countries with lower purchasing power may prefer cheaper products, even reproduction wallpapers, but this is not conducive to the marketing of name-brand products.
Yulan told HKTDC Research that some East European consumers are acquiring the habit of buying wallpapers for DIY home decoration, just like their counterparts in Western Europe. Moreover, Muslim consumers in countries along the Belt and Road prefer products featuring Islamic patterns and design. Hence, there is tremendous potential out there waiting to be tapped. Yulan intends to quicken its pace in opening up the Belt and Road markets and developing its brand in these countries.
On the other hand, building construction is on the upswing in many Asian countries and major contractors often call for subcontractor bids from Hong Kong. Besides seeking competitive subcontractors, they also want to make use of Hong Kong's inspection and testing services. This enables them to ensure that the subcontractor projects measure up to the required quality and fire safety standards. Yulan already has experience of taking on indoor wallcovering and decoration contracts for Macau and some Southeast Asian countries, such as Malaysia. In the future, it plans to bid for more subcontracts of this kind via Hong Kong.
Yulan’s Hong Kong office manages the import of materials and the export of products. It also gathers information on overseas markets and keeps abreast of the requirements of overseas buyers and contractors for product technology and specifications. When necessary, it makes use of relevant services provided by Hong Kong companies in order to ensure that its products meet the standards of its overseas clients.
HKTDC Research wishes to express its appreciation to the Department of Commerce of Guangdong Province and the Bureau of Commerce of Dongguan City for their assistance in conducting research studies and company visits.