With a quarter century of experience in heading businesses in Germany, France and India, Frank Schloeder is no newcomer to planning, strategy and operations. A double graduate in International Studies and Business Administration from the University of Munster (Germany) and Montpellier Business School (France), Frank is not new to India either, having steered operations for automobile giant BMW for 4 years. He is now Managing Director of Häfele South Asia, which includes India, Sri Lanka, Bangladesh, Bhutan, Nepal and the Maldives. With understanding of the unique nuances of Indian culture and business practices, Frank took over the reigns of Häfele South Asia to begin unlocking market potential and exploring new revenue channels. WoodNews spoke with him recently to read his mind. Excerpts:

For the kitchen industry, Häfele not only has fittings and accessories, but also surfaces, in-built appliances and lighting.

By DHANANJAY SARDESHPANDE

Hello Frank, it’s 2 years now since you joined Häfele in India. What are your impressions of the furniture manufacturing industry?

For me it’s been a very exciting transition. It’s been a learning journey so far, to discover a business with a fresh look. And I’m very happy to be here for many reasons.

First, my predecessor (Juergen Wolf) has built up a superb business and what he has made of Häfele India, along with the team, is very impressive. Juergen was with me for a few months as my coach. He came literally with just one suitcase to India and built up everything for Häfele.

It’s been a big success story. I mean, India is today Häfele’s third-biggest market in the world! We are also market leader here in many product categories in the furniture industry.

The thing is everyone knows Häfele in India, but nobody knows everything that Häfele does! Therefore, it’s always a challenge to explain that in kitchens we not only have fittings and accessories but also surfaces, appliances and lighting.

How is it different from selling high-performance luxury cars and sports motorcycles?

There are a lot of similarities, you know? They (BMW and Häfele) are both strong brands focusing on end consumers, rather than just doing B2B transactions. They both play on generating aspiration – the audiences (for cars and kitchens) are often quite similar. I mean, someone who buys a luxury car will also buy a luxury kitchen, right?

Of course, Häfele does not only appeal to the top-of-the-range customers. We have a broad range of products that tackle a lot of use cases and, therefore, the entry point is much, much lower than you would have for luxury cars.

At Häfele, we start with near-premium, then premium – that would be probably the broadest range of our products. And that’s where the sweet spot is; and that is what Häfele has understood very well.

What sets Häfele apart from other multinational players in the Indian market?

I cannot just sell the European products in India. I must adjust my product offerings to the needs of the market. The price points are different; the requirements vary – and you know how different food and cooking habits are in India!

Thanks to the (Häfele) headquarters, Juergen was given a free hand to build up the business in a manner that was required, not just by copy-pasting something that worked well in another geography. A lot of Western companies fail to truly understand the Indian market context.

I think Häfele is one of the very positive examples of a European company that has read the Indian consumer mindset correctly and has been able to answer with the right solutions that work for the consumers. So that is really important for us.

What is the state of the domestic furniture manufacturing industry now?

I think this is the decade of India. It has done a lot of homework, to make it business friendly, to drive structural change in regulations, to develop infrastructure, to improve tax collection, fight corruption, and so on.

We are seeing now how this is starting to pay off. And that’s why India is amongst the big economies, the fastest growing, and will probably accelerate further where the rest of the world is nearly at a standstill or even in crisis mode.

The construction industry in India is doing very well, in both new home projects and commercial spaces. We are dependent for growth on the health of the construction industry. I think it’s a good time to be here!

What role has Häfele played in the growth of domestic manufacturing?

There was not much by way of a modular furniture industry in India 20 years ago. It was very basic, very carpenter oriented. Being an early entrant to this market, Häfele had to reinvent its strategy to gain a foothold and begin to educate the largely unstructured ecosystem.

We still have a long way to traverse to organise furniture manufacturing, structure the market, get its players to act more professionally, drive quality and better products. In the end, Häfele wants to provide better solutions to the aspiring consumers, who want to beautify their homes with design, functionality and all that goes with it.

What challenges does the unorganised market pose?

As a professional organisation, it’s always easier to deal with the organised sector. This industry in India is not very mature. That is changing for the good. The changes are probably driven by the fact that we are all trying to work together when it comes to advocacy with the government to protect the interests of this industry.

That said, there are differences in which publicly listed companies and family-oriented business work. The processes are not the same. When you work in a family-run business, you have more freedom, decision making is faster, it’s more pragmatic and focused on business, less on politics.

What do you make of the new BIS standards and quality control orders (QCOs) for various components and fittings?

One of the biggest challenges we are facing right now in the market is the BIS standards and the QCOs. For the last 20 years the furniture manufacturing industry was completely under the radar of the government and players were happily enjoying a not-so-regulated environment. Now this has drastically changed.

These QCOs are a very positive thing because they will drive quality. That is what India needs to lift the level of furniture construction to be competitive in international markets.

If we want to develop India as an exporting hub for the world – and surely there is potential there, with the skilled labour force and the ecosystem that we have in India – we need to have high quality products. Therefore, the movement to implement the QCOs is a very positive one.

But what about fittings and furniture components that are directly imported for the Indian market?

The products that come from Europe – and even many Asian countries – already meet several international quality standards. Even when you import into Europe, you have strict certification requirements. India is not alone in demanding these QCOs; in fact, India is catching up with good practices around the globe.

But there are no mutual recognitions of standards; and that is one problem. Importers will have no difficulty in meeting the BIS standards. But the cumbersome process is the other problem. Importers will have to certify every manufacturing facility across the globe!

What about the ‘Make in India’ mission?

We work with suppliers across the globe. That’s the choice we made in our business model because we have such a vast range of product. We offer 10,000 products in India; we cannot manufacture everything on our own. Less than 10% is what we do in-house. The rest is always sourced from partners across the world.

So, if I want to now attract my partners to manufacture in India, that takes time and we need to then acquire land, build factories and so on.

I would be happy to buy from India. But today India doesn’t have a very strong supplier base in international quality furniture fittings.

That said, we are working on all fronts to attract suppliers from abroad to buy from India. It will help them to improve their quality standards and to become eventually partners with Häfele. If that happens, these Indian suppliers can eventually export their products. So, our intention is good, and the target is very good!

India also has scope for furniture exports; but the government must put in place large incentives for foreign investment, fast-tack approvals, scalable infrastructure, regulations and taxation – the whole package.

What are the positives that you see in the Indian furniture ecosystem?

The organised market in furniture manufacturing is doing better, and we can see more players getting organised. The OEMs (as we call them) are growing in size and in numbers. We can see them scaling up production and upgrading technology.

Then we have the likes of LivSpace, Homeland and Bonito Design that are trying to excel in supply chain. They buy the raw material and components by themselves. The processing only happens with a partner who is getting paid for doing a processing job, not for taking care of the entire thing.

That is a good movement because it professionalises the market. They are asset-light; they don’t manufacture on their own; most of them work with external partners.

But the thing is they completely control access to the customer. They are also excelling in creating new customer experiences and meeting the demands of the new digital age – they create the entire interior for homes at very affordable money. I find this model very interesting.

Your biodata lists cars, golf, skiing and travelling as your hobbies. What are you doing this year end?

You’re right there! I might probably go to Gulmarg in the Himalayas because I’m a big skiing fan. I went there last year in April, but it was a month too late for skiing. My wife – she is Indian – has also learnt some basic skiing. If I don’t go skiing, there are so many places in India to go to which we have still not discovered.

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