by Mauro Spinelli, CSIL Centre for Industrial Studies – Milan, Italy
China is the leading office furniture manufacturer and exporter at a world level. With a total value of USD 15 billion in 2017, increasing by 10% on average during the last decade, China holds almost one third of total world output of office furniture.
China. Office furniture exports, 2010-2017. USD million
Source: CSIL processing
China increased its export share from 18% in 2007 to 37% in 2017 (USD 3.8 billion) and is the major exporter and the main supplier for the United States, Germany, France, the United Kingdom and Japan. The United States is the main customer with USD 1.2 billion, accounting for about 28% of the whole Chinese office furniture exports.
China’s main office furniture trading partners. Percentages
Source: CSIL processing
Domestic consumption of office furniture in China increased by +2% in 2017 reaching a value of USD 11.3 billion and is expected to continue increasing both in 2018 and in 2019. Office spaces in China mainland continued to expand as it happened for the ‘Hospitality ‘and ‘Healthcare’ markets as major related business and this trend includes both the first-tier metropolis and the second-tier and third-tier cities. According to JLL the total Grade A office space in Shanghai will reach 11 million sq.m. by 2020, surpassing Hong Kong as the largest office market in Greater China. The country’s enormous production capacity enables it to fully satisfy the domestic demand, leaving very little space for imported products (progressively growing), which account for a negligible quota of 1%.
The Chinese office furniture sector, structurally fragmented, started its concentration trend. Although some of the fastest growing companies almost doubled their turnover over the last five years, the top 10 brands still represent less than 15% of the Chinese market. The increasing pressure coming from higher operational costs is forcing some smaller players to close down. On the low-end of the market China is experiencing competition from Malaysia, Cambodia and Indonesia (where labour costs are lower) while on the upper-end segment the general lack of brand strategies worth on company performances. Where price is higher, the competition of North American brands is strong and some of the local players risk to lose opportunities and market shares. The product evolution registered in China over the last years is evident, however, local companies still lack of a “brand identity” abroad, as they supply international customers mainly under OEM agreements.
The traditional production zones are located along the Eastern coastline. From South to North, the most important production poles are in the provinces of Guangdong, Zhejiang and Shanghai. Guangdong alone covers over 30% of the total furniture production according to the China National Bureau of Statistics. Another important cluster for office furniture production is the Anji district (Zhejiang), specialised in the production of seating. The majority of office chair manufacturers located in Anji are privately owned Chinese firms and among them there are a lot of OEM manufacturers producing for both US and European office manufacturers and distributors. Starting from 2012 the number of companies in the district started to decrease due to the growing concentration and factory optimization. However, the output in volumes and values continued to increase.
Anji Chair District. Number of companies 2005-2015
Source: Zhejiang Association for chair industry