China maintains big lead as top furniture source
Thomas Russell -- Furniture Today, January 23, 2013
HIGH POINT - Looking at the latest import figures from trade data specialist Zepol Corp., it's clear that China remained the largest Asian exporter of furniture to the U.S. last year.
Its $9.17 billion of cumulative shipments during the first three quarters of 2012 towered over even the next largest source country, Vietnam, which shipped $1.48 billion during that period.
Among the top Asian furniture producing countries, Malaysia was the next most important resource with $515 million in shipments followed by Indonesia at $439 million during the first three quarters.
While this data contains few surprises about the importance of each source country, the accompanying charts do show how each country fared by quarter.
This highlights the peaks and valleys experienced by each and is thus an indication of the unpredictability of the U.S. market, where recent years have appeared to get off to a good start, only to be followed by lackluster second and third quarter activity.
In 2013, we don't expect much variation among these resources. China likely will remain important in fabric and leather upholstery as well as middle to upper end dining and other categories such as occasional, home entertainment and home office.
Thanks to the strength of its manufacturing base, Vietnam will remain a viable resource in lower middle to upper middle priced bedroom, while Malaysia will likely remain important in promotional to lower middle bedroom and casual dining.
Malaysia also has some fine leather upholstery producers, but many of these appear to have priced themselves out of the U.S. market, in effect handing over market share to places like China, which has plenty of capacity and thus a price advantage.
Indonesia, meanwhile, will likely remain an important wood resource for the upper middle to upper end of the market. This is especially true as manufacturers invest more in CNC equipment and also develop better finishing capabilities.
The big question looming in the year ahead will be how rising labor rates affect each of these markets. Both industry and international news sources tell us that manufacturers in each country face cost pressures, particularly as their governments implement double-digit wage increases. China already is getting surprisingly close to Mexico in terms of its wage structure. And with proposed minimum wage increases from 22% to 44% depending on the region, Indonesia, once a value compared with China, is starting to get more expensive too.
How this plays out in the year ahead will be anyone's guess, but it's an issue that merits close attention as it could affect wholesale prices in the months ahead. Stay tuned.
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