10th Anniversary Special  



Past, Present & Future Part II

Furniture & Furnishing Export International Celebrates Its 10th Anniversary With Recaps From Industry Authorities & Business Leaders On The Last Decade, As They Share Valuable Tips On Exceling In The Next 10 Years


FURNITURE AND FURNISHING EXPORT INTERNATIONAL rolled out in 2003 as Southeast Asia’s first and only furniture export-import magazine. Since then, it has grown to become Asia’s number one furniture trade title serving the global markets. The publication provides extensive editorial coverage and brings news, reports, designs, trends, interviews and event information to industry players across the globe. Spanning Asia Pacific, the Middle East, Europe, Africa and the Americas, our readership at present comprises wholesalers, distributors, large retailers, manufacturers and so on.

We are celebrating our 10th Year Anniversary with this special segment featuring comments from industry leaders and experts in the region and around the world. From them we learn of the major developments observed across the local and global furniture trade in the last 10 years, lesson learnt as well as their predictions on the outlook, trends, threats and opportunities to expect over the next decade.

To commemorate this special occasion, we spoke to key industry figures to find out what has been significant in the last 10 years, where the furniture industry is concerned. In this first sequel of a threepart series, experts share with us the events which have impacted them the most, lessons to be learned from the decade past as well as their expectation for the next ten years ahead.



AMBAR TJAHYONO
is Chairman of the
Indonesia Furniture
Industry and Handicraft
Association (ASMINDO)
and Director of Griya
Kriyasta Nugraha,
a homegrown
manufacturer
specialising in art and
furniture. He is also the
Chairman of the ASEAN
Furniture Industry
Council (AFIC) and Vice
Chairman of the Council
of Asian Furniture
Associations (CAFA).
FFE: In your opinion, what has been the most significant developments in the furniture industry of your country or region in the last 10 years?
Amber Tjahyono:
Over the last 10 years, Indonesia’s furniture industry has been faced with many changes and challenges. From the 2002 to 2012, fluctuations in the furniture industry have tended to decline due to the financial downturn. With the state of the global economy ultimately dictating the purchasing power of furniture buyers, this downward spiral reached its lowest point in 2008 when the United States hit rock bottom with the subprime mortgage crisis.

We had hoped the situation would improve, but conditions worsened instead due to the subsequent economic crisis befalling Greece, Spain, Portugal and other countries within the European Union. The market movement observed a significant evolution; all middle to low class-oriented industries experienced difficulty in tackling this challenge. The great financial disruption drove and delivered the trade to the hands of dramatic change; one which involved the price factor. The strategy was in set: producing new products with competitive prices.

Also, from ethnic to modern styles to minimalist designs and everything in between, furniture design trends have rapidly evolved across the past decade. Nowadays, the trend is such that furniture products are no longer solely dependent on the materials used to produce them. As long as each one has a creative concept embedded into the design, good color and quality, it can be sold. Where environmental issues are concerned, minimalist recycling is now a choice.

FFE: What has impacted your association the most in the past decade?
AT:
Industry players are well aware of the demands to “go green”, which are now widespread across the global furniture landscape. As a furniture association, Asmindo is responsible for significant developments in this area. The joint collaboration with the FSC to form Asmindo Certification Care (ACC) is evidence of the fact. This division provides mentorship for members not yet certified. The effort includes the mentoring of the SLVK (a timber legality verification system) by ACC, the result of the coming together of Indonesia and the Europe Union.

FFE: What lessons can industry players learn from the last 10 years?
AT:
In order to resuscitate the Indonesian furniture industry from this dark period, Asmindo today coordinates the partnership with the Indonesian Trade Promotion Center (ITPC), an integral component of the Directorate General for National Export Development (DGNED), Ministry of Trade Republic of Indonesia.

And strengthen the relationship by appreciate their role in promoting Indonesia furniture industry and supplying furniture market information in where they stated with an award called Asmindo Award. In future we will strengthen the coordination between furniture industry through AFIC which has mission to integrate furniture industry between ASEAN Countries and CAFA which has wider coverage.

