Staples has a Games plan

Firm hopes to ride office furniture to China gold

BEIJING - Howie Wu will finally breathe a sigh of relief when Olympic judges go to work next week, resting their elbows on sleek gray tables and sitting in blue-cushion chairs from Staples.

Wu, known as Mr. Furniture around Beijing, has spent the last two years in a rush to complete the Framingham company's massive undertaking: supplying furniture for the 2008 Summer Olympics. Under Wu's direction, 200 employees have helped design, deliver, and assemble more than 250,000 items: judges' tables, chairs for doping-test stations, red rope dividers at Beijing National Stadium, and hand-carved bamboo cabinets for the chairman of the International Olympic Committee.

Wu's intensity illustrates how seriously Staples takes its status as the first official office furniture supplier for any Olympic games. The company wants to establish a firm foothold in China's fast-growing $30 billion office products market, where a skyscraper is finished, and possibly furnished, almost every two weeks in Shanghai alone. The stakes are high: The region presents huge potential, but comes with the cultural and political risks inherent in a country where other US brands have struggled.

To carry it off, Staples changed its business model for China, focusing on furniture and services such as interior design, lighting, and supply delivery, instead of the office superstore concept it started in Brighton two decades ago. Executives see the games as a chance for Staples to tap into the national excitement for everything Olympic.

"The 2008 Beijing Olympics is the number one event in China," said Lukas Ruecker, Staples vice president of high-growth markets. "We saw this as a great way to showcase the quality and assortment of Staples furniture."

Unlike official sponsors such as Visa and McDonald's, which shell out tens of millions of dollars for the rights to affiliate their brands with the Olympics, Staples has a lower-level partnership as "exclusive supplier," providing the furniture in exchange for that title. But the Framingham chain has spent several million dollars on the Olympic initiative, including the cost of buying furniture, hiring temporary workers, and launching a marketing campaign that includes billboards, furniture showrooms in office buildings, and ads on city buses. Staples is also selling a limited edition Olympic collection, with chairs featuring the colors of the five rings and tables inspired by the striking steel architecture of Beijing National Stadium.

Staples executives consider the Olympics partnership an investment, saying the majority of the brand's growth will eventually come from China and other emerging countries. Sales in China have increased tenfold, from $20 million when Staples entered the region four years ago as a pioneer in the market. Its chief US rivals, Office Depot and OfficeMax, don't have stores in China. The roughly $200 million that Staples' China division made in sales last year is just a fraction of the company's worldwide revenue of $20 billion, but executives estimate China could represent $1 billion in business for the company within three to five years.

Staples says its Olympic efforts are paying off with increased business orders and consumer awareness. But its ambition has meant a lot of nerve-racking work for Wu, deputy director of the Staples Olympic project, and his furniture team.

Weeks before the Aug. 8 opening ceremony, Wu, a soft-spoken, lanky 30-year-old, was sweating at Beijing National Stadium, making calls on two cellphones and furiously thumbing away on his BlackBerry to deal with a never-ending series of roadblocks, such as delivery trucks held up by security and overzealous Olympic officials taping over Staples logos on media center chairs. Still, the company has made huge progress since the project began in 2006. As part of the bidding process, the chain dropped off three styles of 40 different types of furniture at a remote location in Beijing, where Olympic officials conducted blind tests. Staples, barely known in the market, beat out 10 competitors.

Since then, it has worked with vendors to design furniture that met the Olympic Committee's demands, and held off-site training for employees featuring contests to see who could assemble products faster.

At an athletic event in China last August, Staples field-tested the furniture and discovered a critical flaw: The chairs, designed for Chinese officials, were too small for muscular athletes and members of the international media who can probably pinch an inch or two. So the factory mold was changed to expand the seat width from 38 centimeters up to 46 centimeters.

