China Focus  

Observations at Chinese Furniture Fairs

By Dr Lim Cheok Sin

CHINA NATIONAL FURNITURE ASSOCIATION (CNFA) estimated that Chinese national furniture production in 2013 amounted to 120 billion RMB, with export accounting for more than 300 billion RMB and the remaining amount for domestic sales.

I doubt these estimates. Last year, the domestic sales figure reported by the national statistic bureau is about 200 billion RMB. The difference between the two is great. If we had estimated the production amount with other parameters, we would arrive at comparatively more reliable figures.

In China, the population of the work force in the furniture industry is 5 million. Assuming 2.5 million – 3 million are engaged in manufacturing, with a per capita annual productivity of 23000 RMB, the total production should be between 600 billion to 700 billion RMB with export and domestic sales accounting for half each.

If so, the resulting amount would be closer to those which the statistic bureau had reported. In addition, if we multiply the product price by about 2.5, this will result in the retail sales of around 700 billion RMB, closer to the result estimated by CNFA.

No matter how the estimation is done, the overproduction and oversupply of Chinese furniture is an undeniable fact. And this is fully reflected at some of the Chinese fairs.

Owing to challenging market conditions and difficulties in finding dealers, many producers came up with all kinds of promotional tactics such as offering free samples, providing subsidies for decoration and advertisements etc. At the same time, in order to attract more customers, some companies have organized all sorts of presentations such as having young ladies stand on podiums a few metres high, some having musicians perform. One extreme case even had a young lady in miniskirt lie in the window display and to expose her underwear with a price tag attached.

Many business owners pay too much attention and waste money on this kind of promotion instead of focusing on developing new design and techniques. Eagerly seeking survival, they copy whatever is selling well in the market. Their so-called designers basically copy bulk of the time with occasional minor modifications made to designs. The end result is obvious - most products end up highly similar, and these businesses would have to end up competing on lowering prices, offering subsidies and engaging in gaudy promotional tactics. The core of the business is neglected and they continue to struggle.

Lots of designers, teachers and students in this trade have said to me: the bosses of the furniture industry would rather give treats to lavish dinners and entertainment than pay small money for design services. In addition, there is little respect shown towards the designers. Many bosses amend design works according to their wimps and fancies. This is one fundamental cause for today’s decline in the design for the domestic sales market.

Even in a booming year, few bosses will come up with new designs for the following year. They would prefer to snap photos of designs at foreign trade fairs and have their “designers” draw accordingly. The whole process has little to do with design. This may have something to do with the quality of some business owners in the field.

At this year’s Dongguan fair, a lot of emphasis was placed on solid wood, especially some northern factories and using much more materials. Amazingly their prices are set at lower price points than their southern counterparts. Consumers are misled by media and regional associations, while the factories just play along and creating a vicious circle. When will this unhealthy phenomenon stop? I wonder.

My biggest disappointment is with those larger companies with long history. Little progress were achieved in terms of product design and manufacturing. Management scholar David Hussis once described such a scenario: the early success helped a company set up its system and thinking model, however gradually the people in the company become more and more restricted by this self-built cage. What he meant is that if one cannot stay innovative and achieves break through, one may fail eventually.

Many of the domestic retailers and dealers participating at the fairs had little manners. They threw rubbish indiscriminately, made loud noises, messed up the exhibits, smoked and some even took naps on sofas.

Fairs overseas such as the High Point Market is also domestic oriented. However, the exhibition halls are exceptionally clean, and most booths only serve customers with appointments. Drinks and snacks maybe provided during business negotiations. Some of them are equipped with kitchens to serve lunch to customers. At fairs in Japanese fairs, booth personnel are not even allowed to sit during the show.

No loud noises and no talking on the phone - these etiquettes maybe small matters but they are a reflection of the quality of the people. With too much crowd, it is instead tough to do business.

I hope gradual improvements can be made in the near future.

President, Council of Asian Furniture Associations Professor, Beijing forestry University , currently the Chairman of the Council of Asian Furniture Association (CAFA). He read at Nanyang University in Singapore and completed his PHD at Beijing University of Forestry. He holds a Post Doctorate from Michigan State University and is a visiting scholar there. Dr Lim has been active in the Singapore furniture industry, chairing both the Singapore Furniture Association and Furniture Association of Asia and Pacific previously.