Dongguan Famous Furniture Fair, commonly known as Dongguan 3F, is a mega-size furniture event and China’s premier show serving the domestic market. In addition to growing to its current scale to better satisfy the industry, 3F is also constantly evolving in keeping with current trends.
Having been absent from the show the last three years, FFE was invited to witness its progress first hand. During our visit of the recent event held July 7-12, besides observing its vast magnitude, we were heartened to vast improvements made in design, with a strong Chinese influence. While a significant proportion obviously caters to the Chinese tastes, the accompanying quality was high in general.
We took the opportunity to speak to the management of 3F as well as a handful of outstanding exibitors. Below are highlights of our meetings.
FFE: Through the years, 3F has cemented its position as the premier show for the Chinese domestic market. However, unlike markets elsewhere, the Chinese has developed certain unique design preferences. With such significant differences, the stronger the show caters to domestic customers, the less relevant it is to foreign buyers. Is 3F giving up the international markets? What designs do you have to cater to them, if any?
Lin: Dongguan 3F has a history of 20 years as the most effective gateway to source furniture in China. As the first UFI approved professional international furniture fair in China, 3F has nine exhibition buildings and more than 700,000 square metres’ of exhibition space. Held in conjunction with 3F Design Fair, we have Chinese Style Furniture Fair, Home Accents Fair, and Custom-made Furnishings Fair in March and July. At its peak, 3F successfully attracted more than 100,000 professional visitors from over 150 countries and regions.
So we are certainly not giving up the export business. There are still lots of foreign buyers at our show. While the number of European visitors may have declined, we receive many Japanese and Korean buyers as well as those from the Middle East. During their visit these visitors first focus on overseas-oriented halls and products but eventually they will see other halls and all that we have to offer.
There are many design trends all over the world. For example currently there is a trend for eco designs for some markets which I know a lot of Japanese and Korean buyers prefer but other markets likes different things. So many countries, there are so many different styles preferred. However, what we can do is to gather as many companies as possible with export DNA. They are equipped to serve the overseas markets and are already serving this segment, to begin with. We are committed to the export markets. It may be hard for an event organiser to grab hold of both domestic and export businesses but we are keeping aware of developments in the industry and we are constantly adjusting our strategy.
Our company is very passionate about the furniture business. We are aware of the poor business climate for the furniture industry currently. However instead of giving up, we will push ahead, help the industry transform and bring the industry forward.
Chen Jiaqi, Changshi Furniture Co., Ltd
FFE: Please share with us some background of your company
Chen: Our company started 1993. At the beginning, our products were mainly sold in the Chinese domestic market. Our export business began in 1999 and we have been serving both domestic and export markets since.
During our early days, we mainly do OEM at the beginning. Presently, our key focus is on ODM. Our core strength is solid wood furniture. We specialize in solid wood furniture that are made in luxury classic Italian style.
Our domestic and export production lines are separate and independent of each other. The Export production line produces solid wood dining tables and chairs. They are in turn paired with natural marble.
Currently, we have more than 400 people working on the production line in our factory located in Houjie, Dongguan.
FFE: What is the ratio of your exports vs domestic sales and where are your foreign markets?
Chen: The current ratio of domestic vs export sales is 60% to 40% serving the mid to high end segments. We mainly export to European countries such as Denmark, Spain, France, UK and Ireland. The other big export region is Asia including countries such as Malaysia, Japan and India. India in particular is one of the countries that we have seen much room for growth in recent years.
FFE: What are your distribution channels for both domestic and export markets?
Chen: For the domestic market, we sell via dealers. This is the same as well for our grade A clients overseas. These customers are typically big retailers in their country or region. We used to do wholesale but this is greatly reduced now. Now our foreign customers are those with an average of 20 stores. We supply them our products and in turn they sell to the consumers.
FFE: What are your own brands and what distinguishes them?
Chen: Changshi furniture as the parent company has several brands. We have Baogerui, it specializes in Italian minimalistic design. We also have another brand that offers American luxury classic as well as a third brand for Nordic style design called Jieyi. Then there is also a solid wood walnut line serving the midto high-end segment known as Nousen. These are the 4 brands for the domestic market.
FFE: What do you think are the trends in the market currently? And what strategies have your company to address them?
Chen: I think the direction of the market is driven by market forces and definitely consumer led. It is greatly dependant on what consumer likes, for example their preference for customization or products that can reflect the lifestyle and characters of individuals.
As such, in our product R&D, while the appearance and shape remain the same, we will offer consumers more choices in areas such as size, material selection such as the matching of leather and cloth, color selection etc. For domestic sales, the current trend of whole-house customization scheme enables consumers to experience a better lifestyle.
