Furniture Industry in Bangladesh
The upholstered furniture and beds market is estimated to be worth around 400 billion dollar. Both markets grew substantially during the boom period of the late 1980’s and suffered significant decline during the prolonged recession of the early 1990’s. Imports and exports have become increasingly significant, with imports having grown to around 17 percent of the UK market. Imports are sourced mainly from within the EC including Italy, Belgium, Luxembourg, Sweden and France. Exports are estimated to be worth 9 percent of UK production of upholstered furniture.
Action furniture continues to grow as consumers seek more benefits and features from their products. There are a growing proportion of older consumers and these products are also becoming more acceptable to younger age groups. Classic styling is still very popular, although modern designs are becoming more accepted. However, traditional finishes such as leather and show wood are gaining share although both are now offered in more modern designs and colors to appeal to the younger generation. Cane and rattan is beginning to move up market after experiencing some problems in terms of quality.
Major suppliers of these industries are basically EU based like Germany, Sweden, etc. In terms of distribution, multiples command the largest share at 54 percent having continued EU nations in recent years, while furniture independents and specialists are also key outlets. In terms of Bangladesh some renowned brand company starts to dominate accounting for over increasing percent of the market, although non brand owners are growing their share due to a combination of labor intensive country.
In terms of distribution, furniture independents/specialists dominate with 35 percent, followed by multiples, department/variety stores, mail order and others. This comprehensive report represents a detailed assessment of the market, reviewing major trends, key factors influencing developments and future prospects for the sector. Analysis is both quantitative and qualitative, based on our substantial experience of the building and home improvement markets. Furniture industry in Bangladesh
1. 1. Origin of the report
This study and the resulting report was conducted and submitted as a partial requirement for the International Business (ITB 301) course . The report was authorized by Mr. Md. Gazi Salah Uddin, course instructor of ITB 301, and Senior lecturer, Department of Business Administration, East West University. The report was prepared jointly by Naim, Zareen, Moni, Mizan.
1. 2 Objective
The objective of this report is to address the performance of Bangladesh in international trading through a thurst sector name “Furniture industry”.
This is a study to identify the major trade partners and competitors of Bangladesh in this sector in the terms of foreign trade. To find out the problems of Bangladesh in terms of international trade and the problems of trade liberalization are the other objectives of the report. This information then is used to improve the position of Bangladesh in International Trade and build a positive image towards a leading furniture manufacturing as well as exporting country in the world market..
It also analyzes the trade potentiality of Bangladesh in different sectors with various trade partners and ultimately impact of trade in economic development of Bangladesh and to scrutinize the overall problems and opportunities from trade.
1. 3. Scopes and methodology
Since it’s not possible to conduct analysis on the large number data, some specified tables and articles have been chosen for analysis. Throughout the study many things regarding International Trade of Bangladesh which contributes very small part in development of world’ trade was learnt.
1.Secondary research was conducted to identify present situation or position of Bangladesh in international trade.
2. Consequently, this study is grounded in observation data obtained from recipients of articles, statements and some research paper from different countries and different authors.
1. 4. Restrictions
To complete this term paper we found some limitations and restrains.
• The main limitation of the study is the unavailability of all information. At the beginning stage of the study, the major problem was found out the relevant information. Sometimes after getting the information, it was found that data was not completed. Another significant limitation was time constrain. It was difficult to perform all the analysis about international trade within a shorter period of time.
• There were also technical problems which includes computer problem, virus problems, software problem and a major problem Load shedding,
• Collection of data was more or less time consuming.
• Lake of in-depth understanding of certain terms and concepts prevented us from going into details.
F urniture industry of Bangladesh has proved to be one of the most promising sectors with a high export potential.
The industry has its members spread all over the country with key players located in Dhaka with an overall number of 80,000-100,000 people. There are about 10,000 furniture manufacturing enterprises all over the country and the market size is Taka 4 billion with a growth rate of 15-20%. The country earned Taka 261 million from exporting modern wooden furniture during the first quarter of the financial year of 2007-2008. The Bangladeshi economy is developing at a fast pace and the government has declared the furniture industry as a ‘Thrust Sector’. This is where Bangladesh Furniture plays a key role in the Furniture Market evolving as the biggest Furniture Exporter of Bangladesh. Our Team has carried out extensive research and studies on furniture and its market and the potential of the market here in Bangladesh. Many of its projects have turned out successful and many are progressing well. Bangladesh Furniture Industries Owners Association (BFIOA) is playing a crucial role to develop this sector from the very small, local level to the International market.
