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The Urumqi-headquartered furniture maker gained approval from its board to conduct mergers and acquisitions (M&As) in the US furniture market in November 2008. On January 6, 2009, it inked a contract to acquire the net operating assets, including tangible assets and intangible assets, as well as liabilities of Schnadig, a Delaware-based furniture maker. Under terms of the contract, it will take over the US company's inventory, accounts receivable, fixed assets, corporate name, service logo, sales network, distribution channel and customer relationship. Notably, it will own the latter's four product brands, including Compositions, Schnadig, Karpen, and International Furniture.
As a strategic move Markor has taken to shift its business mode, the deal will help optimize its industrial chain, from research and development to manufacturing and sale. Notably, the deal will help improve its management capacity. The global financial fluctuation delivers a strong impact on the nation's export-oriented companies, said industry experts. However, it creates great M&A opportunities in the meantime.
Actually, Markor is not the first Chinese company to launch M&A in the US furniture market. Shandong Runxing Investment Group acquired a US-based furniture maker for USD 750,000 in July 2008, compared to the target's assets of USD 2.75 million. It was the global financial crisis that help the group put the US maker in to its own bag at such a low cost, Yu Po, a senior executive with the Shandong-based company, said in an interview.
The company's furniture is mainly for export to the US market. However, it is under rising pressure from the nation's adjusted tariff policy, the appreciation of renminbi as well as increasing raw material prices. In order to reduce cost, it planned to establish a sales network in the US market as soon as possible. Later, it made a decision to acquire a US furniture maker, added Yu.
In addition to the US, the markets like Russia, Middle East, and Southeast Asia draw the attention of an increasing number of Chinese furniture producers. Hurt by the global financial fluctuation, many small-sized furniture makers in the aforesaid markets survive from lowering product prices currently.
(USD 1 = CNY 6.84)
Source: www.nanfangdaily.com.cn (January 09, 2009)
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