Market Outlook  

Global Insights - Perspectives from head honchos of the furniture industry

By Christine Tan

Instead of getting some geomancer or fengshui master read the fortunes of the furniture trade for the new year (a popular practice with some Chinese), we got hold of 10 head honchos of companies and industry organisations to give their take on 2018. They represent many segments of the furniture trade such as retail, wholesale, manufacturing, event organising, consulting and industry association. With their generous sharing of insights, we hope it will help empower you, the participants of the furniture industry, to make sense of the challenges and opportunities that may be heading our way. In turn we will be able to better plan our strategies to counter the challenges and capitalize those opportunities.

John J.C. Chan, Regional
Director, American
Hardwood Export Council
“We believe the markets of Southeast Asia & Greater China for U.S. hardwoods will continue to grow but the regional furniture and the timber product processing industries, architectural and design professionals still lack knowledge of American hardwood products which remains a challenge for the American Hardwood Export Council (AHEC). To overcome this challenge AHEC has a comprehensive programme to provide technical information on U.S. hardwoods species and products, to include their applications, variety, characteristics, grading, lesser known species and alternative grades. The information is provided to the traders, users and specifiers through written materials, such as brochures and literature, and through audio-visual presentations (translated into a number of languages) and seminars. A website and publications of special articles in the regional trade and design magazines supports the programme.

Some key opportunities for U.S. hardwoods exist in housing and construction markets as well as the wood processing industries and the growing interior design and decoration markets. For example there is opportunity for new products such as Thermal Modified Timber (TMT) American hardwood products.

To capitalise these opportunities AHEC will continue to promote U.S. hardwood through trade fairs, seminars, exhibitions and our interactive maps providing resource data. The annual convention and PR programme provides cooperation with interior designers, architects and local different timber trade associations. In addition, AHEC will focus on promoting the “green” credentials of U.S. hardwoods through such initiatives as the Seneca Creek legality study, AHEC Life Cycle Assessment (LCA) Study and American Hardwood Environmental Profiles (AHEPs).

John J.C. Chan, Regional Director, American Hardwood Export Council

Zhu Changling, President,
China National Furniture
In 2018, the furniture industry in China will maintain a steady growth with stable market demand moving from low and medium grade products towards medium and medium-high grade products. The import and export of furniture will also maintain steady growth.

The main challenges facing the Chinese industry are the continued rise in the cost of raw materials and labour; the increased demand on the industry for environmental protection and the resulting cost increases brought about by the investment in technology. Only the strong will triumph.

To overcome the challenges, it is important for Chinese manufacturers to adapt to the various reform policies of the new era, adapt to the promotion of environmental protection requirements and promote the technological progress of enterprises. There is also a need to increase the means of intelligent manufacturing to reach the world advanced level according to the requirements of “Made in China 2025”. Companies should also add value to themselves and their products by investing in- and shaping their brands. As the market evolves, enterprises will have to capitalize on the strength of the Internet and big data where industrialization and information integrates.

With the implementation of the policy of “One Belt and One Road”, China has made more investments in alleviating poverty, raising the living standards of its people in the process. This greatly increases the demand for furniture. 2018 will be a healthy year for the Chinese furniture industry.

Stacey Halliwell,
Regional Director,
Furniture Projects &
Singapore Furniture
Head, Courts Asia Ltd
COURTS Asia Ltd is Singapore’s leading retailer of Bedding & Furniture.

Specific to the Singapore market, low growth is projected with 2-4% across Sofa, Dining, Bedroom categories and 1.5% growth for Mattress.

Challenges in the coming year includes increased cost of warehousing and logistics, increased competition for expanding bricks & mortar outlets and sales leakage to Johor Bahru, Malaysia, online 6.6% for Furniture and 2% for Bedding, (Carousell & Gumtree 14.1% for Furniture). Maintaining sales staff is also an important point.

In response, COURTS continues to upgrade our existing stores to enhance the COURTS customer experience with more interactive shopping environments, building on our ‘Better Living, Better Prices” with on trend inspiring ranges across all Furniture categories and representing the best of best of mattress brands within the largest Bedding showroom in Singapore. While maintaining and striving for the best in Customer Service before, during and after purchase with over a 100 new services to help our customer at home.

Stacey Halliwell, Regional Director, Furniture Projects & Singapore Furniture Head, Courts Asia Ltd

Jirawat Tangkijngamwong,
Deputy Managing
Director, Deesawat
Industries Co.,Ltd
Deesawat Industries Co.,Ltd. is a manufacturer, exporter and retailer specializing in outdoor furniture, contract furniture for hotels, restaurants and cafes. Our main markets include Thailand, Asian, Japan, France, Italy, USA, Middle East, Maldives.

For 2018, I believe our market will remain stagnant in general but more predominant on the contract business. The market has grown to become very competitive with competing suppliers coming from all over the world. It is also very price sensitive now more than ever. There will be a lot of focus on contract business in the new year.