FFE: What are your expectations for the furniture industry in the next decade?

AT:
On the back of the economic slowdown in the United States and Europe, the Asian market rose as a platform of endless opportunities for the global furniture industry. We’re beginning to see positive effects of the financial growth in Asia, which in turn has led to an increase in overall buying power of the furniture market in this region. Through the co-operation of the AFIC and CAFA, Asmindo on behalf of the Indonesian furniture industry will do our best to tap into this blooming market.




KEVIN CASTELLANI
is the President and
Publisher of Furniture
Today based in the USA.
FFE: In your opinion, what has been the most significant development in the furniture industry of your country or region in the last 10 years?
Kevin Castellani:
This past 10 years have been the most significant in change for the USA furniture industry. We have seen manufacturing move from the USA to Asia starting with China. With labor costs so low and the craftsmanship of the Asian factories getting better each year, it was hard to compete. USA manufactures became importers with large retailers starting importing direct .

The business went from manufacturing in the USA to a distribution business. The reality was China and other Asian countries were building more capacity each year and the value of products were getting better while the price of furniture kept coming down. All in all, we saw the world become smaller and partnerships with
global companies become stronger.

Just when it looked like everything was perfect came the financial crash of 2008/2009 which changed the US market . With the housing market crash, the need for furniture stopped and we saw many retailers and importers go out of business . With the pressure on pricing and the loss of volume, we have seen companies develop innovative products, source new countries and understand how to become better logistic companies.

FFE: What has impacted your business or association the most in the past decade?

KC:
The largest impact that the industry has realised in the globalisation of the furniture business — not only are we now sourcing from different counties, we are also selling products to different countries. With the world becoming smaller and people travelling more, design product needs are all becoming more international .

USA was the world’s largest market being an 80 billion dollar business. China soon will be larger than the United States, so it is import that KEVIN CASTELLANI is the President and Publisher of Furniture Today based in the USA. importers and manufactures find business outside on their own market.

FFE: What lessons can industry players learn from the last 10 years?
KC:
The biggest lesson learned from the past decade is how to manage growth and opportunity . In the early 2000s, we saw our market grow and the need to find resources and capacity. Also, the industry learned how to become logistics companies because it was not only about making product, it is about getting them from one point to another on time.

Then, the next biggest lesson was how to make your company smaller. The recession that hit the US market in 2008 and 2009 had a major impact on how companies ran their businesses. Companies who were able to cut cost, reduce overhead and manage cash flow are the companies still in business. These are very different lessons and they show the impact of the last 10 years.

FFE: What are your expectations for the furniture industry in the next decade?
KC:
The outlook for the US market is very positive. Our economy is getting better and companies have learned how to keep cost down and value up. We have seen our GDP grow by 2.5% this year and it is forecasted to grow by 3.5% in 2013. November 2012 had a record number of home sales of 5.04 million which is the best in three years.

Our home furnishing industry is driven by home sales so this is very positive for the next few years. Also, another key home furnishings growth is consumers changing homes. Last year, 4.7% of home-owners moved, which is about 9.7 million homes. Again, we know that 22% of all home furnishing sales are the result of moving or changing homes, so this increase serves as an indication that we will continue to see a recovery and growth over the next few years.




LIYAKAT ALI KHAN
is the President of
Index Furniture Journal,
published by Index
Media.
FFE: In your opinion, what has been the most significant development in the furniture industry of your country or region in the last 10 years?
Liyakat Ali Khan:
A lot has changed in the furniture industry in the last 10 years, mostly for good. In a country where a majority of business is yet given to the local carpenters and contractors, the trend is changing.

The industry has gradually moved towards high quality and minimalist, contemporary designs. Fortunately, due to technology and globalisation, the industry is learning of new products and materials on a regular basis and is always keen in implementing something innovative and different in each of their projects.

With the internet at their disposal and vacations planned in Paris and Milan, the well-travelled and well-equipped client has gained knowledge of new products, designs and materials and issues such as going green and sustainability. This increase in awareness has generated a strong sense of responsibility in the architects who in turn demand superior quality products from the industry.