To doing this in a active and flourishing way they are The Furniture industry of Bangladesh has proved to be one of the most promising sectors with a high export potential. The industry has its members spread all over the country with key players located in Dhaka with an overall number of 80,000-100,000 people. By exploring new opportunities Export promotion Bureau (EPB) of Bangladesh is also assisting this sector for the development as well as global growth and to introduce this sector as a major foreign earning source
3. Factor Endowments
3. 1 Land
For building a furniture manufacturing house an entepurer don’t required a huge amount of land as well as warehouse. But if a company want to produce massive production and want to achieve economic of scale then definitely it will required a good amount of land but still it will required less land size in compare to other massive industry like RMG sector.
3. 2 Labor
Another major advantage of this sector as it does not required highly skilled or expert labor but semi skilled labor can easily work in this sector. Bangladesh will definitely get advantage in this sector because we are labor intrinsic country.
For Bangladesh perspective a labor joined a furniture manufacturing firm as a trainee under a senior worker or supervisor for one or two month mean while within this time period when he will have some upgraded knowledge then he will become skilled labor and same process of employment or hierarchy followed all of the furniture manufacturing industry to use their labor
3. 3 Capital
If a company want to establish a manual furniture manufacturing factory then he will not required a huge amount of investment as his focus area or major cause will be in labor sector not in capital sector.
But if it looks for automated production of different part then they have to invest good amount of money to purchase required machinery to do the job.
3. 4 Raw materials
The main material used by the furniture making industry is pre-processed wood or wood products, specially agglomerated wood products, plywood and veneer supplied by the woodworking industry. The production is characterized by a high material intensity, which accounts for up to 80% of total costs.
The use of new equipment and technology, as well as respect for required legislation, means that the products of the different sectors contain virtually no dangerous or harmful substances hazardous to people or the environment. Furniture product ranges include seating furniture, living room, nursery, and bedroom furniture, furniture for other living quarters, kitchen furniture, furniture for the fitting out of offices, banks, hospitals, health and other facilities, shops, as well as other furniture, such as metal, solitaire, and complementary pieces.
To produce furniture both in manual or automated way some common components required they are basically ? Wood, ply wood or laminated board for the main surface. ? Industrial glue adhesives, screw pins for jointing several parts of furniture. ? Color coating, polishing and other decorative work.
3. 5 Technology
A major factor for furniture sector is that it is not technology oriented rather than skilled and creative manpower required. In this point of view Bangladesh has the advantage for this cheap labor.
But now to gain competitiveness some brand furniture of Bangladesh like Otobi, Hatil, Partex, etc are using modern technology to prepare goods like sofa, chair table etc in less time by more efficient way. Like for cutting ply wood or giving the final cut they use highly equipped wood cutting machine to give it better finishing and stylish look
3. 6 Infrastructure
As here we are saying about not only to produce furniture but also sell in the international market also to get competitive advantages by differentiating our product then others.
So our local industry should definitely be backed by some infrastructure facility like easy banking procedure, less time in port area, modern communication facility etc. These facilities will surely accelerate our process to grab the global market of furniture industry.
Demand Condition: As far population of Bangladesh as well as Dhaka is increasing rapidly so it has also gear up the demand of furniture. New commercial and non commercial firms, schools, universities and offices are opening at a high rate and all of them required a common item that is furniture to work. pic] Locally made hospital furniture is gradually getting on well in market, now meeting around 30-35 percent of the total demand of the mushrooming hospitals and clinics across the country. Industry people said manufacturers are now producing more than 50 types of hospital furniture ranging from waiting room chairs to mechanical beds, and saline stands to ICU (intensive care unit) beds. The demand for local products is growing at 10 percent a year, they said. There are around 20 small, medium and large furniture manufacturers in the market with Otobi the leader.
