YU: I know that ICC just celebrated its 12th birthday last week. I also saw your effort when I just visited the showroom, you treat China as your second home. Why did ICC select China?
Humberto: I'm going to try to tell you the whole story, because it’s very difficult to cut it short. We are manufacturers, we were operating in two countries, we were operating in Mexico and USA, we have a very big operation in both countries. At that moment of my career, I was in charge of the corporate outsourcing for Mexico and USA. Outsourcing and purchasing of all the finished goods that we did not manufacture, ceramic, stone or sanitaryware, anything we did not produce, or we did not want to produce.
Everything was working very well, actually we were moving at one point in time about 800,000 square meters (about 800 containers) per month. From Italy, Spain, Brazil, from Colombia, Turkey, India just to name a few, but nothing from China. The life of any company, any industry, economy, or country, goes through different cycles. What happened was that everything was working very well for us, our company was making good money and we decided to open new manufacturing facilities. The most modern factory at that time with Italian equipment in Mexico and the department of outsourcing that I was in charge of suddenly because the company had a new manufacturing facility and the company obviously preferred to manufacture the product instead of importing so my workload was reduced significantly. So, I used my spare time to keep travelling, and understanding the opportunities, that the world had to offer.
At that moment, I landed in China for the first time, which was in 2002. When I arrived in China, I was not expecting to see what I saw when I arrived to Shanghai. People told me so many stories that were hard to believe, especially the ones that have never been to China but the ones that have been to China said many positive things about the country.
But when I arrived, I saw the opportunity and the future. I didn’t take me very long after I went back to USA to say: I believe this is going to be the future. For our company, China is going to represent an important thing, business wise, sales wise and so on.
But at that moment, I just was trying to find good tiles in China to meet our standards, found them at low prices and sell them to Mexican and USA. After we found the right tiles polished that had a very low priced, we are able to earn lots of money in Mexican and USA markets they were extremely profitable products for us.
But at that moment we did not have office in China and I was travelling back and fort, but the import quantity was increasing exponentially and our business demanded presence and set an office here to check quality, find new opportunities, know better the market. So, In 2006, I moved to China and set the office. And after just a couple of years, our growth was the highest, exponential proving that that we made a right decision.
I saw lots of opportunities at that time. For example, one of the opportunities is that we not only sell the tiles in Mexican and USA, but also in anywhere else in the world that was one option, but I also made a study of the possibility of using our experience in the international market to start distribution and sales in China, reproducing Interceramic’s successful distribution network and platform.
The company did not send me here, I moved here and in this way we transformed because of our presence in China very rapidly and now have between the two office in China more than 150 people and a pretty big business in the country.
YU：From your story I have learn that we need keep moving and think about the future, no matter that we are in comfort zone or not. At that time, most people were only thinking about export tiles overseas, less of them done the job like you.
Humberto：Many companies tried to do this before but they did not have success and the right approach. We were for sure the first company that did this. Many other companies could not do this. Because it demands presence and international management and living permanently in China. It was important to be here and open our eyes, ears and mindset to see other things we could do besides only purchasing tiles. That’s why we were able to open distribution in China and many other divisions of the company like right now. One of the divisions that is very successful is sanitaryware. Sanitaryware is growing rapidly, exponentially right now for us, but those things cannot happen unless you are right here.
Most people would say that it should have been a big challenge moving to China. And off course it was a big challenge, but it was absolutely impossible that we could have done this managing it form long distance.
Yu: Lots of people treat this business just as a trade, but you are different, you show enthusiasm and passion, work hard and make efforts to make company better.
Humberto: You are absolutely right, you need commitment in this business. If our company change management in few years and send other people to be in charge, it is not going to work. I always knew and say that this was going to take 10 years or more 15, 20 or until I retire. I always said that this was not like running a sprint of 100meters, it was going to be 42 kilometers marathon.
Yu: Running a business is running a marathon, which is also the spirit we have been advocating in recent years. What are the key points that ICC developed from a North American ceramic brand to a global ceramic brand?
