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China’s Furniture Market

I.  Market Overview

As the standard of living continues to improve in China, people are becoming increasingly willing to invest in home decoration. Consumers’ increasing purchasing power has driven the furniture market to develop in leaps and bounds. According to figures released by the National Bureau of Statistics, in 2017, the total sales of furniture manufacturing enterprises grew 10.1% year-on-year to RMB905.6 billion, while total profits grew 9.3% year-on-year to RMB56.52 billion.

As China’s leading policy of stimulating domestic demand in the years to come, urbanisation is bound to drive furniture market growth. Data from the National Bureau of Statistics shows that the urbanisation rate in China reached 58.5% in 2017, up 1.2 percentage points over the end of the preceding year. In this urbanisation process, wage and salary earners, as well as peasant families who have settled in towns and cities, have become major furniture consumer groups. In addition, it is estimated that by 2020 about 54 million houses will have been renovated under the country’s shantytown reconstruction project, and these renovated houses will also generate demand for furniture.

Apart from domestic sales, China’s furniture exports also show sustained growth. According to the 13th Five-Year Plan for the Development of China’s Furniture Industry, the value of China’s furniture exports increased at an average annual rate of 8.8%, from US$38.9 billion in 2011 to US$54.3 billion in 2015. Furniture exports are expected to show an average annual growth rate of 3%-5% during the 13th Five-Year Plan period (2016-2020).

Mainland furniture consumers can be divided into roughly three groups, namely, avid consumers, luxury/branded goods consumers and average wage-earning consumers.

  • Avid consumers: A very rich group with little concern for price, they usually favour expensive western style, classical Chinese style or avant-garde furniture.

  • Luxury/branded goods consumers: These consumers want furniture to reflect their taste and style. While making their purchase, they would also like to enjoy aesthetics and cultural elements. They are at the forefront of trends in aesthetics, lifestyle and price concepts.

  • Average wage-earning consumers: Representing the majority of consumers, with price and quality as dominating factors, they often shop around when making a purchase.

According to the Industrial Classification and Codes for National Economic Activities issued by the National Bureau of Statistics, the furniture manufacturing industry is divided according to product type into wooden, bamboo/rattan, metal, plastic and miscellaneous furniture manufacturing. Among these, wooden furniture is the largest, accounting for more than 60% of manufacturers.

At present, a wide range of products are available on China’s furniture market and can be mainly classified into home, hotel and guesthouse, office, and public institution furniture.

  • Home furniture: Furniture used in the homes of urban residents, including sofas, TV cabinets, tables and chairs, kitchen furniture and bedroom furniture.

  • Hotel and guesthouse furniture: Dining tables and chairs, sofas as well as guestroom furniture for hotels and guesthouses.

  • Office furniture: Desks, chairs, bookshelves and cabinets for use in the office.

  • Public institution furniture: Furniture for use in public-sector facilities, such as medical, sports, cultural and educational institutions.

An increasing number of consumers, in particular mid-to-high end consumers and children’s furniture consumers, choose to embrace new living concepts, such as the ‘eco home’. These consumers have a strong preference for environment-friendly furniture, such as odour- and formaldehyde-free products, despite the fact that the price of most of such furniture is higher. According to HKTDC’s consumer survey, over 90% of respondents are interested in using green, eco-friendly materials and are willing to pay a premium of 14% on average in purchasing products made of green materials. In view of this, many furniture and building materials brands have added the idea of eco-friendliness in their brand concept. Examples in the mainland market include ‘smart’ furniture incorporating indoor air purification functions and lightweight honeycomb board furniture.

Demand for children’s furniture is on the rise. As living standards improve, parents are increasingly willing to buy suitable furniture for their children to create a good environment for their development. With the full implementation of the two-child policy under the 13th Five-Year Plan, pundits believe that the market has further room for growth. According to preliminary data from the National Bureau of Statistics, the number of children under 15 reached 250 million in 2017, including 17.23 million newborns, representing a birth rate of 0.12%. Among all children’s furniture, wooden furniture takes up the lion’s share, accounting for nearly 90%, followed by plastic furniture.

In the case of children’s furniture, according to the 2018 survey on trends in child-related spending, more than 90% of parents would like to buy desks and chairs, while another 40% planned to buy bunk beds for their children. Among the many consideration factors in buying children’s furniture, the majority of parents would give priority to safety and eco-friendliness. Over 77% of parents are worried that non-eco-friendly furniture which generates toxic or hazardous substances would pose health threats to their children. 

Green is the underlying trend in the furniture industry and more and more enterprises are using water-based paints rather than traditional solvent-based. Water-based paints refer to coatings that are water soluble or dispersible. The biggest difference between water-based and traditional solvent-based paints is that the former requires no addition of hardener or thinner and therefore do not contain toxic substances, such as formaldehyde, benzene or xylene, which makes them safer and more compliant with environmental standards.

