- With increasing market competition, the furniture industry is expected to move towards specialization and differentiation. In terms of division and cooperation within the industrial chain, it is impractical for a single enterprise to cover all aspects of the chain. Therefore, theoretically, design companies will specialize in new product design and development, plants will focus on semi-finished product processing, furniture manufacturing enterprises will specialize in final assembly and brand building, general agents will concentrate on regional marketing and logistics distribution, while other sales service retailers will specialize in pre-sale, in-sale, and after-sale services. This approach allows each company to develop its own competitive advantage and establish its unique value proposition. Competitive advantage may be achieved in one or more sectors of the industry chain but covering all sectors is not feasible.
- Production bases are being relocated to areas with cheaper labor and materials due to the labor-intensive nature of the furniture manufacturing industry which requires significant manual operation. This gives regions with low labor costs (such as developing regions) a competitive edge. Additionally, disassembling furniture products reduces transportation costs making it attractive for investors to establish plants in these regions. Given that furniture materials have large volumes and require substantial timber procurement, production enterprises inevitably face high material costs. To mitigate this challenge, many enterprises opt to build production bases near timber sources which significantly reduces costs thereby enhancing product competitiveness.
- A new phase of strategic industrial consolidation is set to take place in the Midwest. Historically, the furniture industry has naturally concentrated in coastal regions, particularly in the Yangtze River Delta and the Pearl River Delta, where the entire supply system has been well-established. However, due to ongoing industrial restructuring, many local governments in these areas are gradually shifting away from traditional manufacturing towards a more diversified industrial structure. This shift is commonly referred to as “emptying the cage and releasing the bird,” which presents challenges for certain industries. As a result, a new wave of industrial consolidation is expected to occur in central regions, with even the furniture industry in Shenzhen gradually relocating to the Midwest. Our current plans include establishing an industrial park spanning 6 square kilometers in Sichuan and another 6 square kilometer park in northern Gansu Province. Additionally, there are considerations for expansion into Hebei and Hubei; however, transferring operations to southwestern regions such as Guizhou may not be feasible due to logistical constraints. For any enterprise considering relocation, cost reduction must be a primary consideration. The reluctance of enterprises based in the Yangtze River Delta and Pearl River Delta to relocate can be attributed to their established industrial support systems and logistics infrastructure that currently offset rising labor and raw material costs. However, it is anticipated that within two or three years these cost offsets will no longer suffice prompting businesses’ migration elsewhere – evidenced by Taiwanese-funded enterprises swiftly relocating operations to Vietnam. In response to this trend, Shenzhen’s government has established its own free trade area within Vietnam while actively encouraging Taiwanese enterprises (particularly those within electronics manufacturing) to migrate there as well. This initiative aims at freeing up valuable land space within Shenzhen for advanced manufacturing development – including but not limited to the furniture industry. Therefore any industry association with interests or investments within Midwestern regions should seize this opportunity without hesitation.
- Differentiated management is the primary prerequisite for the survival and development of enterprises. Due to the scientific and technological nature of the furniture industry and the limitations of investment scale, the industry has a relatively low threshold, making it easy for novices to enter as “professionals.” Additionally, with a wide variety of furniture types and styles, patent protection becomes more challenging, providing opportunities for imitators. International and domestic exhibitions serve as classrooms for these imitators. Enterprises that heavily invest in new product development can rapidly industrialize and engage in large-scale production once they gain recognition from the market. However, good products often have short lifespans; what used to be a best-selling product life cycle of 2-3 years has now been shortened to less than half a year due to market homogenization. This trend has caused many major companies to struggle, while consumers are overwhelmed by identical styles, colors, materials, and prices within vast furniture shopping malls. Therefore, there is a desire for differentiation in response to market homogenization.
- Modernizing the production process As Chinese furniture production undergoes industrialization, advanced manufacturing technologies such as digital control technology and new sensing technologies like laser measurement are being utilized alongside new mechanical technology to enhance processing efficiency and accuracy. Various new equipment for sawing, planing, drilling veneer application sealing have been introduced along with corresponding techniques adopted accordingly by domestic large-scale furniture production enterprises aiming at gaining competitive advantage in various markets through these latest production methods.”
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