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Shanghai Looks West

Summary: A small BC plant has what it believes is the first contract secured by a Canadian manufacturer to ship ready-to-assemble solid pine furniture to China.

By Paul MacDonald
Copyright 1996. Contact publisher for permission to repint.

When Brent Pfefferle of the Pine Falls Furniture Company went on a business trip to Shanghai last November to sign a deal that would result in a 30 per-cent increase in sales for his BC-based company, he felt like a giant.

But it had as much to do with his physical size as the deal the company had just put toge t h e r. "I felt a bit out of place because I was so tall," says the 6'3'' president of Pine Falls Furniture of Maple Ridge, a Vancouver suburb.

The deal with the Shanghai Furniture Group will see Pine Falls Furniture, pro-duced from Western White Pine, in the showrooms of furniture retailers this year in Shanghai, a city of 13 million people. And, says Pfefferle, a lot of those people are looking for Western-style furniture.

"The economy is growing, wages are going up and they're looking to become more westernized in their furnishings. That 's where we come in to play with our solid pine furniture and its clean look." A tour of the so-called "furniture cities" in Shanghai _ clusters of retail furniture outlets _ reinforced the market niche for quality, solid-wood furniture.

"We did a comparison based on what we saw in the stores ," said Pfefferle, who travelled to China with Trevor Sandwell, the company's general manager. "There was some Danish furniture and some Italian furniture, but most of it was substrate, particleboard. But people there recognize the difference between particle-board and solid wood. They're very aware of the quality of the product." The deal is expected to result in Pine Falls shipping some $500,000 worth of furniture to Shanghai in 1996. According to the company, this is the first contract to supply solid pine furniture from Canada to China.

This recent contract, along with expansion into other markets such as the United States, Japan and Taiwan, will result in company sales more than doubling to $3 million in 1996. While this figure may pale compared to lumber exports from BC, it's important to note that each and every dollar represents added value and BC jobs.

This is finished furniture being shipped out of BC, not cants. It's been a long haul getting Pine Falls to this point for Pfefferle, who used to work as a longshoreman at a sawmill on the west coast of Vancouver Island. After moving to Maple Ridge, he started producing small, solid-wood items, such as breadboxes and hope chests, from his garage.

A customer requested that he start making solid-wood furniture and the com-pany moved out of the garage and set up shop. "We were doing custom work at the time, in ash and pine, but it just wasn't paying the bills. That's when we sat down and decided we were going to do a line of furniture in pine."

Pine Falls offers an extensive line of products, from dining room sets and armoires to bed frames and dressers, all of it featuring dowelled and dovetailed construction. The furniture is sold by a num-ber of Vancouver furniture retailers, but Pfefferle has also found a strong market at BC ski resorts. "That's where a large part of our business comes from," he says.

"We recently finished doing the furniture for two hotels in the southern Interior and we've done six major hotels and condominiums up in Whistler." The company's traditional-style furniture is a big hit with skiers. " The resort market is very up and down ," concedes Pfefferle. "Everybody wants to get in for the Christmas season, so we're swamped leading up to the end of the year. Things slow down after that and then start to pick up again in August."

Faced with the challenge of regulating demand for his expanding product line, Pfefferle recalls, "That's when we developed the Ready-To-Assemble (RTA) prod-uct line and targeted the export market, s u ch as China, Japan and Ta i wa n ." Pfefferle credits general manager Trevor S andwell, who joined the company in 1995, for promoting the idea of expanding into the export market.

The boxed, pre-finished RTA furniture is transported to overseas markets in containers, with the retail store or consumers doing the simple assembly. Depending on the type of product, up to 600 pieces of RTA furniture can be shipped in a single container. The increase in export sales has meant an expansion for Pine Falls, which is in the process of adding on 10,000 square feet of manufacturing space to the 12,000 square feet it already has.

Using a variety of European and Canadian equipment, the company's 26 employees build two lines of furniture: the RTA product for export markets and the fully-assembled product for mostly domestic markets. The company's lineup of equipment is a combination of North American and European technology and includes a Precision chop saw, a Doucett clamp carrier, an Ogam rip saw, a Timesaver double-headed wide-belt sander, a Morbidelli CNC router, an Altendore panel saw and two Delta table saws.

Pfefferle is proud of the fact that Pine Falls furniture is manufactured in BC and is made from BC-grown Western White Pine. But it's not the easiest species to get your hands on, he says.

"We buy our wood from a number of small mills and through a broker. It's hard to source Western White Pine because it involves a lot of smaller sawmills. But it works out well with these smaller mills because they will produce what we want in terms of sizes and grade."

Pfefferle hears of mills that are able to supply Western White Pine mostly through word-of-mouth. "It's a species that is fairly sparsely grown, growing between fir, cedar and hemlock. It's not like you can just go in and log a lot of white pine."

Most of the mills he deals with are around the Kootenays and the Vernon area in the BC Interior. Considering the availability of raw material, it may seem surprising that a very small number of companies produce solid-wood furniture in BC. This is due in part to the small size of the local market for such furniture. However, Pine Falls is looking beyond the local market with its China contract and Pfefferle would like to see export sales increased in a big way.

"Our goal is 50 per cent overseas sales. It could be as much as 60 to 70 per cent overseas, with the remaining 30 per cent representing the local and commercial markets." Working through Canadian embassies and trade consulates, the company is look-ing at markets in Britain, Australia and the United States, in addition to Pacific Rim markets. It was the Canadian Trade Office in Beijing that helped Pine Falls hook up with its new customer in Shanghai. The office did the initial research and selection of organizations in China that could handle the introduction of a new line of furniture.

Several Pine Falls pieces travelled to China with Jean Chretien and his Team Canada visit t o China in November, 1994. The company was also part of a trade trip with the BC Wood Specialties Group to a trade show i n Taiwan this past December.

"We had extraordinary response there," said Pfefferle. " We were told that Taiwan was not a market for our product because they 're so heavy into manufacturing themselves. But they don't have any forests and the raw material is imported . We can be competitive with them."

Pfefferle reports that his hosts from the Shanghai Furniture Group went out of their way to make him and Trevor James feel at home, making the business negotiations that much easier.

"Up till then, we had only been communicating with them by mail. In a way, we went over there blind, but we were treated royally and we felt comfortable with them." He has some advice for companies interested in doing business in China.

"You've got to be very straightforward. We told the company representatives what we could produce and we came away happy and so did they. They appreciated our honesty." Working through an extremely capable translator provided by the company also helped to make the negotiations go smoothly, he added.

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