Outdoor furniture is increasingly popular in the Chinese market. Available in an increasing variety, outdoor furniture mainly falls under the following categories: beach beds, rattan chairs, leisure chairs, bamboo chairs, and other outdoor furniture items. Among these, rattan chairs and leisure chairs account for a bigger share. Demand in the outdoor furniture market has been extending from specialised sectors, such as star-grade hotels, restaurants, exclusive clubs, leisure venues and residential communities, to the home sector, including private gardens, rooftops and terraces. Development in the home sector is gathering momentum.

Faced with rising property prices, young homebuyers have limited choice in the size of apartments and are inclined to choose multi-function and foldable furniture for easy storage. Sofa beds are immensely popular because they are ordinary sofas that can be used as beds for overnight guests.

Rosewood is a type of quality hardwood; furniture made of such material is generally regarded as superior. As the rosewood furniture industry thrives, in addition to traditional rosewood markets in the Beijing, Jiangsu and Guangdong schools of craftsmanship, there are now markets for craftsmanship schools from Dongyang in Zhejiang, Xianyou in Fujian, Shanxi and Shanghai. The rosewood furniture industries in Pingxiang in Guangxi and Guangfeng in Jiangxi are also growing fast.

Custom-made furniture is becoming popular in tandem with the growing demand for personalised home products. Furniture makers treat each customer as unique and tailor-make products according to individual needs. At present, a number of large bespoke furniture manufacturers are developing rapidly. Companies such as Shangpin Home Decoration, Suofeiya Home Collection and Oppein Home are now offering bespoke manufacture of different types of furniture, or even furniture for the whole house. Currently, the most popular custom-made furniture items on the mainland are kitchen cabinets and wardrobes, but other items, such as TV cabinets, shoe cabinets, book shelves and wine cabinets, are also gaining favour.

Star-graded hotels are a major source of demand of upmarket furniture. Statistics from the China National Tourism Administration show that the number of five-star hotels on the mainland has increased from 640 in 2012 to 822 in 2017, representing an average annual growth rate of 5.3%. The number of four-star hotels has increased from 1,817 in 2012 to 2,392 in 2017, an average annual growth rate of 1.9%. According to reports, the demand for furniture replacement in four-star and five-star hotels across the country will hit RMB7.7 billion in 2018.

China’s imports of selected furniture products in 2017:

HS CodeDescription2017
(US$ million)
YOY change
(%)
94016900Other seats, with wooden frames78.1-9.9
94016190Other upholstered seats, with wooden frames102.526.7
94036099Other wooden furniture394.116.3
94034000Wooden furniture of a kind used in the kitchen214.152.8
94035099Other wooden furniture of a kind used in the bedroom185.414.3
94032000Other metal furniture74.126.2
94038990Furniture of other wooden materials34.539.3

Source: Global Trade Atlas

II.  Market Competition

After more than 20 years of rapid growth in its furniture industry, China has now become the world’s largest furniture production base and exporter. According to information released by the China National Furniture Association (CNFA), there are 49 furniture manufacturing clusters in China, covering the six regions of the Pearl River Delta (PRD), Yangtze River Delta (YRD), Bohai Rim, northeastern China, central China and western China. The PRD has the highest furniture industry concentration with the highest production output and strongest integrated support capability. Next come Fujian, Zhejiang, Jiangsu, Shandong and Shanghai, which have an edge in product quality and operations management. In the YRD region, led by Shanghai, the furniture industry is developing fast, with the highest average growth rate in the country. The northern and northeastern regions, with Beijing as the centre, have a sound furniture industry base and rich wood resources. As for the central and western regions, the furniture industry is actively capitalising on the opportunities arising from urbanisation and Belt and Road Initiative.

Furniture (home furnishings) industrial parks, whether completed or on the drawing board, are mainly found in eight central and western provinces, including Jiangsu, Anhui, Henan, Hebei, Hubei, Sichuan, Yunnan and Shaanxi. The development of these industrial parks can help consolidate and improve the industry chain, shorten the production-marketing distance, reduce logistics costs, change the employment distribution pattern, and promote industrial restructuring, specialised division and industrial co-operation between regions. In the face of rising production costs and other market factors, furniture makers are planning to shift inland to the central and western region as well as to Southeast Asian countries.

