links that can damage your ranking

same locality but unrelated site

[rookie]

We have an e-commerce site and we rank pretty well. We have stablished a good amount of Recip. links. We came across one site in particular with no similarity in the field we are in but both of us are from California and we had asked for a trade link and politely they responded by saying they cannot allow to link to us base solely on the latest algo Google applies or what not, that this type of link now are being hit hard by Google which in effect will damage there ranking even the fact we are both from the State as California like I said in a none similar products or industry. I know well from this forum back then I recall that this will be beneficial as oppose that it can pull your ranking down hill.
Can anyone elaborate on this for me.

If this is recommendable then is there such thing as overdoing it like
getting as much unrelated links but from within same State.

Thanks

[korkus2000]

Welcome to WebmasterWorld rookie,
^{don't forget to read paynt's welcome post. [webmasterworld.com]}

Here are some theming threads:
[webmasterworld.com...]
[webmasterworld.com...]
[webmasterworld.com...]

IMHO I really don't think that your ranking will suffer. You may find you are getting into different SERPs. If you have a lot of inbound links then one link shouldn't delute your theme. The locality is another question. Is the site linking to you a site about california or just happens to also be based out of california? I really don't think one link like this will cause a problem as long as most of your links are on theme. I believe theming will be extremely important in the future, but right now its not as important. IMO I would rather have keyword rich link text with high page rank over dead on theme links without the good link text and page rank. The best part of theme links is they will drive their own targeted traffic.

[rookie]

what it is is that no co-relation with any products we do.
We both are in the same State, not locality.
They are a law-firm and we are a manufaturing service Company.
The other similarity would refer to our Home page having
said we are a California base Company, the both of us!

[korkus2000]

AFAIK I don't think a link exchange will hurt. I am not sure if that would be enough to help your California theme.