Europe's reaction to Asian influx mixed
Some producers showing at Cologne look to investments in Eastern Europe
By Powell Slaughter -- Furniture Today, February 15, 2004
COLOGNE, Germany — Attitudes among European manufacturers on Asian competition range from confidence to concern to wholehearted embracing of global sourcing, according to comments at last month's furniture market here.
While not as obvious as in High Point, the presence of Asian-made furniture continues to grow in Cologne, in both OEM product and an increasing number of Asian manufacturers showing under their own banners.
Exhibitors here have reacted to Asian price pressure with sourcing networks and direct investment in the countries of the former Soviet bloc, which offer a strong combination of lower labor costs than in Western Europe and transportation charges a fraction of those from Asia.
"Many Europeans are producing in Eastern European locations such as Romania — what we call 'New Europe'," said Calixto Valentí, president of both high-end Spanish case goods manufacturer Valentí and the European Furniture Manufacturers Federation.
In addition to lower costs, manufacturers here view sourcing development in Eastern Europe as an investment in the future.
"Eastern Europeans will become our customers much sooner than the Chinese," Valentí said. "If some products have to be made with cheaper labor, we prefer to invest there. It's better to bring them work than have them come here to work. We try to promote new markets and raise the standard of living."
A drive to expand its network of BoConcept dedicated stores has Danish ready-to-assemble furniture maker Club 8 taking a blended approach, mixing a growing amount of sourced goods with product it makes itself.
A full presentation at retail, including accessories and chairs, demanded that Club 8 look for product outside its own capabilities, as well as sourced parts and hardware for its own manufacturing operations. Club 8 has five factories, four in Denmark and one in Lithuania, and sources in China and Vietnam.
"We aren't really a furniture company now," said David Most, area sales manager for Club 8. "We consider ourselves an international marketing, manufacturing and distribution company."
The strong euro causes concern among some European manufacturers, particularly ones interested in the U.S. market. Currency fluctuations are part of doing business internationally, but if current exchange rates are sustained, Europe could be vulnerable to Chinese imports, since a strong euro makes Chinese goods relative bargains.
Leather upholstery makers here, for example, face the kind of booming growth in Chinese market share that U.S. case goods producers have dealt with for the past few years.
"The strong euro is a definite advantage for the Chinese, on top of their low production costs," said Erik Stammberger, president of German leather upholstery manufacturer W. Schillig. "It makes them even more competitive."
Natuzzi has 11 plants in Italy, but also a factory in China. That helps Natuzzi get a price value, combined with product development capabilities.
"Our leather tannery in Italy is very important in order to keep our product development effective," said Giacomo Ventalone, Natuzzi public relations manager. "When you have a new leather that you can develop yourself, that gives you an edge."
Some leather sources have given up competing with the Chinese on price. Interline Italia, for example, is moving toward higher grades of leather, along with increased function.
"We manufacture everything in Italy," said Max DiPalma, Interline's export manager. "That's one of our selling points. People here also are starting to be conscious of job losses. We just aren't going to ever beat the Asians with price."
In addition to leather, more Asian contemporary case goods are becoming evident here. Until fairly recently, Chinese residential furniture producers tended to concentrate on traditional styles involving a lot of handwork, which made full use of their labor-cost advantage.
Italian case goods maker Calligaris is confident it can compete.
"If you just consider price, that's a partial view of the whole situation. There are no proprietary ideas over there," said Emanuele Corvo, North American sales manager for Calligaris. "Our company is based upon product, design and service. All our designs are patented and registered, and if necessary we'll go after knockoffs."
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