Humberto: An important thing to mention is that very early in this whole process that started twenty years ago, keep in mind also that ICC has only twelve years of the 20. But in the first 4-5 years I saw at that time that China was the perfect platform to help transform our company from Mexican and North American company to an international world company. Because the operation and manufacturing here in Foshan could reach markets that we can't in North America or Mexican.
Honestly it was also in another way a big challenge that we push ourselves to compete in the world market, also in the most difficult, the biggest, the most competitors of all kinds from the lowest end to the highest end, but we thought that we could do something here using our experience. But 98% people would not do this. Because they are going to say it is too risky and too difficult.
I always say, yes, it is true, but if it is riskier and more difficult it also means that there is less competition. We were the first one and do it right the first time. It was also a matter of pride and confidence, because we could bring this international wisdom we had in North America to the market that needed a different kind of player. At that moment, we saw the niche in the market to have a brand and perform and do the things we were doing very well and reproduce them in this market.
Yu：At the beginning you already set the target to transform to an international brand.
Humberto: Yes, absolutely that was the target. We needed to introduce ICC as an international company with lots of experience in North America and the most demanding markets in the world with excellent relationships with European manufacturers, because we were excellent customers of Sacmi, Kerajet, Colorobbia, Esmalglass and so on, so I thought that we can use our resources, experience and wisdom to do business in China. Obliviously, we have done a financial analysis and check with different people. based on the feedback, it is feasible to running our business in China.
Now we have been here more than 12 years and it proved we were right. The market is not going to be as good as it was in 2004 to 2007 because if it was like those years all of the last 12 who knows how big we could have been by now. The industry and economy is going through different cycles, now we are going through a very difficult time. But once if it recovers and it is going a right direction, we are ready to grow to the seize that we all believe we can be as a company in this market.
Yu: It does not matter how bad the market is, we just keep doing our thing.
Humberto: Yes, we will do whatever it takes because we are committed to this market. We believe in our strategy. We understand it may take more years to realize it. We are ready to keep doing the hard work and stay here as long as necessary.
Yu: From this conversation, I saw that you are only transfer the tiles between China and Mexican and USA, but also knowledge, wisdom and culture.
Humberto: I am probably not the right person to give you the best answer, they could probably give you a better answer everything they have learned has not been necessarily from me, but if it wasn’t me at least I put them in the right place. So, they are good to learn from the experts or the people from other countries like Italian experts. That is why I said that working in ICC is different than working in most other companies. It is a very different platform.
Yu: It's a very special work experience for them.
Humberto: It makes me happy to hear things like people from ICC getting job interviews from other companies, and they hire them with almost no questions and short interviews just because they come from ICC. It is very important to have a good working environment, promote the culture of the company. I praise them when they do a good job, but it seems very hard for other bosses to do. They have direct and very easy access to me every day.
Yu: Yes, especially for the Chinese boss, it not easy to make them praise their employees. Why did you set the showroom in CCIH? What kind of assistance have CCIH gave to you?
Humberto: There are lots of things that I had to learn from the local people and many ways knew things better than me. Like I asked: Where should we open the corporate showroom? They told me it had to be either somewhere in Jihua Lu between CCIH and CCC or right at the heart of CCIH.
This thing didn’t take very long to decide, because when we moved here we have never thought about opening a showroom and at the same place the office. I said this will be a showroom only. This space here was design to be a showroom, and not an office and we move our office to a building that more suitable be an office for us. They told me: boss, we need set our showroom in CCIH, that is the best place for us.
CCIH is a big area. At the beginning we decided to set the showroom ideally on Jihua Road at CCIH area, but they told me to forget about this, because the lease of all the showrooms there is at least 10 years and the old brands are not going to move from there and it will be impossible to get a space there. Even we get the lease there, but maybe the size is not suitable for us, either too big or too small.
And then we found this one by chance, this location was perfect, right in the heart of CCIH but I need consider about the construction conditions which did not look good. So, I came back again with a construction company to check what I could not see, the ceilings, height and everything else. It was a big surprise that we started to remove the ceiling that was very low, and we found that this showroom had 4.75 meters height. I think is gonna to work, so we decided to committing to CCIH.
After that, we had a new challenge that is if we are going to move to CCIH and make the right impression, we need to make our showroom stand out and our goal was to make the best external facade. I think we achieved our goal, we did the metallic structure and installed a big LED screen outside seven years ago, it was a first for the industry.
