Useful Papers

Production

To refer to furniture as a standard product is misleading. At its broadest classification furniture falls into a market for “no-name brand” and specialty a product. Developing countries, such as China and Malaysia, which can draw on pools of low-cost, semi-skilled labour tend to produce no-name brand, functional furniture. European furniture producers specialise in creating “artworks” and focus on craftsmanship and setting trends in design. The type of product one produces affects one’s production system. Developing countries mass produce sturdy, replicates of last season’s designs using cheap materials and labour. In contrast in Europe, limited quantities of furniture are produced by skilled artisans and designers using new, expensive materials. Both of these production systems produce financially viable products. The important point is that a producer should decide which market he/she wishes to serve as producing a product that straddles both markets has proven to be an unprofitable venture. 

For information about production systems:
http://www.unido.org/file-storage/download/?file_id=11904

An article about EU production:  
http://www.cbi.eu/marketinfo/cbi/?action=showDetails&id=2386

Details about the structure of China’s industry:
http://www.entrepreneur.com/tradejournals/article/172382657_3.html:

For information on the rise of developing producer and their impact on developed producers refer to this case study about American producers’ response to China:
http://www.kenan-flagler.unc.edu/assets/documents/furn_paper.pdf

Consumption

A consumer’s demand for furniture is influenced by his/her level of disposable income. Based on this relationship, the demand for furniture is concentrated in countries with a higher GDP per capita, such as the United States, EU (15) and Japan. For a more in-depth discussion of the factors that influence consumers’ decision in these markets, refer to the following articles:

EU :
http://www.cbi.eu/marketinfo/cbi/?action=showDetails&id=2384

USA:
http://edms.matrade.gov.my/domdoc/Reports.nsf/0/958F479F414B62AB48256FAC0028AD1E/$File/Furniture%20&%20Beddings%20In%20The%20United%20State%20Of%20America.doc?OpenElementhttp://www.exportvirginia.org/FastFacts/FastFacts_2007/FF_Issues_Furniture_Lumber_07.pdf

Japan:
http://www.asean.or.jp/eng/trade/information/A-1_Furniture.pdf
http://www.state.sc.us/forest/fprodjapan.pdf

Trade

No-name brand furniture is produced in developing countries for consumers in developed countries. As expected trade flows for these products have a “North-South” pattern. These goods tend to exported by China, Vietnam and Mexico to the United States, the United Kingdom and Japan, etc. Italy is one of the world’s largest producers of high-quality furniture which is typically sold as luxury goods to wealthy consumers in developed countries, such as France, United States and Japan, etc. The argument is that trade patterns are linked to the type of good traded. Generalisations maybe helpful to gain a “sense” of the market, but should be followed-up with country research. For more specific information refer to the following papers for

Global Trade patterns:
http://ahc.caf.wvu.edu/index.php?option=com_docman&task=doc_view&gid=18

EU Trade :
http://www.cbi.eu/marketinfo/cbi/?action=showDetails&id=2387
http://www.cbi.eu/marketinfo/cbi/?action=showDetails&id=2385
http://www.cbi.eu/marketinfo/cbi/?action=showDetails&id=2388

Regulations:

Countries use tariffs barriers and non-tariffs barriers to protect their domestic producers’ markets from imported goods. Tariffs increase the price of imported goods compared to domestic goods, thereby giving domestic producers a relative price advantage. Trade in furniture is relatively “free” as it is not subject to significant quotas and tariffs.

Information on tariffs and quotas for the EU
http://www.cbi.nl/marketinfo/cbi/?action=showDetails&id=2467

For details on Japanese tariffs
http://www.customs.go.jp/english/tariff/2007_4/data/94.htm

Information on American tariffs
http://dataweb.usitc.gov/scripts/tariff_current.asp

Non-tariff barriers potential to hinder exporters’ ability to sell their products into foreign markets is greater than tariff barriers. Non-tariff barriers increase a producer’s costs throughout the supply chain due to the complexity of the processes that he/she must adhere too and the bureaucratic cost of ensuring that procedures are documented. Unlike tariffs there is not a standardised list of NTBs that applies to all sectors. By their nature, NTBs are industry specific and that is what it is imperative that one understands his/her industry. The important NTBs in the furniture sector are environmentally friendly labelling and phytosanitary testing, Forest Stewardship Council (FSC) certification and ISO14000 certification. For more detailed information on NTBs refer to the following articles. These articles discuss the EU’s standards as it is the largest market for furniture and its standards are the most comprehensive. The implication is that if an exporter can satisfy these standards he/she should be able to meet other countries’ requirements.

http://www.cbi.nl/marketinfo/cbi/?action=showDetails&id=1078
http://www.cbi.eu/marketinfo/cbi/?action=showDetails&id=2390

Way Forward

Examining trade statistics gives one an understanding of today’s trade flows. At a superficial level this information seems discouraging. The low end of the furniture market is dominated by low-cost producers, in particular China and the high-end is the domain of the Italians. These trade statistics only provide part of the story. They ignore “soft” issues, such as the shift in consumer behaviour, the possibility to create a new market by supplying a new product and taking advantage of public sentiment.  

