The U.S. Retail Access Program
A New Supply Chain Model for Chinese Manufacturers

• THE M BLOCK U.S. RETAIL ACCESS PROGRAM
• THE U.S. HOUSEWARES MARKET
• U.S. RETAIL CONCENTRATION DRIVES MANUFACTURER COMPETITION AND CONSOLIDATION
• M BLOCK & SONS, INC - The leader
• M BLOCK & SONS, INC - SALES OPPORTUNITIES
• M BLOCK & SONS, INC - RETAIL SUPPLY CHAIN LOGISTICS
• SUMMARY
• HOW TO APPLY FOR THE PROGRAM
• CONTACT

THE M BLOCK U.S. RETAIL ACCESS PROGRAM
Having a unique position in the housewares industry and enjoying established relationships with nearly every housewares retailer in the United States, M. Block and Sons has created an exclusive partnership program for Chinese manufacturers of housewares products seeking more profitable access to the North American market and more control over their destiny.

Working as a partner with M. Block and Sons, the U.S. Retail Access Program will allow your company to supply houseware products direct to the retail marketplace through a new comprehensive “end-to-end” business model.   If accepted as a supplier, your company will realize greater margins, gain critical U.S. market knowledge, and take its first steps towards establishing a corporate and brand identity with the U.S. retail buying community and consumer.  The result will be greater equity for your company.

Companies accepted will be true partners with M. Block; sharing strategy, risk and sales opportunities.  This new platform will for the first time offer Chinese companies a voice in U.S. sales and distribution, giving them better control over production and long term, more stability for their company.  The program provides manufacturers with an additional method of sales meant to coexist alongside their current OEM business, while freeing them from the dependency of this “one way” business model.

M. Block has extensive experience in the analysis of costs, margins and pricing strategies of houseware products within the U.S. retail community.  An opportunity to engage the U.S. market in a more direct manner and establish an identity for your company and its brands comes as a result of the U.S. Retail Access Program.

M. Block and Sons, Inc has established an Asia-Pacific office in Hong Kong headed by Mr. James Chen, Managing Director.  Mr. Chen is a life-time Chinese manufacturer who has sold to the west for twenty-years.  He understands your business and most importantly, understands the western market.

THE U.S. HOUSEWARES MARKET
The housewares industry is a $301 billion industry worldwide. Of the $301 billion global housewares market, 28.5 percent of sales were in North America in 2005 with sales of $76.2 billion in the U.S. and $9.7 billion in Canada. Western Europe had a market share of 25 percent based on $75.1 billion in consumer spending.
The average U.S. household spends an average of $578 annually on housewares.  Put into perspective, U.S. housewares spending was higher in 2005 than that for dairy products ($362), about the same as fruits and vegetables ($600) and about a third as much as gasoline and motor oil ($1,813).
In 2005, Wal-Mart dominated housewares with $16.25 billion in sales.  Number-two Costco had housewares sales of $6.61 billion.  Target was third with housewares sales of $5.54 billion. The fourth spot went to Sears Holding (tracked for the first time as the combined housewares sales volume of Sears and Kmart) with $4.7 billion.

Rounding out the top 10 were Sam’s Club ($4.13 billion); Williams-Sonoma ($2.75 billion); Bed Bath & Beyond ($2.59 billion); Home Depot ($2.45 billion); Walgreen ($1.45 billion); and Dollar General ($1.23). On the product side, kitchen tools and accessories along with tabletop products showed the highest category gains in 2005.

Within the top 100 housewares retailers, specialty stores make up 25% of the group but account for only 12.4% of the aggregate housewares volume totaling $56.2 billion. Conversely, discount stores constitute 13% of the top 100companies, but generate more than $23 billion, or 41% of the total housewares sales.
In the United States, the retail sector dominates pricing, selection, distribution and terms of all consumer goods sold.  In years past, manufacturers and wholesalers drove the market.  Today, with advanced inventory and marketing information on consumer spending and taste, retailers are the primary driving force controlling the products that get manufactured and sold in the United States.

U.S. RETAIL CONCENTRATION DRIVES MANUFACTURER COMPETITION AND CONSOLIDATION
There has been a substantial shift in the balance of power in favor of retailers due to mergers, which greatly affects the nature of producer competition.  The on-going consolidation taking place in retail markets has served to increase the enormous buying power that retailers can now exercise, ensuring that even the largest suppliers are placed under intense competitive constraints.  Retailers retain the whip hand and are able to drive prices down by playing off suppliers against each other.

Consider the example of housewares products sold in the department store channel, which over the last 10 years has consolidated from approximately 30 independent retailers down to one (Federated Department Stores).  Instead of 30 independent buyers spreading their purchasing power over many manufacturers, there is now only one buyer, who is most likely dealing with only one manufacturer (per product category).  The U.S. retail market has seen this same consolidation the grocery and drug store channel as well as the mass market.  