Now the market of locally produced hospital furniture is worth around Tk 40-Tk 50 crore, industry people said at the inauguration of a three-day international medical equipment and healthcare services exposition styled Medexpo-2009 at Dhaka Sheraton hotel. A total of 42 companies, mainly hospital furniture makers and distributors of medical and rehabilitation equipments, and health care providers from Bangladesh, India, Thailand, Malaysia, Singapore, Germany and Japan are participating in the fair.
5. Local producer and exporter
1. Different types of furniture
Furniture household movables such as chairs, tables, and beds. Bengal furniture drew motifs of designs and ornamentation from two sources: ancient Hindu culture and medieval Muslim culture. In addition, general oriental techniques of carving and inlay on ivory and wood also worked as common motifs. Wooden furniture is made of wood, or to put it botanically, the xylem tissue that forms the bulk of the stem of a woody plant. Chairs, tables, beds, wardrobes and racks are major furniture items most commonly made of wood. Other items such as almirahs, chests of drawer, dressing tables, sofa sets are also made of wood.
Woods used in making good quality furniture include mahogany, segun, garjan, chapalish, chikrashi, shilkarai, gamari, walnut, and cherry. Modern furniture Modern furniture has a direct association with colonial rule. In their trade settlements established in various parts of Bengal. Europeans furnished their homes and offices with contemporary European furniture. But such furniture did not influence the native taste at all. Until the mid-nineteenth century, the use of European furniture remained confined to European houses and offices only.
Gradually, modern furniture, including steel, metallic or plastic forms along with wooden ones began to be used widely. In has become an essential part of residential houses, offices, institutions, hotels, restaurants, hospitals, public halls and auditoriums. Variations in furniture usage occur on different counts. In rural areas, traditional furnishings still prevail, but there is an increasing mingling of modern designs. Furniture usage in rural schools, restaurants or community centres is marked by the parallel use of modern furniture with traditional ones; however, the latter is being fast replaced by the former.
Cane furniture adorned with creative design and artistry subtly bears testimony to the glorious tradition of handmade artifacts in Bangladesh. Such furniture ranges from dining tables to dressing tables or easy chairs to rocking chairs or from dress hangers to shoe racks. artisans gifted with artistic bent of mind employ combination of manual and mental labor in making high quality cane furniture like chairs, tables, sofa sets, book shelves, beds, corner shelves, partitions, wardrobes, almirahs, showcases, plantation cases, glass frames, trays, trolleys and show pieces.
The image of different flowers, such as rajanigandha, kadam, Suryamukhi and shapla or of the moon and stars, boats, and the waves of river, are manifested in the exterior decoration of the home.
Steel or metallic furniture is made of an alloy or mixture of iron or metals and includes innumerable furniture items such as chairs, tables, mechanical beds and wardrobes. It has not been very long since Bangladesh developed specialized steel or metallic furniture forms. During the British period, the upper strata of the society had become accustomed to use of imported metallic crafts such as sinduks, almirahs and wardrobes.
Bangladesh imports plain sheets and steel sheets from Japan, Malaysia, China, and India, and locks from England, China and India. Some readymade modern steel furniture such as folding chairs, file cabinets, revolving chairs, bedroom sets and fire resistance safes are imported from Singapore, Malaysia, Thailand, Japan and South Korea. It exports steel made show pieces, dolls, medals, plantation cases, pictograms, portraits of plants and animals to Europe, Canada, United States and the Middle East. Steel made furniture is relatively expensive, but is pleasing to the eye and durable and can incorporate new designs.
Normally poor and low-income groups of people do not use steel made furniture. Yet, the demand for steel made furniture is increasing and its cost gradually decreases with production in larger volumes
5. 2 Furniture Manufacturer
In all, there are 5,000 registered furniture houses in the country, according to the Bangladesh Furniture Association. Almost 90 per cent of them are categorized as non-brand operators. Although these non-brand operators hold almost half of the market their share is diminishing day by day, thanks to aggressive marketing campaign by the branded companies as they boom up the market competiton. Local consumers are feeling comfortable with the brand items’ Otobi chief executive officer Sabbir Hasan Nasir told New Age. Chart: 01 Table: 01 |Furniture Manufacturer | |Non brand manufacturer |90% | |Brand manufacturer |10% | [pic]Source: Export Promotion Bureau (EPB) Some renowned brand furniture: I. Otobi Furniture Brand furniture has curved out a niche among the people as some manufacturers led by Otobi are holding more than 50 per cent of the country’s furniture market worth about Tk 1,500 crore.