Selected specialised regional production bases in China:

LocationSpecialised base
Dayong, Zhongshan city, GuangdongRosewood furniture production base
Longjiang, Shunde district, Foshan city, GuangdongFurniture materials capital
Dalingshan, Dongguan city, GuangdongTop furniture export base
Sanxiang, Zhongshan city, GuangdongClassical furniture base
Anji county, ZhejiangHome of the chair industry
Yuhuan county, ZhejiangWestern style classical furniture production base
Ningjin county, ShandongTable and chair capital
Zhuanghe, Dalian city, LiaoningSolid wood furniture production base

Furniture production enterprises in China are much less concentrated than in other industries and most of these are small and medium-sized. As a result of low industry concentration, there are hardly any brands with strong influence in the market. However, after years of competition, a number of branded enterprises of a certain scale and possessing considerable strength have emerged. Examples include QuanU, Qumei and Red Apple.

Competition among industry players in China’s furniture market shows that rivalry in this market has come of age. Today, furniture brands are no longer fighting for first-tier cities but are gradually shifting their focus to the furniture market in second- and third-tier cities. Rapid urbanisation has also spurred the growth of home marts in second- and third-tier cities, with the market for furniture marts and brands almost saturated in first-tier cities. While the consumption is smaller in second- and third-tier cities, the market offers more room for development. As a result, tapping into the medium- and low-end market will become a key marketing strategy.

China's furniture industry has started the process of upgrading, with advanced manufacturing and the application of information technology in production. Furniture enterprises need to upgrade their products and give greater added value by raising the level of technology innovation to achieve low cost, high quality and high efficiency. A key future development trend is green manufacturing, with the whole life cycle of products conducive to environmental protection and the reduction of energy consumption. For example, paying greater attention to environmental protection, human health and home safety in the production process will help sustain the development of the furniture industry.

Foreign furniture industry players are stepping up their pace entering the Chinese market. For example, Airland, a mattress and bedding manufacturer from Hong Kong, has in recent years secured distribution of foreign brands such as Serta for the Greater China region, while Ashley Furniture, a major American brand, has been expanding into China on a major scale. As of the end of 2017, the global furniture retail giant IKEA had opened 25 stores in China. The company intends to expedite its pace of expansion in China to increase the number of stores in the country to 34 by 2020.

In the children’s furniture market, domestic brands account for the lion’s share. Currently, some famous brands, including Aokok and Colorlife, have already emerged in the mainland children’s furniture market. In entering the mainland market, some foreign children’s furniture brands choose to use locally sourced materials or imported boards for processing in the mainland in order to appeal to the local market.

III.  Sales Channels

Traditional furniture enterprises mainly market their products in three ways: first, consignment through distributors in various places; second, renting premises in various places and selling the products themselves; third, displaying and selling products through large furniture malls or furniture marts. Meanwhile, some specialised stores and chain stores with financial clout have emerged. As the internet develops rapidly and e-commerce grows in leaps and bounds, online shopping is becoming an increasingly popular sales channel. According to the HKTDC’s consumer survey, large home centres are the major channel through which consumers obtain information on furniture products.

In recent years, furniture hypermarkets have been developing rapidly. Many of these hypermarkets have developed in various places across China as single-brand chain operations. There are also hypermarket clusters, i.e. a high concentration of different types of furniture hypermarkets within the same region, as well as general merchandise stores, which not only sell furniture but also other household supplies and even building materials. Where product mix is concerned, many chain hypermarkets are also general merchandise stores. Red Star Macalline is currently the leading mainland home mart operator.

The focus of different sales channels varies. For instance, large furniture marts mainly offer home furniture but also sell office furniture. Specialised stores generally sell their own brand, with the majority of these stores being larger domestic production enterprises and famous foreign brands, such as IKEA from Sweden, the first foreign brand to set up specialised stores on the mainland. This sales format is often adopted by foreign furniture companies.

In recent years, to make furniture part of consumers’ everyday life, some branded mart chains have created ‘shopping districts’ by such measures as bringing in famous foreign brands, setting up home experience stores, building commercial complexes or establishing furniture villages. This way, they have successfully raised brand awareness and increased sales several fold.

The O2O e-commerce model is gaining popularity in China’s furniture market. O2O refers to the linking of online sales and marketing with offline business operation and consumption. There are now different types of O2O e-commerce operators on the mainland and the O2O model takes various forms in practice.

Qumei is a typical example of furniture manufacturing enterprise and e-commerce operator. The company uses its website as its sales platform, showcasing images of various products and accepting online orders from consumers. Consumers may also opt for offline experiences by visiting dealers’ stores and placing orders there at online prices. This not only allows furniture brands to carry out sales and marketing but also boosts product sales within a short time, therefore speeding up cash flows and reducing inventory pressure.

Another type of furniture e-commerce is conducted by traditional furniture sellers. Easyhome, for example, has developed the Juran.com.cn website to move the offline experience stores online. It targets consumers who like the brand but wish to select products online. Some O2O e-commerce operators start as pure online brands and open offline experience stores afterwards. In other words, they build up their e-commerce platform by extending their coverage from online to offline channels. Meilele.com is an example of such practice.