Johnson Zhang, General Manager, Marketing & Sales Division, Zhongshan Comely Lighting & Electrical Appliances Co., Ltd.
FFE: Your company is in the lighting business. Are you OEM, ODM or OBM?
Zhang: Comely is established 23 years ago. Our business scope is quite wide. We started with OEM at the very beginning, then in 2003 we branched out and became the first franchising company in the lighting industry with our own brand. Since then our franchise network has grown to 330 stores. ODM is one of our core strength and this capability has always been the foundation of our company.
FFE: Please share with us regarding your company’s design capabilities and the volume of work you churn out every year.
Zhang: The founder of our company is an architect by training. Since founding this company, he has been involved in the design of our lighting products at a personal level. He now leads a team of more than 20 designers. However we do collaborate with independent designers in Europe and Southeast Asia as well.
To illustrate our design capabilities, our European clients used to provide us with detailed blueprints, but over the years, we have gained their trust and confidence with our strength in design. They now typically just provide us with some ideas, concepts, sketches etc and we do the rest for them. Volume for such work is very large, because we have quite a lot of OEM customers.
Around 2010, we started to work on five-star hotel projects overseas. The design of these projects should typically have been done by lighting designers but funny enough, hotel project owners let interior designer do the design. Few actually know about lighting. So they can often find a little concept here and there and give it to us and let us complete the development of the design for them.
Altogether, we develop a lot of new designs each year, ranging between 500 to 700, out of which 150-200 designs are under our own brand.
FFE: What is the ratio of your domestic vs export business?
Zhang: Our domestic vs export business is about 50-50. For OEM export, the business is mainly concentrated in Europe. For North America, we have our own company with our own companies and showrooms in Canada and the United States.
FFE: What are the strengths of Comely?
Zhang: Our biggest strength is design. When our business started, there was almost no original design in the whole Chinese lighting industry. As our founder was not from the industry, he adopted the idea from his architectural training: “I build a house by my own design, so I make a lamp by my own design.” This bold move embracing original design made a huge difference. Our other strengths are our high product quality and comprehensiveness in coverage. We adhere to very high standards of quality demands in our production process to ensure high quality and consistency. By comprehensiveness of coverage, we refer to several areas: our company is able to serve both domestic and export markets equally well, resulting in a good balance. Our online and offline markets are also well balanced with both franchise stores and e-commerce business evenly covered. Our products are not only used in homes, they are also good enough for projects. So our business is broad and well balanced.
Fusion Lo, General Manager, Henghui Furniture Co., Ltd.
FFE: Please share with us some background of your company.
Lo: Our company is Henghui Furniture Co., Ltd. started by my dad about 30 years ago. I have succeeded him now running the company. When I returned after my studies to run the company, I started HERE / BELLA. This year to cater to the custom market, we launched HERE&Bella to integrate elements from the two brands to promote to the custom market. Why? This is because Here and Bella are the two of the best brands of our company. We integrate the two brands to better cater for customization.
The market response has been positive, because our products are competitive, with good quality and flexibility. We are quite unique in that we are equally strong in export, which make up half of our business. We began export in 2005 with OEM. We then switched one of our production lines to focus on the domestic business. We have been maintaining the export business since.
Our key export markets are the US, Japan, Middle East, Australia and Europe. Not only are customers well spread out, our OEM products are different for the different markets. We will help the customer make whatever he requires. The main focus then was panel. However after I took over management around 2011, we started introducing solid wood. Over time we moved upmarket with the solid wood furniture.
Market conditions have not been favourable. With the ongoing US-China trade war, market uncertainty and the impact of ecommerce, we recalibrate and launched HERE/BELLA customization business to cater to the market.
FFE: How is your sales and distribution network organised? Lo: We have exclusive distributors in China. HERE and Bella are standalone brands and we have now HERE / BELLA brand. The products offered by each brand are different. For the Chinese market, various channels are via our franchise network, going through designers and hotel projects/contract channels. Another would be online stores.
Our HERE has about 48 stores in first- and second-tier cities in China. BELLA on the other hand has 38 stores but mainly located in second- and third-tier cities. The brand positioning is different for the two brands. And HERE / BELLA brand will focus on first- and second-tier cities as well.
Foreign markets are predominantly OEM. We produce what the customers dictate supported by a certain volume. We support some of the largest furniture retailers in various countries and region.
FFE: Moving forward, what are your export plans for the company?
Lo: For export, we will stick to OEM orders. Exchange rate fluctuations often has an impact on the company’s bottom-line, but we can only accept orders that are not loss-making. When our customized business becomes more developed and mature, we may introduce it overseas to open our own stores.