China is the leading office furniture manufacturer and exporter at a world level. Currently Chinese production exceeds US$ 16 billion, increasing by 10% on average in the last decade and representing 30% of the world office furniture output.
China, which increased its share from 24% in 2009 to 36% in 2018 (USD 4.0 billion) of the global exports is the main supplier for the United States, Japan, France, the United Kingdom and Japan. The United States is the main customer, with USD 1.3 billion it represents about 33% of the whole Chinese office exports.
Office furniture exports. Five major exporting countries, 2012-2018. Current US$ million
Source: CSIL from industry and official data
China showed the most impressive increase in terms of office furniture consumption over the last decade reaching US$ 12.2 billion in 2018. Considering the enormous capacity of the local market, apparent office furniture consumption is estimated to continue to increase also in 2019 and in 2020, although at a more moderate rate. The country’s large production capacity enables it to fully satisfy domestic demand, leaving very little space for imported products that account for a negligible quota of 0.8%.
Percentage breakdown of office furniture exports, 2009 and 2018
Sources: UN, Eurostat, CSIL (2018: preliminary estimates)
To be considered that the top five office furniture players in China range from about USD 200 million to around USD 400 million turnover, followed by an enormous amount of medium-small local competitors. There is still no real “dominance” of the market but a persistent level of fragmentation. However, the largest players are increasing in dimension and huge amount of investments are dedicated to factory expansion, construction of new facilities (also in other countries) and, to set up of effective distribution network especially in second and third Tier cities.
We expect a possible future step to be the start of a M&A phase, among Chinese players of course, but most importantly the acquisition of some international competitors and probably this strategy will be accelerated if the tariffs tensions will persist.
In terms of products the Chinese office sector still shows a dichotomy with traditional office furniture and contemporary workplaces, but we believe the market is starting a strong transformation phase which will becoming more evident within the next five years when “millennials generation” will flood the market at the managing positions.