The mergers and consolidation affecting the U.S. retail community has forced corresponding changes with manufacturers and marketing companies as well.  As fewer retailers remain, manufacturers and marketing companies must now compete for the attention and sales from fewer buyers.  This creates mergers and consolidation by manufacturers and marketing companies, as well as increased pricing pressure on their Chinese sources.  The growing market power of the retailers creates incentives to mergers as a means of gaining matching bargaining power.
 
In addition to the tradition pricing pressures applied by U.S. retailers, manufacturers and marketing companies, a variety of new tactics are being employed to increase leverage with their suppliers.  A number of retailers are using a reverse auction process that requires suppliers to submit blind “one-time, best-price” bids on product.  Retailers, manufacturers and marketing companies are trying to squeeze more out of suppliers by pushing costs of product modifications and new packaging requirements back onto the manufacturer, as well as requesting extended terms and shorter lead times.

M BLOCK & SONS, INC - The leader
M. Block and Sons is located in Chicago, Illinois, the center of distribution for all of North America and is the most experience and established company of its kind in the housewares industry.  M. Block is unique in that it operates as both a distribution logistics company as well as a sales and marketing company and conducts housewares business with nearly every retailer in the United States.  They are a privately held company currently operating out of 450,000 square feet of warehousing space, with revenues in excess of $220 million dollars per year.
M. Block has been offering value added solutions for U.S. retailers for 100 years and enjoys a reputation of the highest quality in the industry.  As a hybrid, M. Block combines the capabilities of warehousing and distribution logistics with sales and marketing, thereby creating a comprehensive “turn-key” solution for Chinese housewares manufacturers interested in a more lucrative business opportunity in North America. 

M. BLOCK AND SONS, INC. – SALES OPPORTUNITIES
While the U.S. is dominated by large mass retailers with established supplier relationships, there is still a significant amount of business available to manufacturers in the U.S. market.  Many national and regional retail chains, upscale department stores, value department stores, specialty stores (or “box stores”), grocery and drug stores, as well as thousands of independent accounts are open and accessible to sales.  Certain channels of distribution can quickly accept promoting product on an “in and out” basis.  M. Bock and Sons has relationships with many of these retail accounts through either direct sales employees or independent representatives.  Working with an experienced partner like M. Block and Sons will provide sales access to retailers that might otherwise take years to achieve.

M. BLOCK AND SONS, INC. – RETAIL SUPPLY CHAIN LOGISTICS
Managing product distribution to retailers in the U.S. is a very complex process whose importance in the supply chain is often overlooked, under estimated or misunderstood.  U.S. retailers have very complex requirements in managing their basic and promotional inventories, electronic ordering and payment procedures, as well as picking, packing, labeling and shipping compliances.  Requirements that are not met can cost the manufacturer thousands of dollars in compliance charge backs.  M. Block has established itself as a leader in the processes and technology required to manage the distribution supply chain to the U.S. retail community. 

SUMMARY 
Changing market environments force companies to re-think their organizational design and their basis for competing in a market.  As the U.S. retail community changes, new supply chain solutions by Chinese suppliers are required to offset or compensate for these changes.
Chinese manufacturers seeking better margins and more control over their destiny can achieve this through the U.S. Retail Access Program from M. Block and Sons.  In order for manufacturers to penetrate the U.S. retail market on their own, major investments in time and money would be required to organize, manage, implement and develop a complete supply chain organization.  Using the U.S. Retail Access Program, you are able at once to make use of M. Block’s existing infrastructure; providing you with sales, marketing, warehousing, distribution, IT, and logistics, together with 100 years of relationships, market knowledge and experience, all integrated into one compressive business solution.

M. Block’s U.S. Retail Access Program provides Chinese manufacturers with a means of addressing the changes that are occurring in the U.S. retail market.  It offers a compelling alternative to establishing a direct business model and provides a perfect adjunct to the current OEM business employed by most Chinese suppliers. 
Working with a proven partner, M. Block and Sons will guide you through a very complex and sophisticated U.S. supply chain model.  In the end, the U.S. Retail Access Program provides a reasonable and inexpensive alternative for Chinese manufacturers to sell directly into the U.S. retail market, helping grow sales and profits, while diversifying away from the current low cost OEM model, and gaining more control over their future. 

HOW TO APPLY FOR THE PROGRAM
Companies with interest in the M. Block and Sons U.S. Retail Access Program should contact Mr. James Chen at:

KMC GLOBAL,Inc
Unit A, 10/F
China Harbour Building
370 King's Road
North Point, Hong Kong

Phone: (852) 2570 9823
Fax:     (852) 2510 0575
Email:  james@kmcglobalonline.com

Those companies that share the same goals, objectives and criteria of the M. Block U.S. Retail Access Program will have the opportunity to visit the company during the International Housewares Show in Chicago, Illinois in March 2007.  At this time M. Block will conduct a more extensive review on the particulars and specifics of the program

A second follow-up meeting will take place at the Canton Fair in April 2007.

CONTACT