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Chinese furniture: now growth is led by domestic demand

A survey carried out by CSIL among 35 of the largest Chinese firms operating in the home furniture sector recorded a total turnover of roughly RMB 17 billion (Euro 1.7 billion). We are talking about firms that today consider their domestic market to be a priority: overall 60% of turnover is made in China and only 40% abroad. Some of these firms have turned to the domestic market relatively recently (for example Kuka, important mainly for upholstered furniture, used to be highly export-oriented, but today exports just 30%). For almost all of these firms the rate of growth in 2010 and in 2011 will be between 10% and 20% annually in local currency (a little more if expressed in dollars or in euro). For the majority of these firms the main distribution channel is currently the furniture chains, but that is not the only channel: on average 40%-45% of sales are made throughbig furniture chains. It is interesting to note that the large-scale retail trade is currently not capable of monopolising the production capacity of these firms: although they are all different (for example Dickson or Fudebao) they distribute through both the furniture chains and their own monobrand stores. On average the 35 firms studied serve the domestic market through 250-300 sales outlets. Normally each outlet purchases roughly RMB 1 million (Euro 100,000) worth of products from each firm. The distribution mark up is extremely variable, from 100% to 400%.Firms for whom the domestic market generates – indicatively – at least Euro 30 million sales usually guarantee almost total coverage of the national territory, with 50-60 sales outlets in each of the macro-areas considered (North Eastern, Eastern, etc).




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