World Outlook  

The Unexpected Surge : Furniture Sales Soar, Design Becomes Central

By Roberta Mutti and Franz Rivoira, ICON - Italian Consulting Pte Ltd

Thanks to the CSIL 2018 Forecasting Seminar, which was held in Milan in November 2017, we can see the
situation of the furniture market in the world, with a quick excursus towards Europe and Asia Pacific.

The situation of the world economy.

Stefania Tomasini, researcher of Prometeia, one of the most accredited research institutes in Italy, illustrated the situation of the world economy, which shows a decisive recovery.

Already at the end of 2016 (CSIL Report 2017) the world economy was expanding, but now, almost at the end of 2017, the strength of the growth of the world economy is surprising for all operators. Global GDP grew by 3.5%, but the most positive figure is that growth, at world level, is shared by both industrialised and emerging countries: there are no longer the imbalances that were present until last year. Among the BRIC countries, Brazil and Russia are emerging from their long recessionary phase, even though they are not yet stabilized in a phase of expansion; China has had a higher-than-expected growth in 2017, followed by a controlled slowdown for the following two years (rates ranging from 7 to 5.8%), and India is expected to expand more than 7% until 2020. A positive trend is expected for the next three years, with the emerging countries growing at a rate of more than 4%, and the industrialised countries remaining below 2% on average. Among the high-income economies, the United States will continue their growth trend, while EMU countries are likely to slow down and stand at 2.2%, due to the lack of accommodating policies.

Thanks to this positive economic situation, world trade in manufactured goods increased by 4.9%, a decidedly interesting rate; in 2018 growth will remain above 4%, while thereafter interest rates will fall slightly, also as a result of lower growth in China and, from 2020, in the United States. The great absence of this growth is inflation, and it is a factor of which there are still no unequivocal and shared interpretations.

The positive fact is that low inflation, on the one hand, makes it possible to maintain expansionary monetary policies and, on the other hand, allows families to gain in purchasing power, which is a positive element to support economic expansion.

The furniture market in the world

We have already seen that global trade as a whole increased by 4.9% in 2017. The world furniture market, valued at production prices excluding the markup for distribution, is USD425 billion, up from 2016, and is expected to grow by 3.5% in 2018.

Foreign trade in furniture, thanks to this favourable situation, has also increased by 3% compared to 2016, and is expected to grow by about 4% in 2018, with growth concentrated mainly in Asia Pacific. Currently, the main exporters are China, with a 35% share, which is increasing; Germany, 8% stable, Italy and Poland at 7% stable, and Vietnam at 6%, increasing; the top 5 exporting countries account for 63% of total world furniture exports. The main importers are the United States, with 28%, increasing; Germany, 10%, stable; the United Kingdom, 6%, increasing; France, 5%, increasing; and Canada, with 4%, increasing; the top 5 importing countries account for a 53% share of total world furniture imports.

The protagonists of the world furniture market, which account for 75% of total consumption, are China, with a 29% share; India, 5%; Japan with 3%; the United States with 20%; Canada 2%; the United Kingdom 3%; France 3% and Italy 2%.

China and the furniture industry

China is the world’s largest furniture manufacturer, accounting for 35% of the world’s total exports.

China is the world’s largest furniture manufacturer, accounting for 35% of the world’s total exports. From 2004 to 2010, the number of furniture manufacturers in China has doubled, and with it also the number of employees; there are currently about 5,500 furniture manufacturers in China, employing about 1.2 million people. One Chinese company has an average turnover of approximately RMB144 million (about USD22 million), compared to an average turnover of USD1.3 million in Italy and USD2 million in Germany, and has 210 employees, compared to the Italian average of 8.13.

In 2016, the production value of China’s furniture industry was over RMB855 billion (USD124 billion), and China continues to invest in this sector, deploying substantial capital to implement technology (RMB306 billion, about EUR38 billion of investments in 2016).

Wood furniture accounts for 64% of Chinese furniture production, followed by metal furniture (19%), while bamboo and rattan furniture (2.1 billion dollars) and plastic furniture (1.3 billion dollars) follow at a distance. The furnishing in rattan and bamboo has seen an increase of 43% in the last 5 years; wood gained 20%; plastic 11% and metal 9%. Overall, Chinese exports grew steadily from 2004 to 2015, reaching 53 billion dollars in 2015 (later falling to about 50 billion in 2016 and 2017).

From 2013 onwards, the Chinese domestic market has started to grow significantly, and today the main share of production is directed to the domestic market.

The furniture industry in Asia-Pacific

A number of studies point to a growth in consumption in Asia Pacific of around 4-5% per annum in the years up to 2020. Of course, this consumption also includes furniture. Considering that in Asia Pacific (including China) more than 50% of the world’s furniture production is produced, and that about 40% of trade takes place within the area, it is clear that there is a market, both developed and potential, of great interest.

In Southeast Asia, two countries are among the top 10 exporters in the world: Malaysia (8th place) and Vietnam (5th place). However, both gained these positions thanks to large sales volumes in the lower end of the market and in the wood furniture segment; Ngo Sy Hoai, Deputy Secretary General of the Vietnam Wood and Forestry Association, in a recent speech at the Global Timber Conference, in Kuching, stressed that Vietnam’s leap forward in the ranking of world exporters is mainly due to labour costs, which are currently lower in Vietnam than in other countries in the area.

As all the researchers continue to underline, the Asian furniture market is in great expansion, and the demand for design and luxury products will be growing more and more. According to a recent report by, the Luxury furniture market will reach USD5.4 billion in Asia Pacific by 2020.

Increased disposable income, improved consumer lifestyles and a significant increase in GDP will support market growth in the Asia Pacific region, and the furniture market will be based on the rapidly developing real estate sector. The expansion of the luxury furniture segment will lead to diversification in the materials used for products. The lion’s share will be occupied by wood, which currently accounts for 24% of the total production, followed by metal, rediscovered mainly for living, sleeping, outdoor and kitchen areas, thanks above all for its durability, which makes up one fifth of the production. Other growing materials are leather, plastic and glass, the latter increasing by 8% between 2016 and 2020.

Finally, with smaller shares, we can find rattan, fabrics, fibers and stone.

It is therefore very clear that the Asian furniture industries must make an effort to develop better quality products, investing in product design, but also in different marketing and communication strategies.

New consumers of the future will be increasingly demanding, and companies will need to explore new avenues and plan new marketing strategies to better serve their would-be customers locally and globally.

Franz Rivoira, Partner and Director, Italian Consulting

Roberta Mutti, Partner and Director, Italian Consulting