This results in the furniture industry churning out better products, either by manufacturing locally or importing. Hence, from a broad perspective, one of the most significant factors in the development of the industry is globalisation.

FFE: What has impacted your business or association the most in the past decade?
LAK:
Our business grows along with the industry and thankfully, the furniture industry has tremendous scope for growth in this country. International brands and superior quality furniture is witnessed mainly in the Tier 1 and a few Tier 2 cities in India. Rest of the country is in the course of development and re-development which would demand furniture for the same.

The boom in the Indian furniture industry is driven by the growing housing and tourism sector, and output is expected to grow by 15% each year, over the next five years. The organised furniture industry is expected to grow by 20% each year.

FFE: What has impacted your business or association the most in the past decade?
LAK:
A very simple one! If you wish to survive in the industry, you have to keep innovating. The industry is always on the look-out for something different, innovative to implement in their projects and fortunately a lot of that is seen every year at the several industry oriented trade fairs around the globe. Innovation in every aspect and imitation with improvement has kept the industry running.

FFE: What are your expectations for the furniture industry in the next decade?
LAK:
Overall, there is tremendous growth with the industry growing much like a tree, though not straight like the coconut palm but like a mulberry, branching in all directions. The growth is visible, trends are subjective; every individual associated to the industry has his own ideas to explore and goals to achieve, taking the interior and architecture industry higher. As mentioned earlier, the country is still developing and has the best resources at hand to do so.




FRANÇOIS PREVOT
is the Editor-in-Chief for
Le Courrier du Meuble
et de l’Habitat.
FFE: In your opinion, what has been the most significant development in the furniture industry of your country or region in the last 10 years?
François Prevot:
In these past few years, the most significant event to occur within the French furniture industry is the globalisation phenomenon which has led to a slew of dramatic changes upon the landscape. One of the most in-depth and earnestly felt impacts of globalisation was the liquidation of companies.

FFE: What has impacted your business or association the most in the past decade?
FP:
The above situation saw the trade press take quite a hit as it meant significant losses in terms of advertising revenue. With businesses all around having had their marketing budgets slashed by more than half, they could no longer afford to navigate their ad spend as they previously did. Inevitably causing a ripple effect, media platforms in turn, had to re-work their advertising schemes to match the spending power of clients.

FFE: What lessons can industry players learn from the last 10 years?
FP:
Another consequence of globalisation can now be fully noticed. The French furniture industry was compelled to implement automation techniques as much as possible in manufacturing processes in order to keep factories in France.

As an alternative, companies also collectively decided to relocate their manufacturing resources to countries where labour costs were significantly lower. Indeed, plenty has changed and even more transformations are on the horizon. The key lesson we learned that is that strong brands will find a way to thrive even when faced with challenging times.

These are those who understand consumer expectations and are constantly finding ways to innovate, so as to retain their competitive advantage and provide offerings which are distinct in quality, value and design. Also, I can’t stress enough the importance of being prepared and adapting gracefully to change.

FFE: What are your expectations for the furniture industry in the next decade?
FP:
I think that within the next decade, the French furniture industry will gather very small highly-specialised companies in the luxury part of the business as well as big companies whose success will rely on the continuous refinement of automation systems.




ARTEM V VASILIEV
is the Foreign Editor
of Mebelny Biznes
Magazine based in
Moscow, Russia.
FFE: In your opinion, what has been the most significant development in the furniture industry of your country or region in the last 10 years?
Flavio Maestrini:
Supposing you are referring to the furniture field, I have got to say that not one specific memorable event can be detected in the last ten years, but rather some single facts. First and foremost is the Milan Salone del Mobile which reinforces its position each year as one of the most important shows in the industry. Next, there seems to be a rising growth in China; one indicating a peculiar but keen interest in design and well-made products.

FFE: What has impacted your business or association the most in the past decade?
FM:
Undoubtedly, the slump situation. In Italy, it has radically affected and modified behaviours and purchase trends.