We were always committed to be the best and bring the things you have never see it before, like the modern rustic ceramics. The way we did is super western, most of the tiles were not polished. The tiles application way was very particular. It helped ICC move to another level. So, compare with other locations, CCIH gave us a great platform, perfect location and good size.
once we settled down this showroom, we found we made another right decision. Later and just last year we finished remodeling the second floor of the showroom and transformed it into a museum gallery concept, I believe it worked very well because many other companies started to following us and doing galleries as well. So it is important to know that people like the things that we do.
If you want to be successful, you must do the different kind of things in this market. If our company just make ordinary and basic stuff, this company is not going to last a long time. Now our showroom gets a major renovation every two years. I believe next year we are going to transform the first floor to always keep it attractive for our distributors, potential distributors, designers, industry and so on.
Yu: You seems like you can always expect the future, the tiles in your showroom we can see the similar one in CERSAIE this year.
Humberto: I tell our co-workers, employees are that I have live in the future, and then come back to the present, and tell you what we need to do. I am going to write this on paper this time, and you can check it at the end of the next year to see if I was right. At the beginning nobody believes or understand what needs to be done. But I have prove to them too many times this and most of them I was right.
The better I do this, the better result is going to be for ICC, and is better for the industry in general. We benefit as a brand if the industry is doing well. Either we like it or not, we have to share things on the media, because we are part of the industry.
Yu: I believe you live in the future, because you already answered my next question is that you keep sharing and analyzing the world ceramic trends and present your report since 2014. Now, ICC is not only a brand, but also a trend representative in ceramic industry. Why did you think to do such a thing in the first place?
Humberto: I cannot tell you anything about girlfriends, your wife, or if you are going to win the lottery，or who is going to win the world cup. Doing the trends was a little bit easier for me, I have done the first sharing of CERSAIE trend in 2014. We did not share this in the first year, the opportunity is not ripe yet since at that time we were only a new company, people probably would not trust your analyzing. After few years, we are now a well-established company and a very hot brand in the market, my analyzing become more believable, then I started to share it to our industry.
once I finished my first show, we achieved a big success. CCIH and the people from ceramic industry asked me to do it again next year. And then, the second show was even better than the first one.
The benefit is obvious, it helped us layout in advance, made the whole industry pay attention in ICC, made us relevant, made believe the people that we were a real important company and so on. People knew we were an important company that was helping transform our industry.
After three years, I told CCIH to take the lead and organize it with more industry people join us to share their views and opinions. Later on many other ceramic associations do it using a similar way. This time because of the pandemic, it was very hard to go CERSAIE and share the report at the right time because returning wasn’t fast and easy. But they do not know this was the time that I have wrote the best report than other reports I have ever written.
Obviously we use the information for ICC first, and eventually we share the information to our industry. We did not do this in October this year, but we are going to share the report in media to our industry eventually.
Yu: You have been continually sharing your opinions and views for our industry, you have done lots of contribution for us. I know that you are not only traveling in the world, but also investigate the terminal showroom in the market. What do you think about international market and domestic market?
Humberto: A few years ago, I told the media that people come and purchase in China because they have good product and a very reasonable price. But I told them that China would eventually become a design reference to the world. The quality of Chinese tiles kept improving, I and I mean not only the product, but also the showrooms. China is going to be a reference to the world. But back then I didn’t predict that famous designers would help the ceramic companies do better showrooms and this helped a lot.
A couple of years later, my wife who is a designer was traveling with me, and she noticed and told me that you better be careful, other different brands are improving a lot and the level of design is significantly better than five years ago. We used to have a very competitive advantage, but now the gap is narrowing.
Chinese ceramic industry keeps improving, there are about 30 brands in the market that are doing very well in the market. Their show rooms are top class, you can put their kinds of showrooms in Milan, Rome, London or New York, and they will look good.
There are in the market hundreds or maybe thousands ceramic brands showrooms that are high end in China, but in Italy just ten or twenty have showrooms in their country. If you go to Chongqing, Fuzhou or Hangzhou to the right market, you can easily find thirty or forty beautiful and world class showrooms in the building materials malls in the country, that did not happen before. The design of the showrooms is at a completely different level.
