Carpeting may not have the glamor of alternative energy, but as China builds a new generation of office buildings, it plays a surprising but important role in promoting sustainability – and in improving workplace health. China Economic Review spoke with Stef Kranendijk, CFO of European carpet manufacturer Desso, about innovation in carpeting and the opportunities in China.
Q: How long has Desso been here?
A: We have just started out in China. We started to build up a sales organization in the second half of 2009, introducing ourselves as a superior floor design company. We are starting with carpets for offices, schools and hospitals. That is our first business. We also have carpet products for hotels and airlines, and also a consumer carpet business – though not in China. In Europe, we’re very popular. Another part of our business is artificial turf, for soccer and football pitches. We feel that China is particularly suitable for our products, and we want to be aggressive about building a business as a company that offers more than just carpets. We believe the way to win is to innovate, innovate, innovate.
Q: How do you encourage that?
A: For us, innovation has three main drivers. The first is creativity. We have a circle of architects across the globe helping us produce the most stunning designs. We turned our company in three years into a real trendsetter. The second driver of innovation is the “Cradle to Cradle” concept. You only use a few very pure materials so that you can endlessly recycle them at a very high level. We started “Cradle to Cradle” two years ago, and we are replacing old materials in a very forceful way. In July 2010, we’ll convert all of our products into “Cradle to Cradle” concept products. We can disassemble them, re-use the yarn, melt the yarn into a liquid and re-use the liquid to make material for packing – we can recycle everything.
Q: Has Desso applied this concept differently in China than in other markets?
A: The “Cradle to Cradle” concept can be applied anywhere in the world. It sounds simple, but the difficulty is in the fact that you cannot just call your products “Cradle to Cradle” – you need to analyze all the raw materials you use, because each and every ingredient must be tested. We went through tens of thousands of materials to make sure that they were pure and safe so that you could endlessly recycle them.
Q: You said there were three drivers…
A: The third driver of innovation is technology. We’ve developed a product called the Desso Air Master, as well as the Sound Master for sound absorption. By adopting creative concepts, you become very technically innovative.
Q: How do you use your technology to address environmental concerns?
A: Do you realize that inside any office in China or the Netherlands or the States, the inside-air quality is three to fives times worse than the air quality outside? This is because of volatile toxic fibers being released. These particle fibers spur the spread of viruses and diseases. Desso has designed a new product that is constructed from yarn that it is eight times better at taking fibers out of the air. “The carpet cleans the air,” is what we say. Schools, hospitals, government buildings – they will all use this product.
Q: How quickly do you expect those institutions to adopt your products? How does this play into your broader strategy in China?
A: Our short-term strategy is to make sure we are successful in selling carpet. Our factories are located in Belgium and Holland, but we plan to have factories in China, South America and India. We are looking, at the moment, into setting up a greenfield operation just one hour outside of Shanghai. Our medium and long-term strategies will include introducing other product categories that we’re famous for in Europe, including wool carpet for hotels, cruise ships, and airlines. We’ve already provided carpeting for China Airlines, which used to be a client. We’ll also be working on “Cradle to Cradle” artificial turf for football and soccer fields.
Q: What do you see as the biggest obstacles to your success here?
A: Our biggest challenge is finding the right people to the sell the concept to. But I am very impressed by the people we’ve met here in Shanghai and Beijing. We also need to convince architects and interior designers of our “Cradle to Cradle” concept. This is a venture we started in November of last year, and we are making very fast progress. In the Netherlands, we have quite a lot of Chinese entrepreneurs who are impressed by the concept, have reacted very positively and want to cooperate with us. In fact, the artificial grass on top of the Dutch Pavilion at the Shanghai World Expo is Desso grass, though the insides are hardwood floors. We are also working on some projects – about thirty thousand square meters in size – in Shanghai and Beijing. But it’s still early for us.
Q: Are counterfeiting and imitation a problem?
A: Some of our technologies like the Desso Air Master technology are very hard to copy. If they start imitating, we’ll take them on. If you’re a high-end company, there will always be copycats when the market picks up. I do believe that China has a big problem with counterfeiting, but I also believe that the national government and local government are showing a much higher level of responsibility in following up and protecting intellectual property.
Q: And how open is the market to foreign competition?
A: China is becoming more and more of an open market. The majority of the country is served by Chinese carpeting companies, but there is room for international carpet companies, as well. We are selling concepts like the improvement of indoor air-quality – the best in the world – and sound absorption. And we are selling a way for companies and government offices to give credibility to their sustainability efforts.