Substantial funding backs up SPC flooring opportunities

The imports of stone-polymer composite (SPC) supply in the United States is decreasing. Is the market yet reverting to a growth trajectory?

Le Quang

The most recent projections indicate that the path to recovery for the construction materials market remains extremely challenging, given that the economic recovery in the US is only modest, and the real estate industry has not yet shown many indications of recovery.

The Uyghur Forced Labour Prevention Act also keeps a close eye on the import of SPC flooring from China, which affects the export of this line of goods from Vietnam.

The lack of supply in the US is not due to increased demand but rather to China’s control over its exports.

Within a year, numerous Chinese companies invested in SPC production in Vietnam. However, when exporting such flooring to the US, some companies were placed on a US Customs blacklist. Many purchasers began to rethink their purchases from businesses on the blacklist, opting instead for reputable manufacturers outside of China.

Are you concerned about the relocation of manufacturing outside of China?

In recent months, clearance into the US market has been extremely sluggish, with approximately 1,000 containers lingering at ports on average. The US Customs Service rigorously regulates the origin of SPC imports.

The disruption of the flooring supply chain to the US is causing great concern among other customers who trade in this product, which has a direct impact on Vietnam’s supply. The growth of Neo Floor in the first six months of this year is only half of its growth in the final six months of last year.

As an increasing number of Chinese companies invest in SPC production in Vietnam, Thailand, and India, the risk can be substantial. Some of the largest SPC manufacturers in China currently operate in Vietnam, and some investors are opting for novel strategies by establishing a facility in Vietnam and another in Thailand or India. Frequently, these factories have limited capacity, and investment is exploratory.

After China, Vietnam is the second-largest exporter of this type of flooring to the US market. In the last six months of 2023, the shift of production outside of China will become clearer, and the situation will become more precise next year.

Does the regulation of imports into the US create opportunities for non-Chinese suppliers such as Vietnam?

Opportunities are distributed nearly equally among non-Chinese supply sources, including Vietnam, India, Thailand, and Cambodia. Vietnam, on the other hand, has an advantage due to its initiative in stone materials, whereas India is becoming increasingly reliant on imported stone materials, and the SPC output of Thailand and Cambodia represents a negligible portion of the US market.

China continues to dominate SPC exports, accounting for 83 per cent of the value and quantity of such flooring imported into America, according to US Trade. Vietnam ranked third and accounted for approximately 1 per cent of the market in 2019, but its share jumped significantly to 4 per cent between 2020 and now.

SPC floors are predominantly used in civil construction undertakings in the US.

Due to their durability and affordability, contractors continue to use such plastic flooring products from the first generation manufactured 50 years ago in public construction projects.

What is the status of Neo Floor following modifications in the US supply chain?

Neo Floor has consistently welcomed large corporations from the US and Europe to survey and negotiate orders since April. Due to their water resistance and durability, our flooring products have become the primary product line in the construction materials market since 2019, particularly in the American market.

The efficacy of Neo Floor is predicated on two advantages. Firstly, three-quarters of the basic materials used to manufacture SPC floors are calcium carbonate stone particles. This company currently possesses a calcium carbonate quarry in the central province of Nghe An with a reserve of more than five million cu.m, indicating that the project has a raw material area with guaranteed quality and US origin.

The company’s substantial investment in research and development has also yielded specific results. After two years of research, Neo Floor’s scientists have developed a formula for combining additives and have mastered the entire SPC floor production line.

Our scale must be large enough to satisfy our partners’ high output and quality standards. Consequently, NEO Floor’s second SPC floor factory in the northern city of Haiphong is concluding its final phases and will commence operations imminently. The factory in Haiphong has a total investment of $26.5 million, 14 large capacity lines, and an annual output of 14 million sq.m.

The factory system of NEO Floor has a contemporary, highly automated production cycle and is seamlessly integrated with the auxiliary system. In comparison to factories in the south, production in Haiphong saves $8.14 per tonne of conveyed stone powder due to its proximity to the quarry in Nghe An. In addition, the proximity to the Mipec seaport enables the business to save approximately $122 per export container.

Is Neo Floor attempting to develop a novel strategy to advance?

It typically takes six months to relocate production from China. We intend to use this delay to increase expansion. Currently, we have set up a modern organisational structure and partnered with MS International, one of the largest distributors of building materials in the US. Beginning in 2021, the largest supermarket chain in the US, Home Depot, will carry the company’s SPC goods.

The company is right now approaching and concluding large orders with other significant distributors, such as Calibamboo, Mohawk, Anatolie, and many others.

To boost its profit margins, the business will reach out and sell straight to wholesalers and retailers in future years, such as Discount Hardwood Floors, Old Master, Town and Country Ceramic Tiles, and CA Flooring, once its distribution network and strategy for boosting production are finished.

SPC exports to US at risk due to questions on origin claims The Vietnamese producers of construction materials believe that while the danger of false origin is currently low, they must still take precautions.