Selected furniture exhibitions to be held in China in 2018-2019:

DateExhibitionVenue
10-13 September 2018China International Furniture Fair (Shanghai)National Exhibition and Convention Center (Shanghai)
11-14 September 2018China International Furniture ExpoShanghai New International Expo Centre
15-18 March 2019China International Integrated Custom House ExpoNew China International Exhibition Center (Beijing)
18-21 March 2019 (Phase 1);
28-31 March 2019 (Phase 2)
China International Furniture Fair (Guangzhou)China Import and Export Fair Pazhou Complex & PWTC Expo, Guangzhou


IV.  Import and Trade Regulations

After China became a WTO member, tariffs on furniture dropped significantly. Apart from the furniture products listed below, which are still subject to import duties, a zero tariff has been applied to all other furniture items since 2005.

China’s import tariff rates on furniture in 2018:

 HS Code
Description
%
 94012010
Seats of a kind used for motor vehicles, of leather or composition leather
 10
 94012090Other seats of a kind used for motor vehicles 10
 94019011Seat angle regulating devices
 10
 9404Mattress supports/articles of bedding and similar furnishing fitted with springs 10

Source: Customs Import and Export Tariff of the People’s Republic of China 2018

Starting on 1 October 2004, the Instructions for Use of Products of Consumer Interest Part 6: Furniture came into force. According to the requirements of the new national standard, all furniture products manufactured after 1 October 2004 must come with a manual providing such information as date of manufacture, materials used, performance, model, structure, specifications, installation, use, maintenance, main technical parameters, and trouble-shooting tips. The standard also requires that all furniture on sale thereafter must comply with the relevant laws, regulations and standards on safety, health and environmental protection. Information on any hazardous or radioactive substances contained in the furniture materials and coatings must also be given.

A number of national standards for furniture were amended or newly formulated in recent years. Standards such as the Testing Method for Burning Behaviours of Furniture and Subassemblies Exposed to Flaming Ignition Source, Determination of Furniture Dimethyl Fumarate Content, Safety and Technical Requirements for Glass Furniture, Furniture Industry Terminology, and Technical Requirements and Testing Method for Connectors Used in Furniture were successively implemented in 2012. General Safety Requirements of Outdoor Leisure Furniture, Seating and Tables came into force on 1 May 2013, while Limits of Harmful Substances in Plastic Furniture became effective on 1 July 2013.

General Technical Requirements for Children's Furniture (GB 28007-2011), China’s first mandatory national standard for children’s furniture, came into force on 1 August 2012 and is applicable to furniture designed or intended to be used by children aged from 3 to 14. In other words, the materials used in the production of children’s furniture are subject to a specific standard different to that of adult furniture in order to protect children’s health and prevent accidents. Focusing on safety and environmental issues, the standard lays down the structural requirements for children’s furniture, such as stipulating that these products should not have edges or pointed parts which may pose safety risks to the user. It also limits the content of hazardous substances in children’s furniture and specifies the flame retardant performance of these products.

The Test of Mechanical Properties of Furniture implemented in May 2014 updates the original standards and introduces stricter parametric test requirements. Seven standards, i.e. GB/T 10357.1-2013 to GB/T 10357.7-2013, have been revised, covering the stability and durability of furniture such as chairs, storage units, beds and tables. These performance tests can help ensure the life span and safety of furniture items. The eighth update, i.e. GB/T 10357.8-2015, fills a void in China's furniture standards. It was put into implementation in 2016 to ensure the safe performance of lounge chairs, rocking chairs and recliner chairs as well as protect consumers' personal safety and rights.

The Code of Management for the Sales and After-sales Services of Rosewood Products (SB/T 11147-2015) came into force on 1 September 2016. The purpose of this standard is to regulate the sales and after-sales of rosewood products. For example, on the sales level, this type of products should be accompanied by information such as tree species, grade and material inspection labels. This standard also lays down detailed requirements on the sales personnel and sales venue for rosewood products and there are also specific requirements on the warranty period. If a piece of rosewood product is involved in repurchase and lease sale, processes such as third-party evaluation and third-party guarantee will be invoked.

The Technical Requirement for Environmental Labelling Products - Furniture was introduced on 1 February 2017. Compared with the previous edition, the new edition requires the classification and disposal of wastes by furniture manufacturers. The direct discharge of sawdust and dust is prohibited. In the course of painting, enterprises must also take effective gas gathering measures and carry out standardised treatment of the waste gas collected.

The General Technical Requirements for Indoor Stone Furniture (GB/T 32282-2016) came into effect on 1 July 2017. It defines the meaning of indoor stone furniture and sets the technical parameters and requirements for matters such as size, shape, position tolerance, external appearance, physical and chemical properties, mechanical properties, limits on toxic substances, logo, user manual, and intellectual property manual.

Content provided by Picture: HKTDC Research
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