In all, there are 5,000 registered furniture houses in the country, according to the Bangladesh Although these non-brand operators hold almost half of the market their share is diminishing day by day, thanks to aggressive marketing campaign by the branded companies especially like Otobi.. Starting in a tiny tin-shed factory in the city’s Topkhana area in mid 1970s with the annual turnover of only Tk 60,000 Otobi’s recent years’ turnover crossed Tk 500 crore. ‘We hold 70 per cent share in the branded segment,’ he said.
Establishing 13 show rooms in the capital and employing 300 dealers across the country in less than one decade Otobi has proved that organized marketing campaign was the secret of its success.
Since its inception in 1989, Hatil has been a trend setter in innovation, design, management practices and quality in Bangladesh. It is the market leader in household wooden and processed wood furniture segment. In 2005, they had major expansion and are currently operating around 80 outlets in Bangladesh, one showroom in Calcutta and three other distribution centers in India. They are looking forward to exploring the international market with foreign partners
Furniture: Navana Furniture is the Brand Name of the Furniture unit of Aftab Automobile Ltd. which is part of Navana Group. Founded in 2002, NAVANA Furniture possesses capabilities that are fully integrated, from designing, prototyping, material selection and molding through testing, assembling and distribution. Abreast of being a strong leading player in the market, all our -produced furniture are guaranteed to have met the stringent quality and standards.
Group : PARTEX Furniture manufactures a diversity of solid timber as well as timber-substitutes products maximizing the resources of both ends. We offer a combination of timber, special particleboard, and decorative plywood making the best quality and cost effective substitute for natural timber for custom-made innovative and stylish furniture. Within a short span of time the company has been able to claim a sizable portion of the market. This is a commitment of PARTEX GROUP to use eco-friendly materials, as much as possible.
Currently, we are providing an ever-increasing range of products to meet the greater than ever demand of furniture for households, offices and schools. Chart: 02 Table: 02 |Market Share of Brand Furniture | |Otobi |54% | |Hatil |16% | |Navana |12% | |Partex |9% | | Others |9% | [pic] Source: Export Promotion Bureau (EPB)
6. Related and Supported and Industry: There all measures that are taken to ensure a long life of wood fall under the definition wood preservation (timber treatment). Apart from structural wood preservation measures, there are a number of different (chemical) preservatives and processes (also known as timber treatment or lumber treatment) that can extend the life of wood, timber, wood structures or engineered wood. These generally increase the durability and resistance from being destroyed by insects or fungus. Wood sector: Wood in its original solid form has adequate properties for many uses.
In Bangladesh it is widely used for furniture, cabinet, house, boat, ship, railway sleeper, electric transmission poles, fuel, etc. In the comminuted and reconstituted form, it can provide materials with a wide range of properties. Plywood: Plywood is a type of manufactured wood made from thin sheets of wood. It is then glued together for greater strength. A common reason for using plywood instead of plain wood is its resistance to cracking, shrinkage, twisting/warping, and its general high degree of strength. Also, plywood can be manufactured in sheets far wider than the trees from which it was made.
It has replaced many dimensional lumbers on construction applications for these reasons. Table: 03 [pic] Source: FURNICO Bangladesh Adhesive: An adhesive, or glue, is a mixture in a liquid or semi-liquid state that adheres or bonds items together and they are becoming increasingly important in modern and industry highly in furniture industry perspective to joint several part of furniture. Joinery is a part of woodworking that involves joining together pieces of wood, to create furniture, structures, toys, and other items. Some wood joints employ fasteners, bindings, or adhesives, while others use only wood elements.
Among all of this related industry Bangladesh is self sufficient in all except in adhesive industry as this sector is entirely dominated by china. Chinas demand for Adhesives has grown at a fast pace in the past decade. In the next five years, both production and demand will continue to grow and they also may become Major producers in world market.
