The South East Asian international furniture fairs, among which we find MIFF (Kuala Lumpur, Malaysia), IFFS (Singapore), and the two most important Chinese fairs, CIFF and Furniture China – among the biggest and most important trade fairs in the world, are the four key events to watch to get a good look of the Far East markets, and understand both what is their untapped potential – hardly ever touched by Italian furniture companies – and which are the obstacles that need to be overcome by a company deciding to confront with them.
To begin, some background info. Asia is quite a big “thing” – the biggest on Earth. It is so big that even if you talk about a region of it, like South East Asia, you confront with huge differences between the different countries. First of all, laws – they could be very different even within a small land extension, like between Malaysia and Singapore. Second, the complexity in setting up and running a company, and the various technicalities like the import/export dues and tariffs. Or other more immaterial ones, like the prevalent language spoken and how much other “commercial” languages – like english – are widespread.
Talking about local consumers habits and needs, the differences are striking, too. Even considering the countries belonging to ASEAN only, we find extreme differences in income, spending habits, and development levels. Singapore, for instance, is a very small, very rich, very developed city-state; Malaysia is instead a much bigger country which is speeding along the way to development; Indonesia is the fourth biggest country in the world (250 million people), but with a very low disposable income pro capita. Thailand is again quite different, as are the Philippines. But in this rather brief summary, we want to focus on the three countries hosting the biggest, most developed and most important furniture fairs of the area: Malaysia, Singapore and China.
Some facts and figures
In the last edition of FMI’s Global Competitiveness Report, 2014-15, Singapore is on top of the charts for economic freedom – grabbing the second position on the world (only Hong Kong is better) and the first in ASEAN. Malaysia also made some giant steps in this field: today, it is among the first twenty countries in the world for economic freedom, the first between Asian emerging countries, and openly aims to become the world hub for Islamic finance. Both countries are among the biggest furniture manufacturers of the world, even with huge differences, and both are of extreme interest for the furniture market.
Malaysia, an industry in transition
The Malaysian furniture industry is experiencing a phase of deep transformation. The current local companies, started as small, family-owned woodworker shops between the Seventies and the Eighties, have now grown into modern enterprises making Malaysia the eighth major furniture exporter of the world. If we examine the figures, we notice that between 2004 to 2014, the Malaysian exports have grown moderately, but gradually – except for some slowdowns due to their market’s and the world’s economy. In the first 9 months of 2014, the export has registered a growth of + 11,9% vs the same period of the previous year, for a total of 5.904 Million Ringgit – in 2013 it was 5.275 Million Ringgit (1 Euro = 4 Ringgit). Even if we factor in the crises of 2009 and 2012, Malaysia has stayed in the top 10 world furniture manufacturers from 2003 onwards. The main markets for Malaysian exports are the Usa, with 28,8% – and growing (1.700 Million Ringgit in September 2014), followed by Singapore, with 8,1% – and growing, Japan (7,9%), Australia (7,5%), UK (4,4%), and others. 80% of the exports consists of wooden furniture, given the huge extensions of Malaysian peninsular and insular territory covered in forests, which offer a nearly endless gamut of modernly-managed wood essences. This is the moment when the Malaysian furniture industry is searching for a new identity, because it is now imperative to switch from OEM (Original Equipment Manufacturer) to ODM (Original Design Manufacturer) and OBM (Original Brand Manufacturer). It is not an easy task, and it requires a big change of perspective for the local companies. This fact also means that now it is a good moment for the foreign companies to step in, especially considering that Malaysia aims to reach the status of “High Income Country” by 2020.
Singapore: to improve, to innovate, to integrate
The development of the furniture industry in Singapore is a peculiar case, and it deserves some attention. It is peculiar because, even if we are talking about a tiny country, the city state of the Merlion elbowed its way up to occupy some very important positions in the production and distribution of furniture products worldwide. The furniture sector comprises 1.943 companies, for a 19.700 workforce in total; from 2006 to 2013, the field has seen an exponential growth, counting now for over 1% of the world furniture trade market. With an extension of only 700 square kms and a population of about 5 million people, Singapore and its companies are naturally shaped on export, both for the location of its manufacturing plants, concentrated mainly in Malaysia and China mainland, both for the markets of destination of their products. The export for the Singapore companies is very important, even if directed mainly to short-range markets like Malaysia and China. A statistical survey conducted by BDO Consultants on behalf of SFIC (Singapore Furniture Industries Council) and Spring Singapore (the state agency working for the development of the Singaporean companies) shows that 49% of the companies has expansion programs in place for the next three years, ranging from intensified export activities to the opening of company seats abroad. The Singaporean furniture manufacturers are now suffering on the local market because of the massive intake of foreign companies, which find themselves at ease because of the lack of advanced branding of the local players – even if they have been quite active in product design and innovation. It is a positive scenario for an economy in great health – and for 13% of the Singaporean companies aiming to expand, Europe is the preferred choice. Likewise, for almost every European company, the globalization is mandatory to find new clients. So, we still have to check how the commercial exchanges turn out to be an advantage, considering that Singapore is the third richest country in the world.
