Chinese imports jump, U.S. sales slip
By Michael J. Knell -- Furniture Today, June 2, 2003
Ottawa — The United States remains Canada's leading source of imported furniture, although China has displaced the United States as the No. 1 case goods source.
Meanwhile, geography, the value of the dollar and a shared cultural outlook continue to ensure the United States remains the only truly important export customer for this country's furniture.
According to Statistics Canada, total furniture imports rose 15.2% in 2002 to C$1.4 billion, continuing growth that has run unabated since 1997. However, U.S. imports fell for the second consecutive year, dropping 3.9% to C$488.7 million.
Imports from China in 2002 totaled C$278 million, up an impressive 45.7% from C$190.8 million in 2001.
For the first time, Canada's exports to the United States broke the C$2 billion mark in 2002, up 6.5% from the previous year. Sales to U.S. retailers continue to account for about 95% of all Canadian household furniture exports, as they have for past decade or more.
China is Canada's second-largest customer for case goods, with wood shipments to that country nearly doubling to C$19 million in 2002. Canada's No. 2 customer for upholstery is Japan, although shipments dropped 27.5% to nearly C$800,000 last year.
In the early years of free trade in the 1990s, Canadian retailers usually looked south for new sources of case goods, but since 2000, imports of U.S.-made upholstery have outpaced those of wood furniture. For the past two years, imports of U.S. upholstery have remained essentially flat at C$199 million, while imports of case goods have fallen from C$191 million in 2000 to C$164 million in 2002.
Meanwhile, case goods imports from China jumped 49.4% in 2002 to C$190 million. Although the United States dominates the upholstery category, China is showing increased strength, with imports tripling since 2000 to C$87.5 million last year.
As an upholstery source, China knocked Italy out of its long-held No. 2 spot for the second year. Even though Italian imports in the category showed significant growth in 2000 and 2001, they fell 11.5% last year to C$48.4 million.
American case goods makers with an historically strong presence on Canadian retail floors by no means have left the market. Many have shifted production away from high-cost, labor-intensive U.S. factories to China and other Pacific Rim countries, and these goods have found their way into stores on both sides of the border.
Although not to the same degree, Canadian furniture producers also have been making more and more items offshore in an effort to remain competitive, particularly in the entry level, promotional and mass-market price points. To complicate matters further, many of these imports are re-exported to the United States.
Although imports have been growing, their share of the overall Canadian market has remained flat for the past three years, hovering at about 41%.
Canada's furniture industry remains export dependent. Last year, 45.2% of all Canadian household furniture shipments were for the export market, almost all of it to the United States.
The Canadian industry appears to be feeling the competitive heat from China in the U.S. market, especially in case goods. After a decade of record growth rates, often 20% or more, growth in shipments to the United States slowed to a crawl in 2001. For the past two years, Canadian exports of wood furniture to the United States have been essentially flat at C$1.4 billion, although this category continues to make up the overwhelming mass of Canada's furniture trade with its southern neighbor.
Upholstery exports are fueling whatever gains the industry currently is making. In 2002, upholstery exports to U.S. retailers jumped 15.5% to C$455 million, after gaining 13.4% the previous year.
Most observers attribute the bounce to Canadian upholstery producers' ability to offer the consumer a breadth of choice, in leather or fabric, coupled with short lead times.
The bottom line is that Canada's balance of furniture trade with the United States grew by 10.3% in 2002 to C$1.5 billion. However, this country's balance of furniture trade with the world dropped 7.4%, recording a surplus of C$709.5 million, down 10.3% from the record set in 2000 of C$791.2 million.
| Canada's balance of furniture trade with the United States | |||
|---|---|---|---|
| In millions of current Canadian dollars | |||
| 2002 | 2001 | Percent change | |
| Source: Statistics Canada and Industry Canada | |||
| Exports to the U.S. | $2,036 | $1,911 | 6.5% |
| Imports from the U.S. | $489 | $509 | -3.9% |
| Balance of furniture trade with the U.S. | $1,547 | $1,403 | 10.3% |
