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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 the first three quarters of 2018, the total sales of furniture manufacturing enterprises grew 6.4% year-on-year to RMB543.01 billion, while total profits grew 4.0% year-on-year to RMB30.48 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 59.6% in 2018, up 1.1 percentage points over the end of 2017. 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.

Apart from domestic sales, China’s furniture exports also show sustained growth. According to statistics from the General Administration of Customs, exports of China’s furniture and furniture parts amounted to US$53.69 billion in 2018, up 7.6% year-on-year.

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 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.

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 a survey of mainland middle class consumption conducted by the Hong Kong Trade Development Council (HKTDC), over 90% of respondents are interested in using green, eco-friendly materials and are willing to pay a premium of 14% on average. 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 to create a good environment for their children’s development. With the full implementation of the two-child policy under the 13th Five-Year Plan (2016-2020), 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 2018, including 15.23 million newborns. 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.

Green is the underlying trend in the furniture industry, with more and more enterprises 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 does 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 ever more 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.

Given the current wider application of artificial intelligence, big data and cloud computing, smart technology is being increasingly integrated with traditional furniture. Smart furniture incorporates electronic technology, allowing users to control their furniture through a simple touch action or through an instruction transmitted via Wi-fi or Bluetooth using mobile apps self-developed by enterprises. Examples of smart furniture include dining tables monitoring babies’ weight and body temperature as well as tables whose height can be adjusted based on user’s height.

Rosewood is a type of quality hardwood; furniture made of such material is generally regarded as superior, with mahogany now the most popular type of rosewood in the market. 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 increasing attention on optimal use of home space and growing demand for personalised home products. According to the HKTDC’s consumer survey, about 52% of the respondents have ordered custom-made furniture. Reportedly, consumers in first-tier cities have higher demands on personalised home products in simple and fashionable design. Furniture with exquisite decoration on a leather surface, made with special fabrics or carrying distinctive patterns are favoured by many young people in first-tier cities. In fourth- and fifth-tier cities, it is more common for large households living in an area of over 100 square metres to order tailor-made furniture, especially when they are fitting out a new flat. To large households in fourth- and fifth-tier cities, it is important that furniture design makes their home look luxurious and spacious.

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 819 in 2018, representing an average annual growth rate of 5.2%. The number of four-star hotels has increased from 2,186 in 2012 to 2,351 in 2018, an average annual growth rate of 1.2%. The increase in the number of star-graded hotels will drive up the demand for furniture.

China’s imports of selected furniture products in 2018:

HS CodeDescription2018
(US$ million)
YOY change
(%)
94016900Other seats, with wooden frames75.6-3.2
94016190Other upholstered seats, with wooden frames121.618.6
94036099Other wooden furniture445.413.0
94034000Wooden furniture of a kind used in the kitchen183.2-14.5
94035099Other wooden furniture of a kind used in the bedroom202.59.2
94032000Other metal furniture102.939.0
94038990Furniture of other wooden materials37.58.8

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 50 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 is China’s largest furniture manufacturing base with the highest furniture industry concentration, 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
Zhangshu city, JiangxiMetal furniture production base
Zhuanghe, Dalian city, LiaoningSolid wood furniture production base

 

Furniture production enterprises in China are much less concentrated than in other countries, and most of these are small and medium-sized. According to market statistics, there are some 6,300 furniture enterprises above a designated scale in China. The 10 largest furniture enterprises take up 6.1% of the market, as opposed to 44.3% in the United States and 26.1% in Germany. Compared to other countries, there are relatively fewer brands on the mainland with strong influence in the market.

Owing to rising design fees and labour costs, mainland furniture products are becoming less competitive in the global market. On the other hand, China’s domestic market is growing. Rapid urbanisation has also spurred the growth of home marts in second- and third-tier cities, where the market offers more room for development. As a result, expanding in the domestic 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.

Overseas furniture industry players are stepping up their pace entering the Chinese market. For instance, a number of US furniture brands have moved into the Chinese market. Overseas furniture brands used to sell mainly upholstered furniture on the mainland (as for example, soft beds and mattresses made of sponge and fabrics) targeting high-end consumers. In recent years, however, overseas furniture brands offering other furniture products (such as wardrobes and dining tables) have also penetrated the Chinese market, posing competition to mainland brands.

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 overseas 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. Their business scope has also extended to cover areas like interior design and decoration, renovation and on-site testing and repair, providing one-stop service to consumers. 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.

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. 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. 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 2019-2020:

DateExhibitionVenue
8-11 September 2019China International Furniture Fair (Shanghai)National Exhibition and Convention Centre, Shanghai
9-12 September 2019China International Furniture ExpoShanghai New International Expo Centre & Shanghai World Expo Exhibition & Convention Centre
9-12 March 2020China International Integrated Custom Home Furnishing ExhibitionNew China International Exhibition Centre (Beijing)
18-21 March 2020 (Phase 1);
28-31 March 2020 (Phase 2)
China International Furniture Fair (Guangzhou)China Import and Export Fair Pazhou Complex, PWTC Expo, and Nan Fung International Convention & Exhibition Centre, 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 2019

 HS Code
Description
%
 94012010
Seats of a kind used for motor vehicles, of leather or composition leather
6
 94012090Other seats of a kind used for motor vehicles6
 94019011Seat angle regulating devices
6
 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 2019

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 to protect consumers' personal safety and rights.

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.

Starting on 1 April 2017, the mandatory national standards, Instructions for Use of Products of Consumer Interest Part 6: Furniture, were changed into recommended national standards. The standard codes were changed from GB to GB/T, while the serial numbers and year codes remain unchanged.

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.

The newly revised General Technical Requirements for Metal Furniture (GB/T 3325-2017) came into force on 1 April 2018. Changes in the revised standard include re-classifying the other requirements under item 4.4 of the old standard into requirements on external appearance, physical and chemical properties, and safety requirements, etc.

On 1 May 2018, the newly revised General Technical Requirements for Wooden Furniture (GB/T 3324-2017) and the new Upholstered Furniture: Assessment on Burning Behaviours of Mattress (GB/T 34441-2017) were implemented. The newly revised General Technical Requirements for Wooden Furniture provides clear definitions on solid wood furniture and panel furniture. Revisions have also been made to the major dimensions of tables, cabinets, chairs and beds, as well as formaldehyde emissions. Moreover, requirements on volatile organic compound (VOC) limits and testing methods have been added. The Upholstered Furniture: Assessment on Burning Behaviours of Mattress specifies the terminology, definition, requirements, testing equipment and facilities, inspection method and inspection rules on the burning behaviours of mattress as an upholstered furniture.

On 1 July 2018, the Rules on Materials in Rosewood Products (GB/T 35475-2017) came into effect, specifying the definition, classification, tree species, requirements on moisture content and testing methods for redwood products.

Further details can be found on the website of the Standardisation Administration of China.

Content provided by Picture: HKTDC Research
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