Imports resume climb

China fuels much of last year's 13% growth

By Brian Carroll -- Furniture Today, April 21, 2003

High Point — After a 1% slip in 2001, U.S. furniture imports resumed their growth last year, bulging 13% to $14.2 billion.

Not surprisingly, No. 1 source China fueled much of that growth, accounting for 40% of total U.S. imports in 2002. No. 8 Thailand and No. 9 Brazil also scored substantial gains of 32% and 35%, respectively.

Huge new factories in cities such as Xiamen and Shanghai and in southern China propelled an eye-popping 37% increase in Chinese furniture exports to the United States, according to U.S. government figures that are further refined by Furniture/Today.

China pumped more than $5.7 billion worth of furniture into the U.S. market in 2002.

Meanwhile, U.S. furniture exports continued to slide, declining 10% last year, following a 16% drop in 2001 (see story below).

Notable among the Top 10 source countries was No. 5 Taiwan's stabilization at $606.7 million, and a double-digit gain for No. 7 Malaysia to $476.6 million.

Both Malaysia and Thailand have become more aggressive in boosting their furniture exports in reaction to Chinese competition, with the Malay and Thai governments playing leading roles in those efforts.

Taiwan's slight increase in furniture sent to the United States is its first in nearly a decade. Taiwan has suffered most from China's growth, primarily because much of China's furniture production is tied to Taiwanese factory owners who relocated to China.

No. 2 Canada showed its second consecutive yearly decline, with imports slipping 2% to $2.2 billion. Like U.S. factories, some Canadian furniture makers increasingly are looking offshore for cheaper labor.

For the second straight year, Brazil saw significant growth, with exports swelling to $262.2 million. That 35% gain came on the heels of a 34% increase in 2001, a tough year for most countries shipping to the United States. The sustained growth indicates Brazilians increasingly understand how to meet the demands of the U.S. market.

The big story, of course, remains China's sweeping expansion, enabled by enormous progress in infrastructure and facilities, as well as the country's entry into the World Trade Organization. The growing interdependence of China and the United States in the furniture arena is obvious.

"China is probably the next superpower of the world," said Jake Jabs, chief executive of Colorado retailer American Furniture Warehouse, an aggressive direct importer. He recently toured China, Malaysia, Singapore and Thailand, attending the Far East series of furniture markets. "The best buys are in China," Jabs said.

Last year marked the fifth year out of the last six in which total Chinese furniture exports to the United States jumped some 30% or more. Only 2001's 13% gain fell below that threshold.

Shanghai is a big cog in China's growth engine, offering perhaps the country's best business climate and infrastructure for moving goods. Importing pioneer Larry Moh, who died earlier this year, said these attributes led him to build his mammoth Fine Furniture Design & Manufacturing facility in the city.

In the south, Guangdong province is the leading furniture region with over 6,000 facilities, according to Aktrin Furniture Information Center. Its distance from the nominally communist government in Beijing, its proximity to Hong Kong and the abundance of cheap labor are the big reasons why.

A war with North Korea would affect trade in the region, but many believe China will prevent any such conflict, largely because of its own world trade.

"I still don't see anything that will impede China's furniture production or exports," said Don Mecke, senior vice president of sales and marketing at Standard Furniture/Kathy Ireland Worldwide.

By product category, miscellaneous wood furniture, which encompasses most of the occasional category, accounted for $1.4 billion of China's 2002 shipments to the United States, registering 47% growth from 2001's $974 million. The second-largest category, metal household furniture, grew by nearly a quarter, totaling $617 million in 2002 compared to 2001's $493 million.

Also important were 70%-plus increases in upholstered furniture categories coming out of China. Upholstered chairs saw a 73% jump, while wood-frame sofa shipments nearly doubled to $156 million.

Another country to keep an eye on is No. 17 Vietnam, which grew its furniture shipments to the United States more than five-fold in 2002 to over $63 million. That figure likely would be much higher if unfinished furniture made in Vietnam but completed elsewhere were included. Singapore, Malaysia and even China are among the countries increasing production in Vietnam.

Miscellaneous wood furniture is Vietnam's largest category at $38 million, accounting for 60% of total exports to the United States. But the upholstered chair and dining room categories are growing faster.

Canada saw declines in two of its largest export categories. Wood bedroom slipped 3% to $329 million in 2002, and wood furniture parts, at $209 million, saw a 9% slide.

Fueling Brazil's 35% gain, the second-largest increase in the Top 10 after China, was growth in miscellaneous wood and wood bedroom, its two largest export categories. That more than offset a decline in leather upholstery, which finished 2002 at $44 million, down 13% compared to 2001.

No. 3 Italy's shipments here rose 9% to $1.3 billion in 2002, although the country's largest category, wood-frame upholstered seats, declined 1%. More than compensating for that slip were gains in miscellaneous wood and wood bedroom.

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