Fitting place for fine furnishing

Local firms try to come to terms with drop in market share as well as effect of slowdown

Shunde, the hometown of kung fu screen idol Bruce Lee and other martial arts legends, has a fight on its hands. This district of Foshan in Guangdong province is also known as the cradle of the mainland's furniture industry.

Since the early 1980s, taking advantage of its proximity to Hong Kong, more than 2,600 furniture makers and 3,000 dealers have set up shop along national highway 325, which runs through the towns of Longjiang and Lecong in Shunde.

Neighboring cities in the Pearl River Delta, such as Dongguan, followed the trend and the province became the main source of furniture for the domestic market and exports. But that cradle has been rocked hard and taken some knocks over the years.

Guangdong furniture gradually lost its dominant position as the domestic market grew and economic woes hit overseas markets. In 2009, its Chinese market share dropped from 50 percent in 2007 to one-third, and today is less than 30 percent, said Qian Jiang, general manager of the Asian International Furniture Material Trading Center, a 2,740-hectare park in Shunde that houses 1,100 furniture businesses, the largest of its kind in the world.

In November, it was reported that several companies were debt-ridden. Some had closed their factories.

"In our center, 20 percent of the shops were in the black, 30 percent broke even and 50 percent were in the red in 2012," said Qian.

Although the center's turnover in 2011 had been close to 30 billion yuan ($482 million), growth rates across the industry in Shunde and Guangdong had slowed down considerably and it was no longer sitting comfortably.

This has been put down to the combined effects of the economic slowdown in the principal overseas markets of Europe and the United States, stricter regulation of the property market in China, higher labor and land costs, attractive policies from other regions forcing companies to relocate, and shortfalls in the quality and design of furniture.

"Growth in Shunde has inevitably slowed down as a result of new policies and the macroeconomic environment," Qian said.

"Another factor is that Shunde is facing more challenges from other fast-growing furniture manufacturing bases in China, such as Likou in Jiangsu province and Chengdu in Sichuan province."

Many small cities in those provinces have decided to develop their furniture industry in line with the national and regional governments' 12th five-year plans (2011-15). Governments in those provinces and cities are drawing up policies that are more favorable for this industry, Qian said, but those in Guangdong have not.

With regard to the quality and design of products, Shunde has also had the chair pulled from beneath it by European furniture manufacturers, particularly in Italy and Germany.

"In terms of quantity, China is the world's largest furniture manufacturer, but compared with Italy, our products have much lower added value," said Hu Lingxiao, deputy manager of Shunde Empire Furniture, one of the largest shopping malls in the district, which saw sales growth drop from the double-digit figures in previous years to single-digits in 2012.

"If we want to catch up with Italy, we need to start with design, including the cultivation of our taste and the education of designers, which I think will be a long process."

Now, in the spirit of its famous sons, Bruce Lee and fellow martial arts legends Wong Fei-hung and Yip Man, Shunde's furniture businesses are fighting back. They are working together, improving their craftsmanship, image and reputation.

In August, 30 leading Shunde furniture producers formed the Brand Union of Shunde Furniture to promote its furniture and increase its competitive strength.

"Shunde doesn't lack good products but a united brand that will receive recognition from consumers," said Zhou Zhenyang, deputy director of Shunde Furniture Association.

That move is aimed primarily at the domestic market, with Shunde furniture producers seeking more market share in second- and third-tier cities.

Internationally, for the export market, Riccardo Ribechi, business and regional manager of European furniture designer and manufacturer Poltrona Frau Group from Italy, outlines the challenges Shunde faces.

"Chinese furniture has made a lot of progress over the years, but the gap is still very big," he said, citing his visit to the 2012 Furniture Fair in Cologne, Germany, where he saw many Chinese furniture companies.

"The quality in general is good enough, the difference is in design.

"The design of Chinese furniture is very simple and not really up to date. There is a lack of research in terms of design, new materials and technical solutions. It is difficult for me to mention a good example of Chinese furniture."

Qian, who as well as being general manager of Shunde's giant trading center is executive president of Shunde Furniture Design Institute, accepts the criticism up to a point.

"I think the general design level in Shunde lags 10 years behind that of Italy, but in certain projects, our level is comparable," he said.

Now, in a bid to reduce that gap, local governments in Shunde and other parts of Guangdong province are running various kinds of furniture design competitions, with prizes of up to 100,000 yuan.

Yuan Zehong founded Yitong Design in Shunde two years ago and already enjoys annual growth of 40 to 50 percent in orders. Previously, he worked for several furniture companies after graduating from Shunde Polytechnic more than 10 years ago.

"It is more a case of technical problems than one of design," Yuan said of the challenges facing Chinese-made furniture.

"Chinese people have their own tastes. Italian exhibitions can provide inspiration for us but we still need to cater to local consumers' needs.

"But as more Shunde furniture companies develop toward the high-end market, design becomes important."

Vollodis Furniture, one of the top 10 producers of beds and mattresses in China, saw its revenue growth rate drop from 20 percent annually over the past five years to 15 percent in 2012. Its general manager, Zhou Zhenyang, said his company, which has a 12-strong design team among its 450 employees, is cooperating more with foreign and Chinese designers to improve the appearance and functionality of its products.

"Since I founded the company 15 years ago, we always have been trying to improve our design capability," he said. "We are also choosing talents from among top furniture design students at universities such as Guangzhou Academy of Fine Arts."

Last year, Foshan Hong Qiao Furniture, one of China's largest office chair producers, invited Japanese designer Toshiyuki Kita to design its office furniture.

"Design is the core competitive strength of our company. Since we founded the company 13 years ago, we have been designing products based on our experience, and now we have a design team of 40 people," said general manager Zuo Boliang.

Besides design, the local government is also trying to promote the use of new materials.

"Promoting water-based paint is the most important job for 2013," said Qiao Xiaobin, director of Longjiang Economy Promotion Bureau.

"But, because of technical and cost problems, very few companies have adopted this environmentally friendly paint that will reduce pollution during production and pose fewer health hazards."

The latest concepts in furniture making have also been introduced from Europe.

"When we visited furniture fairs in Europe, we saw LED lights were being used to improve furniture's function and also make life more colorful," Qian said.

In 2011, the output value of Shunde's furniture industry reached nearly 100 billion yuan ($16 billion) and more than 52 percent of its output was exported, according to Shunde Furniture Design Institute.

For China as a whole, the output volume of the furniture industry in the first 10 months of 2012 grew by only 5.15 percent, compared with 16 percent in 2011, China National Furniture Association reported.

Last year, the output value for Guangdong province alone surpassed 300 billion yuan, of which around two-thirds was for the domestic market, up 10 percent year-on-year. Exports grew 2 percent, compared to an average of 6 percent over the previous five years.

yangyangs@chinadaily.com.cn

(China Daily 01/19/2013 page10)