To address these challenges, I believe enterprises have to reinforce themselves with the strong design and quality approach because although there is stiff competition, the market will go after the lower price range at the similar quality. Strong marketing approaches are needed to win the projects. Getting exposure in exhibitions or market places are still the success factors as customers want to ensure they are familiar with the products and the suppliers well enough to place the order. Some customers also pay attention to other attributes like being green or original designs or other functionality.

There are many advantages to being a Thai company, which we are proud of. Thailand is known for being original in designs and consistent quality, so we do not have to put too much effort to prove our quality to the customers. Thai companies are also known for using environmentally friendly materials compared to those of competitors so that is also not a big issue to prove the case. There are many new market opportunities nearby Thailand to source for the furniture products, choosing products from Thailand is very reasonable.

The enterprises have to be ready to get themselves exposed either through media or physical exhibition so that they could learn the market requirement and better able to convince the customers. We have planned to exhibit in a few major events in 2018. They include Maison Objet, Isaloni, IFFS Singapore, Style Thailand and a few in Japan.

We believe in Network marketing. It’s also about connection and connectivity so Deesawat is now linking with other potential collaborators through network opportunities through associations like TFA or CAFA or AFPIC so that we can extend the group of known people. The most effective means to get the message across at this time is undoubtedly social media. So more effort could be put into the social media direction to get the target audience attention. A number of companies have not planned their strategy well. So this is considered the earlier age of social network marketing, Deesawat will have to focus on this strategy for the future.

Roberta Mutti, Partner
and Director, Italian
Consulting Pte Ltd
Italian Consulting Pte Ltd is a consulting company that specialises in the furniture and furnishing sectors of Europe and Asia.

The key issues we foresee for Italy in 2018 would be to develop exports to China, currently a booming market. As for Southeast Asia, it would be to develop design products.

We believe Italian companies must invest in exports to China, where Italy is the leading exporter in the premium sector. There is a need to open showrooms, exhibit at Chinese fairs, work on major projects with architects and interior designers and define distribution strategies. Asian companies on the other hand must develop design products, especially in the middle segment, and focus both on domestic markets, which are in great development, on exports to China, with which they already have a close relationship, which has a great demand for design products of medium range.

Digitalisation is a great opportunity for all. It facilitates communication and distribution. Getting digital is a great opportunity for Italian companies, which can undertake new omnichannel strategies, to be developed in close contact with retailers. Digital offers many possibilities to Malaysian producers, who can enter into partnerships with portals for sale in China, work remotely with international designers, to develop design products, and apply new technologies to modernize their production chain, still too much tied to manual labour.

Meutia Kumala, Managing
Director, PT Home Center
PT Home Center Indonesia is Indonesia’s largest retailer of furniture and home accessories. Operating under the Informa brand, our company currently has 69 stores throughout the country.

The outlook for 2018 is positive. We expect good growth, as long as politics does not become an issue. The test for us would be to challenge our existing stores to grow higher beyond the target.

In anticipation of this, we have created a solid team that is focused on the target. We keep awareness of any changes in our operating environment and respond promptly. We are also always on the lookout for innovations that can help our business.

We believe innovations is key. We always strive to innovate in every area possible. The core to our success is providing our customers unique products that are value for money, and giving them more and better services, so we can help people make their ideas happen.

Today everything is based on technology. So we have to keep up with the world’s changing. One of our aim is developing our IT systems to support the company’s goals and programs. And by this, we hope we can reach more people to experience Informa in their life.

Ryosuke Fukusada, Product Designer, Fukusada Design

Fukusada design is a successful product design studio. We have collaborated with many European and Asian companies on furniture, lighting, electronic appliances, sanitary ware, tableware and kitchen products for the international market.

I believe the market sales for 2018 would be an improvement over 2017. The number of European companies who do business in Asia would increase.

The challenge for 2018 is to design sophisticated and high-end taste products with lower price. It also remains a challenge to be able to creating an innovative function.

We will more focus on the material and how to use it in an efficient way. In addition, we will try to rethinik the functionality of our design products and what people needs on it.

Design shows in Europe as Milan Design Week.

We will unveil our new design products in several design shows and also carefully look at that and analyze the situation. We will try to find the people’s wants which companies haven’t enough satisfied. Then will put it in our future design products.

Ryosuke Fukusada, Product Designer, Fukusada Design

Meutia Kumala, Managing
Director, PT Home Center
The Malaysian furniture industry is expected to maintain a steady growth rate of 8% in 2018. This is provided there is a sufficient supply of labour and raw material to the industry.

We expect our industry will face stiff competition from Vietnam and we are likely to be handicapped by an insufficient supply of raw materials and labour. Some government policies and regulation will also likely add more strain to companies, especially the SMEs with additional red tape and paperwork.

