Since the international financial crisis in 2007, China's furniture export market has also been hit hard. The huge decline in overseas order demand, foreign anti-dumping policies against China, the appreciation of the RMB and other factors have caused a large number of furniture companies engaged in export business in the Pearl River Delta, Yangtze River Delta and other regions to switch their bows to the domestic market.
Export companies are turning to the domestic market
Recently, many warehouse-type home stores in the suburbs have become new shopping destinations for consumers in addition to the traditional stores in the urban area. The reporter saw after field investigation that in these warehouse-type stores, more than half of the furniture brands are exported to domestic sales, including Yuexing Group, Fubon Green Furniture and other large domestic furniture export enterprises.
"We have been engaged in furniture export for almost 30 years, but due to the financial crisis, overseas sales have declined, so the company decided to restructure and formally enter the domestic market in early 2008," Zhu Xinmin, Planning Director of Zhejiang Ningbo Fubang Green Furniture Co., Ltd. Introduced to reporters that since the 1980s, Fubon Furniture has begun OEM production for many big-name furniture in the United States. Sometimes an order is enough to keep a factory's assembly line busy for a year. During the peak export period, the annual export volume of the Group even reached RMB 600 million.
However, the severe impact of the financial crisis has sharply reduced the demand for overseas furniture. After 2007, Fubon Furniture ’s annual export volume fell by nearly 70% compared with 2004 and 2005, which forced Fubon Furniture to consider opening up the domestic market. There are countless export-to-domestic enterprises similar to Fubon Furniture in the Pearl River Delta and Yangtze River Delta. Guangdong Dongguan Yangchen Furniture had previously contracted for American Yali and other brands, and 90% of its products were exported. At present, its domestic sales share is close to half of the overall sales.
In fact, after the financial crisis, export-oriented furniture companies that do not have an advantage in capital and product development, especially those lacking their own brands and only engaged in OEM production, have relatively meager profits and are even on the verge of losing money. Turning to domestic sales has become a necessary way out.
Transforming enterprises value brand building
Since 2009, furniture products under the banner of "export to domestic sales" in Beijing's home furnishing market have gradually increased. Compared with home furnishing companies that have been in the local market for more than ten years or even decades, many furniture companies that export to domestic products have also begun to exert their efforts in strategic layout and brand building.
In terms of store layout and business model, many export-to-domestic brands have surprisingly consistently opened independent stores. Yitong Home has opened flagship stores in Madian, Shibali Store and other places to operate American furniture. Yazhen Furniture, FFDM Home Furnishing, Fuyi Home Furnishing, "Homebox" and other brands have also appeared in Beijuran, West Fourth Ring Road, Wangjing and other places. Fubon Green Furniture has also opened 45 independent stores in Beijing, Shanghai, Ningbo, Taiyuan and other cities.
Chen Tao, vice president of Yitong International Home Furnishing, believes that the reason for adopting independent stores for direct sales is to help ensure that companies have the right to control product pricing and independent research and development.
Relative to the construction of marketing networks, the establishment of corporate brands can not be completed overnight, which is also a shortcoming of many transforming enterprises. The person in charge of Fubon Green Furniture said that the time for export-to-domestic enterprises to enter the domestic market is relatively late, and brand influence needs to be gradually improved through market and consumer feedback. "In the final analysis, the brand image needs to be carried by the product. The company must first ensure the quality of the product and make appropriate innovations in accordance with the needs of consumers."
Some people in the industry believe that with the shrinking of the total demand for home furnishing after the regulation of the property market and the entry of export enterprises into the domestic war, the future competition and reshuffle of the furniture industry will become more intense.
â– The way out
Build a brand to cater to domestic sales
Many export enterprises have accumulated a certain strength in the long-term export process, and they have not neglected the construction of domestic sales channels. When the share of export sales declines, they can sell their exported products under their own brands and sell them to China. Now, many brands have successfully transformed and quickly established a chain model in China with their own brands.
Brand representatives: Meikemeijia, Yitong Household, etc.
Acting imported furniture brand
Since the products or brands of furniture export enterprises have been transferred to the domestic market for a relatively short period of time, they still lack visibility and cannot show their brand advantages. Therefore, companies that have a good understanding of overseas markets will use imported brands as a shortcut to expand domestic sales. In terms of brand positioning, these companies also tend to choose first-line international brands with high international reputation as agents, and use their influence to quickly gain market share.
Brand representative: Fubon Green Furniture (representing US high-end furniture Lexington to expand the domestic market)
Development of e-commerce and furniture leasing
The trend of e-commerce has been blowing in the home furnishing industry for a long time, which is also an opportunity for the export to domestic enterprises to grow rapidly. According to Fu Jianguo, general manager of Nick Aijia Furniture, due to its positioning to young consumer groups, domestic sales have chosen to use the Internet as an emerging channel and achieved satisfactory results. At present, in addition to the sales in Taobao Mall, the brand will also enter the Aifeng wave offline experience hall and undertake the leasing business in the Bangjia leasing store.
Brand representative: Nick Love Furniture
OEM for domestic brands
The expertise of export-oriented furniture companies is not in sales, but in their huge production scale and efficient production and processing capabilities. Therefore, when the number of overseas orders declines, companies can choose to be local well-known brands or imported brands sold in China such as IKEA. OEM production. The advantage of this model is that the channels of OEM brands are relatively complete, and the market demand is also large, so the manufacturing capacity of transformed enterprises can be digested and absorbed.
â– Reasons for transformation
Appreciation of RMB: In July 2005, China implemented exchange rate reform. The exchange rate of RMB was based on market supply and demand and a floating exchange rate system was implemented. Since the exchange rate reform, the appreciation of the renminbi has not only affected the price of Chinese furniture in the international market, but also brought a lot of pressure to foreign furniture companies.
Lower export tax rebate rate: On July 1, 2007, the Ministry of Finance issued a new export tax rebate policy, which lowered the export tax rebate rate for furniture products to 9%. Since many enterprises regard export tax rebates as their main profit component, this undoubtedly increases the export cost of enterprises.
Rising raw material prices
In recent years, the prices of the main raw materials of furniture products have all risen sharply. The prices of wood and oil have risen since 2004, which has caused the cost of exported products to rise. The sales price of exported furniture cannot be increased proportionately, making the cost of the enterprise higher and lower and the profit getting thinner, which increases the survival pressure of furniture export enterprises.
Trade barriers: Many countries such as the United States have anti-dumping Chinese panel furniture. Furniture manufacturers in Germany, Italy and other EU countries have also submitted anti-dumping complaints against Chinese upholstered sofas, chairs and other furniture to the European Commission. Due to trade deficits, Many countries resist imports by raising high-quality standards, hindering China's furniture exports. ?
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