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Tom Russell

China’s furniture industry appears strong despite recent challenges

In some respects, China’s furniture industry has taken a beating.

Import growth to the United States slowed in 2007 thanks largely to the stagnant American economy combined with rising prices on finished goods. Some Chinese manufacturers also faced damage due to heavy snowstorms this past winter. The end result, some sources claim, was the closing of some 2,000 furniture plants on China’s east coast shortly after the Chinese New Year in February.

That’s a small number compared with the estimated 15,000 furniture manufacturers in China, but significant nonetheless in terms of the potential impact on U.S. customers.

Yet based on visitor attendance and the number of exhibitors at trade shows in both southern China and Shanghai this year, you’d never know there was any slowdown in the Chinese furniture industry. Nor would you know it by the impressive gala events officials put on at these shows.

Grand opening ceremonies and gala dinners are sights to behold. Opening day speeches often end in a ribbon cuttings and bursts of confetti. Traditional Chinese dancers and musicians perform, and elaborate awards are presented to furniture designers.

It makes one wonder if this was what things were like in North Carolina during its manufacturing heyday a few decades back. Obviously that time is long past. This was recently highlighted by a 17% drop in orders to U.S. furniture factories from July 2007 to July 2008, the worst performance in a year, according to accounting and consulting firm Smith Leonard.

Meanwhile, despite this year’s difficulties, China’s furniture industry still appears to be on the rise. According to officials with the China National Furniture Assn., which celebrated its 20^th anniversary in September, China furniture industry exports rose 28% during the first half of 2008.

That’s in spite of a recent 10%-15% increase in raw materials costs, said association president Jia Qingwen at a meeting with trade press during the Shanghai show.

“Because of the situation, some companies are bankrupt or have stopped production,” he told reporters. “But many still have healthy production.”

The U.S. remains a top export market, but even when it falters, there is still plenty of business from countries like Germany, France, England, Holland, Spain and Japan, not to mention wealthy Middle Eastern markets such as Dubai.

“Despite the increases in labor and raw materials, the Chinese furniture industry is very strong in competitiveness and quality,” added Wang Mingliang, founder of the annual China International Furniture Expo in Shanghai. “The value is there.”

More importantly, the demand from the domestic market in China remains strong and appears to be getting stronger. Furniture imports to China rose 33% during the first half of 2008, according to a statement citing the results of the Shanghai show.

“Within a few years, China will become the fastest growing consumer market in the world for furniture,” the report said. “With more than 10 million new wealthy people living in China, it is further expected that up-market (higher-end) furniture sales will continue to show strong market growth.”

“The middle class people (in China) have had nothing, but now all of a sudden, they have a lot,” noted one U.S. observer who attended the Shanghai show.

This is further evidenced by all the cars on the roads and the expensive new houses going up in and around Shanghai. The message is clear: While the U.S. economy is in a state of upheaval, the Chinese economy remains strong.

In the Chinese furniture industry, the weak companies may be getting weeded out, but the strong ones are getting stronger by taking advantage of the boom. Hence, for those of us who continue to visit furniture shows in China, we’ll likely continue to witness such grand scale gala events for some time to come.

Did you attend any of the China shows this year? If you did — or even if you just watched them from afar — we’d like to hear your comments.