To counter the difficulties, the Malaysian industry is encouraged to diversify and innovate product offering to attract new buyers, whilst not forgetting their existing buyers. Companies may also look into automation for a more streamlined production by using the available automation and mechanisation funds and support provided by the Malaysian government. This is to decrease the dependency on foreign labour which is challenging to source and may be costly. In addition, as the national association, MFC will continue to engage the relevant government ministries and agencies to ease doing business in this challenging economic climate such as to lobby the right ministry and agency to plant more Timber-Latex-Clone rubber trees to ensure a sustainable supply of rubberwood in the future.

On the bright side, we see opportunities for Malaysian exporters in emerging markets such as Philippines, India and China.

Intra-ASEAN trade remains quite low despite the favourable trade policies and market potential brought about by the ASEAN Economic Community (AEC) platform. With a combined population of 640 million, the ASEAN market presents great growth potential and opportunities. Malaysian companies can tap on this. As such, the Export Furniture Exhibition (EFE) will be dedicating an Export to Asia Pavilion at the EFE from 9 to 12 March 2018 in Kuala Lumpur. Moreover, the MFC and EFE is working closely with various Malaysian and international parties to attract and bring in new foreign buyers to EFE

Richard Koh, President,
Singapore Furniture
The Singapore retail industry is likely to witness a decline in rank-and-file with an increase in skilled workers taking on tasks which are beyond their traditional work scopes. Business models would need to be strengthened for retailers to perform competitively in a leaner-manpower workforce, whilst seeking opportunities in areas of innovation to enhance growth.

For Asian Furniture & Furnishing Industry, China remains a stronghold for numerous manufacturers. The expanse of the market with elevated standards and aspirations are key factors for manufacturers and Intra-Asia trade.

The disruption from the growth of e-commerce provides an option for customers to go onto the internet, therefore people no longer need showrooms to visualise furniture in their homes.

As an association, we will aid members both retailers and manufacturers, by forging ahead more innovations and initiatives to overcome these challenges, so as to further enhance value for members’ business efforts and to stay competitive with sharpened marketing edges to bring forth greater value to consumers-at-large.

The recent reduction of European furniture production has open the door of opportunities to suppliers from Asia. The current high levels of immigration all over Europe will, too, contribute to an increase of purchases.

Members can do so via expanding into Chinese market, as well as grabbing hold onto the opportunity of replacing European furniture producers and attracting these consumers to our market, and in turn to purchase from members.

William Simiadi, Director,
Indonesia’s leading manufacturer and retailer of wooden and rattan furniture, VIVERE Group is listed on the Indonesian Stock Exchange. In addition to the local market, our main overseas markets include USA, Europe and Australia.

We have set ourselves a target of USD110 million for 2018.

Indonesian exporters in general are getting squeezed between regional competitors that are outcompeting on either price or quality. The furniture sector has experienced a decade of declining value per unit, driven by the growth of the mechanized, lower quality sector.

To cope, we concentrate on upscale products with rich craftsmanship of local artisans. Moreover, we are ramping up differentiation efforts by using indigenous components and complex detailing methods. Homegrown materials such as rattan are widely employed to better differentiate our products from other sourcing hubs in the region. We are also improving product features and aesthetics of the latest releases to enhance marketability.

The global furniture market is worth around USD400 billion and is expected to grow moderately at a CAGR of around 4% until end of 2020.

To boost overseas presence, we are intensifying promotional activities in international furniture trade fairs, besides local trade shows such as Indonesia International Funiture Expo (IFEX) to seek potential customers. We will penetrate global market through correct marketing strategies via importing agents, direct buyers & retailers, hotels, residential & public projects. We are going to intensify product design and development program to adapt mix-material concept.

Arie Wissmann, President,
Wissmann Holdings
An 85 years old Israeli furniture company with a glorious history, the Wissmann Group is today one of Israel’s largest furniture companies offering both modern and classic home Furniture as well as kids & teens furniture. It is an international importer, domestic Wholesaler, chain stores operator and trader.

In 2018 I believe the furniture market will be difficult because customers will prefer to spend money on tourism than on furniture.

Our challenge is to maintain our position as a leading importer and maintain our high standards, reliability, uncompromising quality.

To achieve these, we will work on locating quality suppliers, using the finest raw materials, the most advanced technologies and equipment in the world, without compromising on design. At the same time, we will be increasing our global trade, an activity that we have begun in the last two years by creating connections between factories and buyers of networks around the world.

There are opportunities that lie with the development of e-commerce with emphasis on modern design, fast delivery times and attractive prices. Success will go to those who are able to find good suppliers that understand the future challenges of the world market and are capable to make steps into the progressing modern world.

As a progressive company, we have already established an internet platform for the marketing and sales of a unique furniture collection via digital channels. The range of furniture marketed includes dining tables, chairs, armchairs, beds, wardrobes, seating systems and complementary furniture.