FFE: What lessons can industry players learn from the last 10 years?
FM:
Sure enough, the focus has shifted towards the internationalisation of markets. Italy used to rely too much on domestic market business, but nowadays success depends on foreign markets which should cover 70% of entire sales.

FFE: What are your expectations for the furniture industry in the next decade?
FM:
Distribution will mostly change - maybe the manufacturing firms will gather to be directly active on the distribution market.




ARTEM V VASILIEV
is the Foreign Editor
of Mebelny Biznes
Magazine based in
Moscow, Russia.
FFE: In your opinion, what has been the most significant development in the furniture industry of your country or region in the last 10 years?
Artem V Vasiliev:
The most significant event of the last decade affecting the Russian furniture market, and the Russian macro-economy itself just happened; last summer, after an 18-year negotiation process, Russia joined the World Trade Organization. We do know that it will not be easy for many domestic manufacturers to survive in the open market. We feel sorry for those of them who would be leaving the market once the barriers are removed.

But we are absolutely sure that the consumer will benefit from this a lot. And as the advocates of ‘healthy economics’, we feel that it may be the one and only way to motivate domestic players to play fair when it comes to pricing and studying what bonafide competition is about.

FFE: What has impacted your business or association the most in the past decade?
AVV:
Just about 10 years ago, Russia’s per capita income amounted to tens of dollars monthly so much so no one would believe today’s average of US$700-800 (and it’s three times higher in Moscow, for example).

Domestic furniture production increased from about US$650 million in 2000 to about US$4 billion in the pre-crisis year of 2008. Now, with the national furniture industry having gotten the better of the recession, we have the most dynamic furniture market in Eastern Europe. Russia is a developing country and all the more so with the booming of the furniture industry as well as the furniture trade. Nowadays, there are streets in every city of Russia where there are more furniture outlets than grocery stores.

By line, service and presentation levels of many retailers are increasing year-on-year while retail formats are getting larger and consumer tastes are evolving to match closely that of those in more developed countries. The feeling of being on the crest of a wave, observing all these changes in just a few years is the very thing leading us, journalists and of course, successful furniture companies, through our everyday tasks and challenges.

FFE: What lessons can industry players learn from the last 10 years?
AVV:
In the first half of the past decade, protective duties were imposed on furniture imports to Russia. This was driven by the government’s desire to support domestic manufacturers in their maturing process. At that time, the founder of IKEA, Ingvar Kamprad wrote a letter to Vladimir Putin. Mr. Kamprad warned him that such strong protective measures on imports will contribute to nothing but an even bigger development gap between Russian manufacturers and those abroad.

As it turns out, only about 6.5% of the furniture produced in Russia including parts are being exported now, while the game’s success is on the side of imports. In 2011, imports accounted for more than half (54.9%) of the Russian furniture market or 40.2% when taking into account the shadow production. In spite of considerable import duties, the volume of imports of low-priced furniture is growing at an even faster pace – 58.5% for furniture priced less than 1.8€/kg.

Such products compete directly with the furniture from the majority of Russia’s domestic producers and development of the country’s export potential remains a burning issue for them. The hothouse conditions and over-protection aren’t healthy for the local market at all: this is the lesson we learned and now, hopefully, Russia is going to try the formula of the open market.

FFE: What are your expectations for the furniture industry in the next decade?
AVV:
As to the development prospects for the Russian furniture market in the nearest decade, the consequences of country’s entry into the WTO are expected to be a key factor.

Over the next six years, custom duties are expected to drop — according to estimates by our national association AMEDORO, today’s 41.7% duty for low-priced imported furniture will gradually be reduced to 12.8% by 2018.

The new rules will be a challenge both for Russian companies discovering themselves on the open market for the first time, and for foreign players entering this rapidly-developing, high potential area.




VALCIDIO PEROTTI is
the CEO of Alternativa
Editorial and Revista
Móbile.
FFE: In your opinion, what has been the most significant development in the furniture industry of your country or region in the last 10 years?
Valcidio Perotti:
The past decade has been very important for the development of the Brazilian furniture industry. Among the most significant events in the furniture industry during this period, are three key situations:
The technological improvements of production with gains in quality, finishing, costs, resources and production capacity of these industries.