Unfortunately, nobody has seen this, because for the foreigners that used to come to China to buy have not been able to come to China in last three years. I think they will be very surprised once they are able to get back to China again. Specially for those who used to travel to China a little bit more.
And if they only arrive in Foshan, they can only see apart of story, they should travel around China, especially to the main cities like Shanghai, Hangzhou and so on.
Yu: Your voice is very important and we will spread your voice in our industry. Other entrepreneurs will be happy when they read your story. Because your view of our industry is with a more holistic view of the world. Your voice better than our bragging, and your perspective is more objective.
Humberto：Before a few weeks ago, I was a little surprised when I was in Italy during CERSAIE with one of our suppliers who worked with us more than 25 years ago. He told me he read and saw my video interview and the proposal and that was very useful and interesting for them. I was very happy to hear that, I feel that I did the right thing. I didn’t realize that interview was going to have such a big exposure.
Yu: You are very famous in our industry because of your show, presentation and trends sharing. The man who lives in the future, What do you expect for the trends next year?
Humberto: to be honest, it is not going to be very good next year, it is going to be very challenging. Probably it will get worse before it gets better.
Yu: I wish you could keep confidence.
Humberto: Next year will be very challenging, remove complex macro factors like economy, real-estate, reconstruct, currency, exchange rate, transportation and any other things. I believe we all were wrong with the predictions of 2022, we knew it was going to be difficult year but not this kind of difficult and bad.
based on that, the expectation for 2023 is not very good and I can tell you that upfront. Somebody said that it is going to be better next year. I said that probably not, because I believe that our industry is going to keep going in the wrong direction for a while before it starts going in the right direction. It is like a wave of cycle, I am not sure we already touched the bottom or not, but that moment will come, and from there, it will not go down anymore and from the bottom there is only one way to go and it will start getting better. I hope it would not be last too long and NOT much more LOWER ANYMORE.
I remember that in 2008 in USA, the market was in terrible shape, It went down to a terribly low number. We can check the figures of our industry, it lasted ten years to recover to the same level. China's woes may not be as bad as that time in USA, but there are still challenging for us next year. I hopeful the best, our first priority is to survive, we might touch the bottom after two or three years, we are going to recovery and climbing up again.
Yu: What are your plans for this challenge?
Humberto: The most important is that you should know what kind of ground or floor you are walking on, and we need to put 120% attention on our financial situation and doing everything with significant diligence and analysis. Not only about the financial, but also the innovation, investment, marketing and so on, actually… everything!
When the pandemic hit us in 2020, the first quarter was horrible for most brands in their history, everything was closed and we lost a lot of money, but we bounced back the second semester of the 2020 year strongly and with fast power, the industry in general and us along with them. Probably we were the one of the best performing ceramic companies at that time because of our size to get out of the hole. And we recovered from the big loss of the first quarter and ended having a decent 2020 year and we were glad it was over. The recovery kept improving in the first semester of 2021, we reached our targets every month for 18 consecutive months, and our sales increased placidly since June 2020.
Yu: The market was going down since August 2021.
Humberto: Exactly, but it was interesting that during this difficult time, even our boss in Mexico question and asked me: Hey Humberto, are you sure we should invest the kind of money in remodeling and upgrading all ICC stores?
I said that we did not have another choice, we have to do it and expect for the market to do better, we could be in a much, more better position than the competition when it gets better. So, we remodeled the ICC stores to ICC Global stores. And in 2019 we imported ABK products from Italy, the global collection products and we had to do something with them, the tiles and the investment in inventory. Eventually It worked, because in 2020 we remodeled half of our stores, and 2021 we remodel most of the other half of stores, and 2021 was a very good year for us.
2022 has been not good year for anyone. But for us, it has not been as bad as it has been for most. We did not win or lose, we are glad it is almost over and just keep the balance. Be ready to live in a challenging time, and be careful with everything you do, do not take foolish decisions.
Eventually I hope sooner than later maybe 2024, 2025 or 2026, we all will be on a different situation, our company is going to be a right position because we did the right layout in this tough time.