On September 11th, the third World Furniture Summit took place at Kerry Hotel Pudong Shanghai, China. The forum attracted more than 600 industry delegates from China and abroad. Given the world’s turbulent economic situation, the opportunity to discuss possible solutions and new avenues of business came at a good time, reports Paul Farley …
Shanghai’s Furniture China is the most ‘international’ of the Asian fairs, bringing together buyers and sellers from every corner of the globe. It also presents unrivalled opportunity for discussion with some of the industry’s leading economies. The second and third World Furniture Summits have been held in Shanghai, providing a platform for discussion and presentation alongside the exhibition.
This edition, which was co-sponsored by the China National Furniture Association (CNFA) and event organiser UBM Sinoexpo, with support from the International Alliance of Furnishing Publications (IAFP), came at a crucial time.
The global financial crunch triggered by the US subprime mortgage crisis in September 2008 has escalated to global economic depression. The US leads a surplus of financing, while China leads a surplus of production. The European debt crisis has deepened, while oil prices and unemployment rates have skyrocketed. People are worried about their futures, and their lack of confidence means fewer purchases.
However, some optimism is founded. Once hard hit, the global furniture trade rallied in 2010 to €73b, up 7.3% year-on-year. North America remains the largest furniture importer, and China the biggest exporter, with gross sales of €21b.
According to data from High Point Market, in 2011 household furniture purchases in the US rose by 15% year-on-year. A report by the Global Industry Analysis Inc in February 2012 stated that, despite global economic uncertainties, changes in consumers’ lifestyles, increased disposable income, diversified high-end furniture, accelerating urbanisation and increasing influence from Western countries, are all contributing to rising demand for furniture – the size of the world’s furniture markets is expected to reach US$436.5b by 2015.
Amidst this, the Asian economies have fared relatively well, and will be a major factor in economic recovery – a steadily growing economy and improving living standards mean that Asia indicates long-term growth for the global industry.
Additionally, there is a growing demand for luxury furniture from the emerging BRIC markets (Brazil, Russia, India and China). According to the CNFA the output value of China’s furniture industry in 2011 was approximately US$154b – up 25.28% year-on-year – and its export activity accounts for 35.3% of the total global furniture trade volume.
The world’s economic geography is changing. Patterns of industry and consumption are changing, posing new challenges to the furniture industry. In a series of keynote speeches and roundtable discussions at the congress, international experts explored how the industry might respond to these challenges.
CNFA president Changling Zhu started by outlining the state of the Chinese furniture industry, and focused on the work his organisation carries out towards its standardisation, technological improvement and communication methods, as well as the drivers behind consumer demand.
“As an evergreen industry, the furniture industry is closely related to people’s lives,” he said. “With continuously improving living standards, accelerating construction through national urbanisation and increased efforts in social security housing construction, the potential of our domestic furniture market is quite considerable.”
Denis Heylen, president of European Furniture Retailers Association (FENA) and owner of the Heylen Group, reinforced the need for attractive products, strong design and better customer engagement.
“Good design has played an increasingly important role in the success of furniture products – emotional connection with the consumer will lead to commercial decisions,” said Denis. “It’s difficult to understand customers. It takes time. However, once we can, they will buy our products, and will buy them continually.”
He also criticised how Europe’s governments in general had dealt with the crisis, and said that restoring trust in leadership is crucial to unlocking people’s savings and encouraging them to spend.
The next talk came from Todd R Wanek, president and CEO of the Ashley Furniture Group, one of the world’s largest furniture retailers and manufacturers. Todd stressed the importance of distribution and logistics. “Today,” he said, “if there is customer demand, we can deliver furniture to any customer in any corner of America in as short as 2.5 days.” He also pointed out that the industry should consider how to address changing demands from an increasingly younger consumer population.
Dr Lim Cheok Sin, founder of Singapore Furniture Association and chairman of the Council of Asia Furniture Associations pointed out that the Far Eastern countries remain behind the West in terms of design and product certification, and that governments should better encourage private enterprise. “Brands belong to Western countries,” he said, “and all standards are either European or American.”
Roundtable discussions followed, in which delegates from Mexico, Turkey, Russia, Romania, Brazil, the UK, the US, Germany, Japan and France discussed the opportunities for industry development within their respective markets.
Mauro Spinelli, senior expert for CSIL Centre for Industrial Studies, delivered his expectations for the market’s development up to 2015. “From the latest world GDP figures, provided by the International Monetary Fund, we can see that the global growth of GDP basically remains comparatively flat,” said Mauro.
World trade of furniture is forecast to grow from a projected US$122b this year to US$128b in 2013, with a slow recovery for the European markets. It was also pointed out that low-income countries account for nearly 50% of the global furniture production – again, the consumption growth in the Asia-Pacific region will be critical.
Chinese economist Depei Wang closed affairs with a speech about how Chinese politics might affect the country’s approach to business – and how, “we cannot change the direction of the wind, but we can change our sails”.
Ultimately, that way of thinking is what the World Furniture Summit is about – by learning about the bigger international picture and how others are overcoming the difficulties inherent with the global economy, we are better placed to react to them ourselves. This edition was the largest yet, attended by more than 427 industry elites from 200 well-known enterprises, and 40 industry media delegates.