7. International market of furniture industry | | Furniture industry has changed over the years. It no longer restricts itself to a production of a chair or a table or a bed but today it includes manufacturing of a range of furniture and home furnishings and designed interiors which spell class and elegance. There is a boom time for furniture industry. Every country sports a string of furniture showrooms of all kinds and sizes. Changing lifestyle, disposable incomes, economy growth, increasing migration to urban areas have all contributed to the demand for furniture and in turn the growth of the furniture industry as whole.
7. 1 Characteristics of the furniture industry
Furniture manufacturing worldwide forms a regionally centralized competition pattern under the clustering effect.
- • The furniture industry is both an organized and a non-organized sector.
- • Utilization of skilled and unskilled workers.
- • Utilization of handcrafted tools, machines and CAD/CAM for manufacturing and designing.
- • Source of employment for rural workers.
- • Employment is spread across many sectors showing the diverse nature of the industry and a broad product range.
- • Consumer expectations and purchasing behaviors have marked regional variations.
7. 2 Industry Trends
As the world economy is developing fast in the past 10 years, the furniture markets have opened up more and the world furniture industry has been growing fast. Traditional furniture making countries continue to firmly take up over 70% of the global market. This is possible because of their long established production capacity, advancement in science and technology, solid funds and rich management experiences. Meanwhile, developing countries and regions like China, Southeast Asia, Poland and Mexico, with China taking the lead, have built upon their respective competitive advantages and gradually have covered almost 30% of the world market.
The furniture industry in such countries is developing strongly and showing great potentials.
7. 3 Global Furniture Production The furniture sector as a whole is a one of the most basic industry, if the industrialized countries are considered. The furniture sector generally represents between 2 to 4% of the total production value of the manufacturing industries. The global furniture industry has shown a growth rate of 8% in 2005. The industry was valued at around US$76 billion from US$70 billion in the year 2004. As far as gaining the top spot as the world’s largest furniture exporting country. China is giving a run for its money to Italy.
In 2004 Italy was able to narrowly beat China. Italy’s exports were US$10. 5 billion compared to China’s US$10. 3 billion. Others that made it to the list as top five furniture exporting countries were Germany, Poland and Canada. While the top five importing nations of 2004 were the US, Germany, UK, France and Japan the solitary Asian nation. Table: 04 |Global Furniture Production | |Economic Bloc |in million Dollars |Amount of market share | |EU |95421 |42. 9% | |NAFTA |57064 |25. 53% | |ASIA |51445 |23. 01% | |Other Europe |9020 |4. 03% | |latin America |5163 |2. 31% | |Africa |1825 |0. 1% | |Others |3550 |1. 58% | Source: furniture manufacturers Chart: 03 [pic] Source: furniture manufacturers
The following factors guide the demand for furniture:-
- • Elasticity in terms of the disposable income of the household Generally the estimated elasticity changes from country to country. But the average elasticity has been found to be 1. 5 that effectively means, if the income increases by 1, the demand for furniture is going to rise by 1. 5 and vice versa. Economic scenario – This translates into consumers’ confidence in the economy of the nation, growth of the Gross National product, the purchasing power and also factors like level of unemployment.
- • Infrastructural considerations – Like level of investments in housing etc.
- • The evolution of the borrowing terms – If the interest rate is hiked the consequences are higher costs for borrowing for purchasing furniture and housing, and vice versa if the interest rate falls
- • Demographic variables – Such as the evolution of marriages, household formations, births taking place and the composition of age class. Distribution of wealth – It is quite evident that demand for furniture would be s higher in countries where wealth is more evenly distributed than in countries where wealth has a tendency to be concentrated.
7. 4 European Union The European Union furniture industry accounts for about half of the world’s furniture production. The production value of this industry in this region is around € 82 billion. Considered to be a labor-intensive industry it provides employment for around 1 million people. Among the European countries, Germany takes the lead as the largest furniture producing country, accounting for about 27% of total EU production.
This is followed by Italy (21. 6%), France (13. 5%) and the UK (10. 4%). Chart: 04 [pic] UK furniture market SOURCE: DTI AND FIRA 2000
7. 5 Germany Furniture Industry Germany was the largest EU market for domestic furniture and was valued at € 18. 4 billion in 2008. This represented a 1. 1% decrease over 2007 and an average annual decrease of 0. 7% since 2004. This decrease was below the EU average decrease of 2% for the year and 1. 1% since 2004. The German market was 35% larger than the next country, Italy. Per capita consumption of € 224 was well ahead of the EU27 average of € 161.