Consumers in developed countries purchasing decisions are not based solely on aesthetic considerations, they also consider how a good is made, in particular its environmentally impact, and who made it, so called social and ethics issues. Brazil, Malaysia and China’s products received negative publicity because these manufactures were accused of using endangered timber to produce furniture. Negative public sentiment provides a “gap” for SADC’s producers to supply furniture made out of Saligna wood, preferably to the high-end of the market. It is argued in the TIB that competing in the low end-market is not the preferred option, Instead it would be more profitable for SADC’s producers to export handcrafted furniture made out of indigenous African wood, which mixes African design with western functionality ( i.e furniture is compact to fit into western apartments /living spaces) to the upper echelons of the middle classes in the EU (15) and the United States.  To take advantage of this opportunity SADC’s furniture industry must address its supply-side problems. This is not an insurmountable task. It will require the growth of a large number of local networks of flexible, small and medium-sized firms that cooperate with each other to share training costs, infrastructure, expensive capital equipment and designs.

For information that explains the steps involved in producing furniture in an environmentally sound manner:
http://www.cbi.nl/marketinfo/cbi/?action=showDetails&id=151
http://www.forest-trends.org/documents/meetings/shanghai_2001/proceedings.pdf

Exporters guide to enter the EU’s markets
http://www.cbi.nl/marketinfo/cbi/?action=showDetails&id=2466

Buyers’ requirements in the EU
http://www.cbi.nl/marketinfo/cbi/?action=showDetails&id=188

Training programmes in South Africa
http://www.engineeringnews.co.za/article.php?a_id=853
http://www.fao.org/docrep/005/Y4803E/y4803e00.HTM
www.sida.se/shared/jsp/download.jsp?f=Utv07-41_SIDA40259en.pdf&a=35259

Setting up an SMME: An African case study
http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/1991/02/01/000009265_3960930201043/Rendered/PDF/multi0page.pdf
http://www.ttf.co.uk/forests/responsible/UK_final_draft.pdf
http://www.intracen.org/mds/wood_toc.pdf

China’s impact on SADC ‘s trade performance
http://www.uneca.org/eca_programmes/acgd/Overview_Report.pdf

Trade Fairs

China International Furniture Expo
10-13th September, 2008-01-23 
http://www.cmpsinoexpo.com/furniture/

International Furniture & Decor Expo (INFDEX)    
18TH-21ST May           
Qatar
http://www.biztradeshows.com/trade-events/international-furniture-decor.html

Furniture & Accessory Market-Long Beach
25th-27th April, 2008    USA, 
http://www.biztradeshows.com/trade-events/furniture-accessory-longbeach.html

Shenzhen International Furniture Exhibition (SIFE) 
19TH 22ND, March, 2008
China http://www.biztradeshows.com/trade-events/sife.html

Global Furniture & Interiors   4th-7th October, 2008  
India   
http://www.biztradeshows.com/trade-events/global-furniture-interiors.html

World of Furniture     
22nd-26st October, 2008        
Bulgaria          
http://www.biztradeshows.com/trade-events/world-of-furniture.html

Furnitex          
17 - 20 July 2008:
Melbourne Exhibition Centre, Southbank, Australia
http://www.furnitex.com.au/

International Furniture Fair, 9th-12 March, 2008
Singapore
http://www.iffs.com.sg/

Malaysian International Furniture Fair
4th-8th March, 2008
Malaysia 
http://www.miff.com.my

Movelsul, March 24th-28th, 2008
Brazi
http://www.movelsulbrasil.com.br/

Associations and Useful Contacts

Kwa-Zulu Natal Furniture Cluster: www.tikzn.co.za

International Furniture Suppliers Association: http://www.ifsa-info.com/

Business Broadcaster  Directory of South African furniture producers: http://www.business-broadcaster.co.za/office-furniture-2.asp

Timber SA Online information portal: http://www.timbersa.co.za/

World Timber NETWORK Provides the weblinks to research organisations and firms from over 24 countries: http://home.comcast.net/~leje/wtn2.html

U.S. Foreign Agricultural Service—Wood Products Provides information about market trends and possible business opportunities http://www.fas.usda.gov/ffpd/forest.asp

FAS Overseas Directory  Good starting point to gain a sense of trade patterns http://www.fas.usda.gov/ffpd/Export-Guidebook/appendix10.pdf