Soon after E.S. Kluft & Co set up a plant in Rancho Cucamonga, California, in 2004 to manufacture luxury beds, Earl Kluft, began to think about selling to China. Last September, he opened three retail stores, Aireloom by Kluft, in Shanghai and Beijing to sell his US-made mattresses priced between $3,500 and $50,000.
Kluft's mattresses stand out from the ordinary because they are made by hand. One mattress takes three days to make from high-end materials such as cashmere, mohair, Joma wool and Talalay latex, and is checked for "comfort, support, pressure relief and durability".
Although the average Chinese are unable to afford a Kluft mattress, the number of wealthy people in China will give him "more than enough business". "There are 1 million millionaires in China. I will have more than enough business if I sell to China's millionaires alone," says Kluft.
A Boston Consulting Group survey indicates that the number of millionaire households in China ranks third in the world, behind the 5.22 million in the United States and Japan's 1.53 million.
While the Chinese mainland has close to a million millionaires with personal wealth of 10 million yuan ($1.58 million, 1.25 million euros) or more, this number is increasing almost 10 percent annually, according to the GroupM Knowledge-Hurun Wealth Report 2011.
Kluft's partner, Eternal Sleep, a Chinese mattress maker, helps promote his business in China and runs the Shanghai and Beijing stores advertising the brand in China Eastern Airlines' in-flight magazine.
"Chinese consumers are very careful when it comes to making purchases. They are not afraid to spend the money but they want good quality. They want to buy top-notch brands," Kluft says.
Kluft envisions expanding his retail chain into major first- and second-tier Chinese cities including Shenzhen, Guangzhou, Shenyang and Chongqing.
"The Chinese demand for American-made luxury products is on the rise," he says.
His confidence is backed by research that forecasts China will overtake Japan as the world's largest luxury market by 2015. Consumption of luxury items in China will grow by 18 percent annually to about $27 billion by 2015, according to consulting company McKinsey & Co.
So now Kluft's US factories have begun producing mattresses tailored for the Chinese market.
The most expensive mattress the company sells in China (featuring 2,000 steel coils and 10 pounds of wool including cashmere and mohair) costs $50,000. While Kluft has similarly priced mattresses here in the states, this model is not available to the US market.
Chinese consumers also have to pay more for the mattresses after factoring in freight costs and import duties. But Kluft has no plan to build a plant in China. His reason: Chinese consumers favor products made in the US.
"The Chinese consumers want them made in America. They don't want them made in China," Kluft says.
On the other hand, Kluft and his partner Eternal Sleep are planning to start another business - supplying mattresses to high-end hotels in China. He may set up factories in China to produce these mattresses.
"It just won't be cost-effective to ship mattresses from the US to the hotels in China," Kluft says.
E.S. Kluft revenue has increased by 14 times over the past five years - from $3.5 million in 2006 to $50 million in 2011. Just a small fraction of that comes from exports, but Kluft expects sales to China to grow significantly in years to come.
About E.S. Kluft & Co.: In 2004, third-generation mattress maker Earl Kluft founded E. S. Kluft & Co. and created the next hallmark of luxury bedding. Kluft’s Aireloom® designs offer artisanal quality and legacy features such as hand-tied coils and hand side-stitching. Kluft lines feature the most advanced materials, patented designs, and technologies available in the world, including the highest quality Belgian jersey knits and damask fabrics, English nested coils, New Zealand Joma wool, natural Talalay latex, airegelle™, bio-based foams, and natural and eco-friendly fibers. Kluft is available in more than 350 select U.S. retailers and internationally.