HIGH POINT — When it comes to furniture making, China is not merely looking to grow the business; it intends to explode it.
Capacity is a key driver, and factories throughout China are accelerating aggressive expansion plans in order to remain in the passing lane of the manufacturing fast track.
To get a firsthand look, Furniture/Today recently traveled to China and visited a myriad of factories in areas including Dong Guan, Shenzhen, Guangzhou and Shanghai.
Since much of the furniture manufacturing in China is dominated by private and foreign enterprises, the Chinese government has no official statistics showing the actual number of furniture factories operating in the country.
However, statistics from the U.S. International Trade Commission, China's U.S. customers and Furniture/Today market research help paint a clearer picture of the ongoing growth of Asian imports.
Last year, the factory value of furniture exported from China to the United States was slightly more than $4.1 billion, almost twice that of its nearest competitor, Canada, whose furniture exports were valued at $2.2 billion.
Even more telling is that while the value of Canadian exports to the United States fell 6% from 2000 to 2001, the value of furniture and furniture parts from China rose more than 13%.
The majority of factory owners, including Y.H. Chen of Strongson Furniture Co., believe a number of factors are driving their businesses: U.S. demand for offshore produced furniture is on the rise; the U.S. economy is stable; Chinese labor costs are very low, and their skill and thus the quality of furniture produced in China are improving.
Those conditions have prompted Strongson and other area case goods and upholstery factories to make large capital investments in brick, mortar and machinery, not only to keep up with current demand but to be positioned for future growth as well.
Geoff Beaston, president of Fine Furniture Design and Marketing, agrees with that assessment. "I think we are seeing many Chinese factories ramping up in order to position and strengthen themselves not only for the current business but for the market share yet to come."
For its part, Strongson, which opened its 800,000-square-foot facility in China in 1993 following two decades of furniture making in Taiwan, is in the midst of building a second, even-larger factory.
When complete in 2003, the Strongson facility will boost its current production from 300 containers a month to 1,000 containers a month.
Similarly, as first reported in Furniture/Today (June 3, 2002), Lacquer Craft, which has a large facility in Dong Guan, announced plans to build a 3 million-square-foot manufacturing and distribution complex in Shanghai.
Careful partnerships
According to Samuel Kuo, Lacquer Craft's chairman, capacity coming from the new site will be devoted exclusively to Legacy Classic Furniture, a furniture resource Kuo describes as his "fastest-growing customer."
In addition, the Shanghai facility will supply Lacquer Craft's recently acquired marketing company, Universal Furniture, to essentially double its capacity by taking over the current Dong Guan plant.
Securing capacity, particularly from an established factory, is going to be a critical factor for U.S. furniture makers looking to source abroad.
"Securing production with reliable, experienced factories is the key," said Kevin O'Conner, president of Legacy Classic. "Anybody can get a good price and good value from China. The real issue is partnering with factories that can deliver quality and reliability."
Most U.S. furniture suppliers looking to source from China agree. One large case goods maker said, "The lines are being drawn, and the partnerships are being formed. It's like going to a high school dance. Nobody wants to end up with an unattractive date."
On the surface, particularly with all the new capacity coming on stream, it would appear that there are plenty of comely partners. However, at a time when demand currently exceeds supply, most of the larger factories prefer to deal with a carefully edited group of secure and loyal U.S. companies.
Rui Feng Woodworking, a large multi-factory producer in Dong Guan City, is one such manufacturer. Despite the fact that its newest facility is 1 million square feet in size and has more than 3,000 workers, Peng Chun Ming, Rui Feng's vice president, confirmed that by choice he conducts business with a handful of loyal and significant players.
"In our case, we devote about 40% of our capacity to Standard Furniture and about 35% to retailer Value City," Ming said. "The rest is divided among a handful of other customers."
Ming said he also believes that certain factories are better fits with certain customers. Explaining that part of that involves the marriage between what the customer sells and what the factory makes, Ming was quick to add that mutual trust and respect are the adhesives that cement a relationship between customer and factory.
Don Mecke, vice president of Standard and Rui Feng's largest customer, agreed. "Doing business in China is not simply about making, buying and selling furniture. It is about mutual trust and commitment. When we source overseas, we are committed to long-term relationships, and Rui Feng feels the same way."
|
|||
|
|||
|
|
%5CImages-Art%5CReady%20Graphics%5CChinaMap.eps)