The international trade fairs
Seen form afar, South East Asia looks like a still developing part of the world: a place for exotic holidays and little else – but these few data demonstrate exactly the opposite. Instead, South-East Asia – all things considered – is composed by a group of rapidly expanding countries, sporting economic increases of 5% per annum – an amazing growth, documented also by CSIL at the last 2015 Seminario di Previsione del Mobile (2015 Furniture Market Trends Seminar).
The furniture and furnishing fairs of South East Asia MIFF, Malaysian International Furniture Fair, is a trade fair active for more than 20 years in Kuala Lumpur on the first week of March. The 2015 edition has seen the participation of more than 500 exhibitors coming from 12 countries, showing on a surface of more than 80.000 square meters, and the visitors have been more than 18.000 – one third of which on their first visit. Founded 21 years ago, it has been bought by UBM (United Business Media, the international exhibition managing company active in the furniture field with other events like Furniture China and Interiors Birmingham). To give you a good estimate of its positioning, MIFF is the biggest and most important event of this kind in Malaysia, and continues to register good performances, a growing number of visitors, and quality products which get better year by year. Among the exhibitors, we can find a hefty representation of Chinese and Taiwanese companies, some proactive European companies (like the only Italian exhibitor of 2015, Antique Mirror of Sovicille), and almost all the biggest Malaysian companies, mainly coming from the Muar district – one of the most important of the Malaysian furniture business. The fair is dedicated to the worldwide business professionals, and its clients come from everywhere in the world, especially from Asia and the Usa, but also from Europe and Africa. IFFS, International Furniture Fair Singapore, is a fair that takes place on the second week of March. It has been founded in 1981, it is acknowledged as the official ASEAN fair, and it is accompanied by two other ancillary exhibits dedicated to the specific markets of hospitality and furnishings (The Hospitality Show and The Decor Show). The 60.000 square meters 2015 edition featured 487 exhibitors from 39 countries, and the fair has been visited by over 18.000 professionals coming from 102 different countries. All the professionals agree that IFFS – and Singapore – represent the best hub to reach the South East Asian market: it is a rapidly growing market composed by around 600 million people, and it is forecasted to develop exponentially with the rising spending power of its population. IFFS globalization movement reached full speed in 2015, with the debut of the pilot project “EU Business Avenue” – a joint project with the European Union. Under this brand, visually identified by a separate area in the exhibit, were grouped 40 different companies active in interior design, furniture and furnishings. An interesting project, which could have been better if the design of the space was more closely attuned to the exigencies of this kind of companies. Maison & Objet Asia – now at its second edition – represents a different thing altogether. Here, among the 300 exhibitors, the Italian presence was more widespread, sporting some of the most important companies of Italy. The pavillion located at the Marina Bay Sands Convention Center has been visited by around 9.000 visitors – quite a good performance for a second edition of an event. However, the feeling is that the real winner in the field has been the duo Singapore Design Week/IFFS – who have gained more attention and visitors from the concurrency of the two events than M&O Asia has, and not the other way round. Apart from M&O Asia – which real penetration in the local market and answer to local needs needs still to be assessed – in the other trade fairs Italy is inexplicably missing. And from a patriotic point of view, we are sorry to see that while Italy is absent, other countries are instead investing heavily in those markets, with collective participations which are aggressive, big and well exhibited, mainly in Singapore and China.
China: a huge market
The most important Chinese furniture fairs are two: CIFF and Furniture China. They are very different in scope from each other, with different origins, and – until 2014 – located in very different places. From 2015, though, CIFF is going to move its September edition to Shanghai.