"The chairs were fine for Asian men with smaller frames, but not big enough for foreigners," said Yaoyu Wang, a logistics manager for the Beijing Organizing Committee for the games. "But we worked closely with Staples to monitor everything, and they've done a good job with no major hiccups."

Staples is known in the United States for its cool and quirky marketing (executives have appeared on Donald Trump's television show "The Apprentice," and the company hired "High School Musical" star Ashley Tisdale as a spokeswoman for back-to-school shopping). But the company has a more serious presence in China.

When a furniture delivery team recently arrived at the Beijing National Stadium, the crew, dressed in matching khaki outfits emblazoned with the red Staples logo, lined up in two rows, saluting like soldiers and chanting instructions before assembling the furniture.

The restrained tone, retail analysts say, reflects lessons Staples learned in Europe, where it had difficulty exporting its US retail model and lost millions of dollars annually for a decade. The experience prompted Staples to approach China cautiously and hand over decisions to Chinese executives like Wu, who tailored strategies to the country, according to company officials.

Staples also recognized difficulties that other US retailers, outside the office products business, have encountered in China as they aggressively expand. Bureaucratic hurdles and biases toward domestic merchants have hindered foreign brands from opening stores, said Frank Badillo, a senior economist at market research firm TNS Retail Forward. Cramped retail space in cities - about 16 million people crowd Beijing - has also thwarted expansion. For instance, Wal-Mart Stores Inc. has struggled to find large properties in China while French rival Carrefour has fared better with small shops, Badillo said.

To meet the needs of the Chinese market, Staples revamped its shopping experience, opening stores in spaces as small as 600 square feet, filled with basic supplies, while reserving larger real estate for its core furniture business. In Beijing and Shanghai, the company recently opened vast showrooms featuring sleek, modern office furniture. It is also rolling out Unicube, a furniture brand sold only in China, and is playing up a line of services to help offices with lighting, electrical wiring, and interior design.

Retail analysts say the shift is necessary. The superstore model, which mainly targets individuals, requires big retail spaces, often in suburbs. It also relies on consumers with home offices and cars; few Chinese have either. Moreover, unlike in the United States, large chains in China face fierce competition from mom-and-pop shops that often evade paying taxes and strike deals with local suppliers. That allows small shops to offer better prices.

"Price is really what matters," said Aimin Yan, a native of China who directs the International Management Program at Boston University. "It's a more complicated market here with different shopping habits, a more cutthroat price environment, and little widespread brand loyalty."

Over the last six months, Staples has also opened several small shops in office buildings in China as part of a joint venture with shipping and delivery giant UPS. The stores feature a range of basic office supplies, along with packing, shipping, and delivery services. The partnership could be exported to other countries, analysts say, particularly as Staples intensifies its focus on business delivery with the recent $2.7 billion acquisition of Dutch firm Corporate Express.

Convenience and speed were on the minds of customers recently at one of the chain's new showrooms in Shanghai. Yvonne Zhu sat at a table, flipping through a catalog to select furniture for the 50-employee biotech firm where she works as an assistant general manager.

"I'm in a hurry and trying to get everything set up as soon as possible," said Zhu, who was making her second visit to the showroom. "Staples can get everything very fast for businesses that are growing."

Back in Beijing, Staples is building a mini-replica of Beijing National Stadium at its office, where it plans to host events and ceremonies for local employees and visiting Framingham executives, including chief executive Ron Sargent.

"Holding a successful Olympics is a dream, the same dream for all the Chinese people," Wu said. "It's a big opportunity for our company, as well."

His job, of course, is not done: Wu will attend the opening ceremony, but not as a spectator. He'll be on alert, ready to act in the event of a furniture malfunction.

In between planning meetings at the Beijing office earlier this month, Wu glanced briefly at a calendar counting down the days until the Olympics and smiled wearily at the number 35.

"Almost done, thank God," he said, rushing down the stairs on his way to the Olympic Green, where another furniture emergency awaited.

Jenn Abelson can be reached at abelson@globe.com.