China is considered the world’s largest exporter and manufacturer of furniture products. A total turnover of 35 billion dollars in 2016, an increase of 9 % over last year. But China furniture market is not only about exporting as the middle class is looking more and more to buy foreign brands. The market is expected to increase sharply over the next 5 years. A fragmented and highly competitive market with more than 60,000 brands
Future growth factors
•The improvement of the living conditions of the Chinese
•increase of the purchasing power of households
•An increasingly important interest in interior decoration
•An increase in the rate of urbanization (57%) in China = New targets and new customers groups in the market
Current growth factors
•The continuous development of urbanization in China
•The development of the BtoB and BtoC market
•the availability of raw materials
•the low cost of labor
•Market entry of international brands
•The ability to offer good value for money while meeting quality standards
Three main key targets
“The Avid Consumers”:
- A rich group of consumers with high incomes
- No concern for prices
- Interest for Western Style, Classical Chinese style or avant-garde furniture.
- High interest for brands
- Furniture which can reflect their taste and style
- Seek for trends in markets, aesthetics, lifestyle.
- Represents the largest categories of consumers
- Search for best quality / price
- Purchase of proximity
Analysis of demand: What is the new consumer profiles?
•The Chinese clientele is generally consumers whose appearance plays an important role in their lives.
•Chinese homes are considered as an extension and a share of self.
•Loyalty to the brand: Strong brand commitment
•Aspiration to a higher quality of life and product awareness
•Customers have a real interest in magazines specializing in furniture or interior design with regard to their decoration influences (These magazines become influencers and trend launchers to boost sales).
•Behaviors become more mature in terms of product knowledge, taste, quality,
•Interest in high-quality imported furniture.
Consumption Trends in the future
Kids furniture market:
Easing the Single Child Policy, attractive market for brands
Increase of family income: The desire of parents to improve the living conditions of their children. 72% of Chinese parents purchase furniture for their kids
The consumer base has a high sensitivity for environmentally friendly products. Consumers are more aware of the environmental quality of products. They are ready to invest and pay a higher price for this category of furniture
The market is supported by the Chinese government, which has a strong interest in the country’s environmental issues.
growing interest for soft decoration:
•Characterized by the decorative attributes that can be found in homes (curtains, lighting, ornaments, frames, and paintings)
•This favors the development of furniture and personalized services
•Target group of consumers seeking refinement, change, and distinction
•Home made and DIY furniture is becoming more popular among Chinese
Development of office and hotel furniture:
•Strong development of hotels and offices in Chinese cities
•Western style offices with spacious and open areas
•A willingness to offer a comfortable working place by purchasing premium furniture
•The need to change for hotels their furniture and decorations every five years (demand for furniture replacement is about 13 billion RMB in 2017)
•The market is the industry with the highest rate of growth in China.
•the market counts more than 60,000 companies, the majority of companies are SMEs.
• China’s furniture industry has low entry barriers which facilitate new entrants to set up a business in the Middle Kingdom.
•Domestic brands have a better competitive advantage compared to overseas brands.
•The market presents a lot of growth constraints due to fraud, plagiarism, and copyright infringement.
•Over the 10 largest companies of the industry, 8 of them are domestic brands. èQuanU, Qumei and Red Apple.
•But these top 10 companies just account for around 3% of the production value
•Domestic Brands encounter a better success than international ones thanks to better management of their distribution channels and also thanks to their lower prices they answer to consumer demand in rural areas
Market saturation on the first-tier cities, the potential growth is mainly in the second and third-tiers cities
Market Competition : highly competitive market
International Brand in the market:
•More and More Foreign Companies as manufacturers and distributors are launching their business in China.
•Foreign furniture companies acquire around 2 to 3% market share and mainly lead the high-end segment.
•Most of them are targeting lower-tier markets in order to obtain more market share
•The most active and successful one is IKEA which owned 21 stores in china and predict to open 13 new one for 2020.
•The yellow and blue brand to offset the taxation problems, over time the brand has built several factories in the country to increase its supply
•Spanish and Italian brands are well-known in the high-end furniture segment.
The market distribution system
•The chain stores and supermarkets are the main channels for the purchase of furniture goods
•Imported products are sold in specialized stores or targeted high-end shopping centers.
•For the high-end furniture segment the main channel is to directly operate flagship stores
•Online commerce is gaining popularity in the marketplace è Offering real experiential universe
•E-commerce Platforms such as JD Worldwide or Tmall Global are the new trends in online commerce è They form an important future to develop sales
•M-commerce is taking an important position in the distribution channel in China
•The balance between online and offline distribution (O2O)has a strong impact on the furniture market.
Key Points Market
Key Points of Furniture Market:
•Urbanization and the emergence of the middle class and the development of its income contribute to the growing market
•Increasing attention and interest to furnish homes well
•Chinese consumers have a positive attitude towards Foreign Brands
•The market is facing an increase of brands who want to enter the market, especially in second and third-tier cities.
•The interest of international brands for Chinese markets is becoming more and more important
•slight drop in import tariffs made by the Government (especially for mattresses)
•E-commerce takes an increasingly prominent place in the market and becomes a crucial channel for sales development.
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