Let’s start from CIFF. Founded in 1998, the China International Furniture Fair takes place twice a year, in March and in September. Until 2014, the seat of the exhibit was Guangzhou for both editions, but from 2015, the Autumn one will be hosted in Shanghai, in the new National Exhibition and Convention Center. The 35th edition of CIFF, held from 18 to 22 March in the Guangzhou China Import & Export Fairground, has reached the usual 100.000-strong affluence. A real crossroads for the China furniture industry, CIFF offers a surface of over 1.2 million square meters dedicated to furniture, furnishings and accessories for the home and contract/office sectors. The March edition is divided into two separate events: the first is dedicated to the home sector, and the second caters to the furnishings and contract sector. CIFF’s numbers are awesome: over 4.500 exhibitors from 32 countries, attracting around 200.000 visitors each year. This great success has made possible to transfer the September edition to Shanghai. Scheduled from 8 to 12 September, the fair will be held in the National Exhibition and Convention Center (NECC) – a structure offering 400.000 square meters of covered surface, and 100.000 square meters uncovered, and very well connected to the Hongqiao airport, the high-speed train station, and to the city centre via a dedicated shuttle service.
Furniture China turned 20 years old in 2014. Organized by UBM Sinoexpo International Exhibition and China National Furniture Association, the 2015 edition, scheduled from 9 to 12 September, will be the biggest ever, with an exhibition surface of over 380.000 square meters (between the two venues of SNIEC-Shanghai New International Expo Center and Shanghai World Expo Exhibition & Convention Centre-SWEECC) – a growth of 8,6% from 2014, and over 3.000 exhibitors, + 13% over the year before. The Presidents of the two competing fairs, CIFF and Furniture China, will make a formal visit to each other during the exhibits. The 2014 edition of Furniture China attracted around 98.000 visitors from over 150 countries, with 21.823 professionals coming from abroad; 44.76% from Asia (Near and Far East), 25,63% from Europe (422 Italians), 10,53% from North America, 9,62% from Oceania, 6,23% from South America and 3,50% from Africa. Among the 75.000 Chinese visitors, the majority – around 45% – came from Shanghai. The layout of the pavillions is going to be modified, with the addition of some new sections, and the integration of the tools and machinery section that was hosted last year at the World Expo. A novelty for 2015 will be represented by the two national Halls, with the delegations of Turkey and Australia that, together with the other foreign companies participating to the fair, will add up to more than 200 foreign exhibitors, a number that shows the growing importance of the Chinese market in the global furniture business.
The chinese furniture market
Following the Chinese government estimates, China makes up 25% of the world furniture business. CSIL data – from September 2014 – affirms that China is the most important furniture exporter in the world, growing at an astonishing rate and passing from 5 Billions US Dollars in 2009 to 53 Billions US Dollars in 2014 – while it is forecasted that the total furniture production in China would reach 400 Billions US Dollars in 2015. With those economic data, it seems almost natural that the furniture field has seen a great development on the Chinese domestic market, especially in the areas of Guangzhou and Shanghai – locations which combine a tradition of commerce, the presence of a busy port, and good infrastructure. Today, both cities show a personal income of their inhabitants on the range of 10.000 US Dollars, and the development of an emerging medium class which is spending money to improve its social status. These are very interesting areas to setup advanced services like furniture trade fairs. Shanghai is in fact aiming to make its September edition become the new design furniture hub of the world – or at the very least, of Asia. Asia and Italy Their blazing growth of market and design fairs notwithstanding, Italian companies in general seem not so much interested in playing an active role in China, whereas – in Singapore and Shanghai – other countries are competing heavily through collective exhibits. France and Spain are getting the lion’s share, and companies from Germany, Netherlands and Belgium are very active, while Italian ones are seldom present, and seem to lack a central coordination. We could say that Italy suffers from its usual problems: the inability to setup a government support system. Being one of the meccas of design furniture, this fact looks bewildering. Nor companies can’t completely rely on European initiatives. In the EU Business Avenue, the collective exhibit in IFFS Singapore, we could count four companies from Latvia, seven from Germany, and only two from Italy. So, we are wondering why. If the event was open to invitations, why invite only two Italian companies. If it wasn’t, who was managing the selections, and what were the channels employed to ask for entries. Luckily, visiting CIFF Guangzhou and Furniture China, the presence of Italian professionals working for and with Chinese companies is evermore felt: from Marco Giorgetti, who is designing products for and art directing Aris, to Mario Mazzer and Claudio Bellini with their office seatings for Senchuan, and many others. If this is a sign that the Italian designers are appreciated in China, then we have some good perspectives for the “Italian touch”. So, the market looks to be there, ready to be exploited. And if Chinese and Hong Kong companies are paying for the “real italian design”, maybe even the old problem of the copies can be solved without too much hassle and fanfare. Nobody says it would be easy – but we should, and have to do, something about it. There are some Italian companies which have built up a good reputation and network of contacts in China, and take part in local events. The Chinese market is booming, but it hasn’t still reached up the level and the complexity of the Western markets: so there are still some huge gaps that need to be filled, offering exceptional opportunities. In 2013, the italian furniture production added up to 30 Billions Euro, which 12 Billions have come from the exports. But only 257 Millions came from China. During 2014, the domestic market slipped again slightly, but the exports remained strong with a growth of +2,9% – a result that could almost double, touching +5% in 2015. Talking specifically about China, the growth of the exports has reached an amazing +25% in the first quarter of 2014, and FederlegnoArredo estimates that Italy has the potential to reach 2 Billions of furniture export in China in 2019.