The development of the internal market in general with an emphasis on the construction and furniture sectors.

The political organisation and improvement of the Brazilian furniture sector which worked positively over the Brazilian furniture industry image.

FFE: What has impacted your business, association or the industry the most in the past decade?
VP:
During this period, the Brazilian furniture industry became more technological, professional and international. Also, the dynamics of information transmission and access changed incredibly in the last decade. All of these events have greatly impacted the way magazines and news are created by Móbile Magazine’s publications.

In the last 10 years, we have made the option of investing in an equation of ´content relevancy plus speed and efficiency in information transmission´, with a keen focus on multi-channel platforms together with analytical approaches and an intensive search of trends in this sector.

The main focus of our business actuation (we have been in this market for 31 years) has been consolidated to offer the furniture market of Brazil and also Latin America (with our newest magazine: Móbile Proveedores) information, analysis and elements which can make it more competitive on a global level. In addition to this proposal, we have extended our actuation to educational events, sectorial prizes and exhibitions in this sector and also have improved our digital channels.

In 2012, for example, we were awarded two (gold and silver) prominent accolades by Anatec, the most relevant institution for segmented media in Brazil, with our 100% digital magazine Radar Móbile (www.radarmobile.com.br) created in 2011, complementing our portfolio of print magazines and web portal, eMobile.

FFE: What lessons can industry players learn from the last 10 years?
VP:
An essential lesson we’ve learned is that the consumer market in general is increasingly democratic, considering the information exchange and criticism which are readily available today. Also, grasping a strong sense of search for diversity and individuality has been an eye-opener. Aspects such as design, sustainability, transparency and focus on the consumer and how he interacts with objects and space must be present in the productive and administrative fundaments.

FFE: What are your expectations for the furniture industry in the next decade?
VP:
The expectations are that emerging countries will tend to become more and more relevant to the global trade in the next years. Countries such as Brazil and others of Latin America may probably have their markets more international and open than today. This can be a trend, but also a challenge for the furniture industry in these countries. Particularly in Brazil, the next step, which is already happening, is the improving of the design and originality of furniture projects. We have already achieved considerable improvements in the quality and finishing aspects, considering the mass market. Now, the challenge is to attend to the public in diversity, functionality and particularity of the furniture goods offered in the market.




ZEKI YUCEL is the General Manager of EKIN Group, the publisher of Mobilya and Furniturk Magazine as well as the FURNISTANBUL Trade Fair.
FFE: In your opinion, what has been the most significant development in the furniture industry of your country or region in the last 10 years?
Zeki Yucel:
On a global scale, the most significant development in the past 10 years is no doubt, the tremendous boom of the Asian furniture industry and the decline of western markets. Where the furniture industry of Turkey in concerned, we can underline its unexpected rise in terms of production volume, quality and exports consequently.

Now, it’s just a matter of recognising all of the valuable opportunities that come our way and taking advantage of them. With prudence, foresight and undivided determination, I believe we will prevail in the best way possible, which is forward and upward.

FFE: What has impacted your business, association or the industry the most in the past decade?
ZY:
In last decade, western countries began to suffer from the bottleneck of the economy and stagnation of the markets and therefore, started to look for emerging markets. Due to its geographic and strategic position, economic stability, satisfactory infrastructure, high productivity and relatively low production costs, Turkey was one of the most convenient destinations for them. That’s how the furniture business bounced back during this period and therefore our business reached its peak.

FFE: What lessons can industry players learn from the last 10 years?
ZY:
The capitalist world has its own weaknesses and the balance may change depending on the floating conditions. That’s why everybody should be ready for new cycles in the global economy, new conditions and should adapt accordingly. Adapting, especially at a time like this, is extremely important to ensure the sustenance of the industry as a whole, whether in this part of the world or beyond the borders of the local landscape.

