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China: Number Crunching

Export growth rates slow, possibly due to decrease from overseas demand and increased consumption at home. Teo Kay Key reports with figures from the Chinese National Light Industry Information Centre (CNLIIC) and China National Furniture Association.

The total furniture production from January to July 2009 amounted to more than 330 million pieces. While this reflected a 1.79 percent drop year-to-date, there was relative growth in July compared to the previous month, with an increase in production volume by 6.61 percent. Production for the domestic industry for the first two quarters also increased by 8.4 percent, according to figures released by the China National Furniture Association (CNFA). This growth was attributed mainly to government policies aimed at maintaining the growth and increasing domestic demand of durable goods like furniture.

Products making up these numbers include furniture made of wood, metal and soft materials, and all these sectors saw a fall in numbers compared to the same period last year, according to Figure 1. Metal furniture, especially, saw a growth of 13.17 percent in July compared to the previous month, registering a total production volume of nearly 23 million pieces. It also reported the highest number of finished products in July, accounting for more than half of the month’s total tally of 45.1 million pieces. Soft furniture, on the other hand, reported the lowest growth rate for the current month among the three categories at only 1.8 percent, which probably contributed to the largest drop of 3.9 percent compared to the same period last year.

Regional Production Volumes

In terms of regional production volume, the top 10 provinces include Zhejiang, Guangxi, Fujian, Shandong, Shanghai, Henan, Jiangsu, Liaoning, Sichuan, and Beijing, as seen in Figure 2. These provinces accounted for 94.18 percent of total furniture production in China for January to July 2009. For wood furniture, they took up 90.44 percent of total national production, while they accounted for 97.27 percent of metal furniture. Furniture production is concentrated in the top three provinces, which churn out more than two thirds of the 330.4 million pieces recorded for the first seven months of this year. Zhejiang itself produced nearly one third of the total output. In contrast, Beijing, which is at number 10, accounted for only a little more than one percent of the total national production volume with 3.79 million pieces.

Zhejiang, which took top position, focused more on metal furniture, producing a total of nearly 74.1 million pieces in the first seven months of 2009. Comparatively, wood furniture only accounted for 12.2 million of its total 98.6 million output. In contrast, Guangxi, which ranked second, reported nearly even numbers of wood and metal furniture production, at 33.8 million and 37.2 million pieces respectively.

Dramatic Import Fluctuations

In terms of foreign imports, China in July 2009 welcomed shipments worth nearly US$119 million in total from its trade partners as shown in Figure 3. They brought the total value of imports for January to July to US$678.2 million. This was, however, a reduction of 8.64 percent compared to the same period last year, which reported US$742.4 million of imports. This was a period of ups and downs for the different sectors of the furniture industry, with dramatic growths registered by some and big reductions in others.

The trend for plastic furniture seems to be gaining momentum in the mainland, as seen by its large leap of 189.99 percent in imports for January to July as compared to the same period last year. While the relative increase is huge, this sector only accounts for 1.27 percent of the total import value. It is therefore a small market, especially when compared to big sectors like seating and accessories, and wood furniture. However, considering the growth spurt it reported this period, especially in the face of continued economic uncertainty, it could be a market with potential.

This assessment is compounded by the figures posted by the abovementioned sectors of seating and accessories, and wood furniture, both of which dropped compared to the same period last year. Seating and accessories saw imports worth US$80.2 million in July, and a total of nearly US$397 million in the seven months of 2009. This was, however, a reduction compared to 2008 by 15.28 percent. Despite the drop, this sector remained on the top of the table in terms of the total value of products.

The largest decrease for the period was reported by bamboo, rattan, and similar furniture, which dropped from US$190,000 last year to US$60,000 this year. This was a drastic fall of 68.42 percent for the small sector, which does not constitute even one percent of total import value. The second largest drop was posted by metal furniture sector, at 22.05 percent. This indicates the changing of preferences of the Chinese, who might be buying more of locally made furniture.

Main Exports Still Post Losses

With regards to exports of Chinese furniture products, the month of July saw the shipping of US$2.04 billion worth of goods to its trade partners, according to Figure 4. This added to a total of US$14.1 billion for the year’s total, and reflected a 9.45 percent drop from the same period last year, which saw the export of US$15.6 billion worth of furniture overseas. While fluctuations were not as dramatic as the imports, outward-bound exports also had their fair share of ups and downs.

The largest growth was clocked by the bamboo, rattan and similar furniture sector, registering a 43.8 percent growth with total exports worth US$19.3 million, up from US$13.4 million last year. However, this only took up 0.14 percent of the total export value for the seven months of 2009, and thus could not help boost the total growth rate significantly.

Seating and accessories exports were worth US$861.7 million in July 2009, adding to a total of US$6.6 billion for the seven months in 2009. This earned it the top spot on the table, but it was still a decline from the previous year by 11.37 percent. Metal furniture took the second place with a total of US$1.71 billion for the seven months, but reported the largest drop amongst the different sectors with 29.94 percent compared to the same period last year.

According to a news report by sohu.com, China Customs reported a decrease in exports bound for the US and EU, the mainland’s major trading partners, taking up 59.9 percent of total furniture exports. Exports to US amounted to US$4.9 billion, dropping by 18.8 percent compared to last year. Similarly, EU-bound exports totalled US$3.34 billion, reporting a decline of 8.6 percent. The decline was attributed at least partly to the continued recession, which hit both regions hard, and from which they have not yet recovered completely. In addition, they have also turned their attentions to furniture from ASEAN, which further impacted demand for Chinese goods. On a brighter note, exports to ASEAN countries jumped 110 percent to reach US$0.99 billion for the period, which reduced the impact brought by the lowered demand from US and the EU.