It won’t be a cakewalk, though – the path to connect with the Asian market is still very difficult. A visit to the most important March fairs (MIFF, IFFS, CIFF Guangzhou) suggests that there is already a well-structured production and distribution system in place, so it is quite difficult to get into the field – especially considering the Chinese way of thinking and the natural distrust of foreigners. To overcome this obstacle, the companies need lots of time, resources, and a highly advanced commercial network, so to support well-rounded strategies. Especially since the Italian companies have to recover from a backward position: their foreign competitors are already inserted in the system, and exhibiting since many years in events such as Furniture China and IFFS. But nothing is lost, still. There are some interesting activities going on, in these days, pioneered by private entities. Let’s examine two of them. One is in Shanghai. The other in Hangzhou, a smaller city at one-hour drive from the latter – a place considered as the China’s “Brianza”.
Oenotria, the name of the showroom that is going to be opened in Shanghai, is a project born out of a cooperation effort between the Italian and the Chinese governments, with the aim of promoting the Italian living culture and the typical excellences of the Italian furniture workmanship. The International Brand Management Center – an association working with the Chinese Trade Ministry to promote the high-end and luxury brands – and D&T (Shanghai International Design & Trade Promotion Center) – an association between the Chinese Trade Ministry and Shanghai Municipality, are the two main promoters of the Oenotria project, which in these years has also received a good amount of support from Italian institutions and associations. CITIC Guoan Group, between the first 500 industrial groups worldwide, is the investor in Shanghai Oenotria Commercial Development Co. Ltd. – the company created to manage the Shanghai showroom. The companies on show have been selected on the basis of design originality, creative capacity and respect for the Italian traditions, and a careful consideration for their capabilities to network and work in synergy to manage complex projects. The showroom is organized over two floors – the first dedicated to classic furniture, the other to modern/contemporary furniture. It is located inside a building hosting also an Italian luxury car dealer, art and antiques galleries, restaurants and cafés. This “Centro Italiano” is part of the Oriental Fisherman’s Wharf, a new development complex rising on the North Bund of Shanghai, in the Yangpu district.
Another initiative to support the high level/luxury “Made in Italy” products is the Parco delle Eccellenze Italiane (Italian Excellence Park) of Hangzhou – again, just opened. Created by Confimprese NordOvest in partnership with the Hangzhou Municipality, this Park dedicated to the Made in Italy offers an exhibition area of 84.000 square meters. It is like a permanent international showcase of exclusive products – and also, of the Made in Italy in every shape and kind: furniture, fashion, automotive, food, art. To guarantee the authenticity of the products, every goods on sale will be sold with a Government Seal which will certify its origin, thanks to the cooperation with CNR and the Fondazione La Sapienza of Rome.
These two spaces are very recent evolutions, and quite new on the market, so they do not represent a real case history: but it has to be said that, when the common knowledge asserts that in the Far East markets the sales are not happening in shops, it is because there are still no retail shops (rare exceptions excluded) of the right kind to sell this kind of exclusive products. This fact could mean that there is space for high-level, advanced shops and showrooms managed by Italian professional retailers, bearing the class, the intuition and the experience of decades of operation. Even in this field, good case histories abound.
To summarize, the Far East offers markets in great development for the companies that have the possibility to invest. The Made in Italy represents an excellence in those areas: so, we should learn how to communicate it in the right way.