While we remain optimistic as we blaze the trail to recovery, the moment is now to stay on our toes and proceed with caution. Business owners and decision-makers all around are faced with the responsibility, now more than ever, of taking their roles of leadership to a whole new level and steering their brands towards optimum brand strength in all areas and making choices which will ultimately elevate presence, opportunities, marketability status and their respective bottom lines.

FFE: What are your expectations for the furniture industry in the next decade?
ZY:
It is obvious that due to the saturation of the markets and unfavorable conditions, as is the case in other segments, the center of the world furniture trade is moving from the western hemisphere towards the eastern hemisphere. That’s why, the role of the Middle East and Asia will be much more important in the future. But all these developments may result in some crucial problems, especially social and political ones.




PAUL FARLEY is Senior
Editor at Furniture News
magazine published by
Gearing Media Group.
FFE: In your opinion, what in the last 10 years has been the most memorable development in the furniture industry of your country or region?
Paul Farley: How does the saying go? America sneezed, and we caught a cold. Admittedly, the bulk of the illness was our own making – flawed lending policies and banking practices that were simply unsustainable led to a market crash in 2007 that the UK is still reeling from.

As a trade directly dependent on the property market, furniture — particularly big-ticket items — quickly suffered. Thanks to the simultaneous growth of the internet and fluctuating import costs, the face of furniture retail has changed forever.

FFE: What has impacted your business the most in the last 10 years?
PF:
Everything started with recession. The industry landscape is certainly very different to how it looked six years ago. The number of players has dropped significantly, but those that remain are lean, strong, progressive modern businesses. As a publisher, we’ve worked hard to negotiate the transition from printed matter to online offerings and I’m pretty confident that we’re succeeding.

FFE: What lessons can industry players learn from the last 10 years?
PF:
That to stay in business, one must be constantly proactive, taking into consideration new channels, technology, practices and approaches as well as potential disasters. In short, there’s no time to stand still if you wish to flourish. So those who haven’t learned the key lessons already do not have the brightest of prospects.

FFE: What are your expectations for the furniture industry in the next 10 years?
PF:
For the UK, I envisage a slow recovery, mirroring developments in the property/housing market. Luckily, as an industry, we’re now well placed to handle any transitions. Our home-made product has found its place, and our production standards are second to none.

Of course, sustainability will continue to play a significant part in the product offered to UK consumers, who will increasingly also demand greater quality and value from their home furnishings. I believe that we’ll see further consolidation of the market within fewer hands with more examples of vertical integration.




Dr Casey Loo
Publisher & Editor-in-chief, Furniture & Furnishing Export International Advisor, Council of Asian Furniture Associations Vice Chairman, International Alliance of Furnishing Publications
SPECIAL NOTE FROM THE PUBLISHER
It has been 10 interesting, and sometimes challenging, years for us here at Furniture and Furnishing Export International, Asia’s premier furniture and related trade magazine for the global markets.

During the last decade, we witnessed the many changes in the global furniture trade and industry. With the advancement and affordability of communication tools and transportation, the world has become better connected. This has led to major transformations. The ease of access to technologies and production machinery enabled the shift in production, always moving to the next lower-cost countries and regions. This trend has been accompanied by the rise of global sourcing.

Asia will continue to enjoy its leadership in manufacturing in the near future. Although production costs in the region continue to rise, it is mediated by the introduction of more advanced machinery and automation resulting in greater
efficiency and higher productivity.

The region is also acutely aware of the need to innovate, and to work on its design and marketing. As the region’s economies grow and its population become more affluent, rising consumption will also help increase Asia’s attractiveness as a market.

There is much talk about the rise of the east and decline of the west – this appears to be so. However, as the world continues to evolve, circumstances change and so will the roles. As the old adage goes: Only change remains constant.

In closing, the success of Furniture and Furnishing Export International has not been without the invaluable support of the trade – numerous associations, agencies, companies, individuals and our partners. We would like to take this time to say a very special ‘thank you’ to them. I look forward to another 10 better years and wish everyone great success.