Chart: 05 Our research finds out the following highlights for the domestic furniture market in Germany ? The German market for domestic furniture was valued at € 18. 4 billion in 2008, an average annual decrease of 0. 7% since 2004. Domestic furniture production was estimated to be € 14. 9 billion in 2008, representing an average annual increase of 3. 4% since 2004. ? In 2008, Germany imported domestic furniture valued at € 6. 7 billion, or 2. 1 million tones. This represented an average annual decrease in value of 0. 4% since 2004. In terms of volume, the annual decrease was 2%.
This was partly because some supplies come from other transit countries such as the Netherlands. Chart: 06
7. 6 Canadian Furniture Industry The Canadian Furniture Industry is the 5th largest exporter of furniture in the world. The major furniture producing countries in South East Asia are Philippines, Indonesia, Malaysia, Singapore, Thailand, Korea, Taiwan and India. In the context of global furniture trade, Asia shows healthy signs of growth with respect to its other international competitors. Asian furniture have always been popular in developed countries like USA, Europe and Australia.
Over 20 years of fast growth, China has been able to bring unlimited business opportunities and vitality to the global furniture industry. Now, China has today emerged as a furniture production center, a circulation center as well as an exhibition center in the world. The rise of China’s furniture industry has brought about a new round of restructuring of the global furniture industry and trade pattern. According to a recent estimate, the Indian furniture industry is estimated at around Rs 350 billion . Eighty-five per cent of this falls into the unorganized sector.
According to a study by the World Bank, the organized furniture industry is expected to grow by 20 per cent a year and India, Brazil and Russia will witness a boom.
7. 7 Swedish furniture industry The future looks very bright for the Swedish furniture industry. Sweden has a worldwide reputation of producing beautiful and functional furniture, and Swedish furniture industrial design is internationally renowned. The trade balance is still positive for furniture with 2,9 billion SEK during 2009. The furniture exports decreased with 7 % from 16, 3 billion SEK to 15,2 billion SEK during 2009 compared to 2008.
The furniture imports decreased with 20 % to 12,3 billion SEK. TMF has estimated the furniture production for 2009 to 22, 9 billion SEK. The country is home to some among the largest furniture firms in Europe in the segments of kitchen, office and, particularly, in the flat-pack furniture that recorded exponential growth with the arrival of IKEA. Sweden is now the fifth largest European producer of ready to assemble furniture. With almost 70% of the furniture produced sold on the international markets, Sweden is the seventh European furniture exporter.
Swedish furniture manufacturers have achieved strong internationalization, strengthen their brands on the international market, and managed to control the distribution channels. This helped in maintaining an increasing performance – although the global downturn – in 2008. Chart: 07 Growth of Swedish furniture industry IKEA is a Swedish furniture company one of the most renowned Furniture brand in this world. The IKEA Group is one of the world’s leading home furnishing companies, with procurement in some fifty countries and retailing in presently twenty-two countries.
The IKEA Group is faced everyday with cultural differences and diverse economic and social conditions. The International Federation of Building and Wood Workers (IFBWW) is an international trade union organization organizing building, wood and forestry workers worldwide. “The IKEA Way on Purchasing Home Furnishing Products”. A contract based on “The IKEA Way on Purchasing Home Furnishing Products” has been introduced world-wide and is being implemented in relation to all suppliers of IKEA products. IKEA has established a compliance organization with the task to support and monitor the compliance work.
Both IKEA and IFBWW appreciate the value of a continued co-operation and henceforth see it beneficial to have a joint group that will meet twice per year, one meeting being organized by IKEA and the other by IFBWW. IKEA Becomes Cheap in China IKEA successfully built the global consistent image of cheap furniture. Now, it successfully bring the same image to Shanghai, China. IKEA furniture is really cheap for local residents. The recent IKEA’s on sale campaign is astonishing. A set of flower picture that was sold at 19 RMB now only costs 1 RMB. Hey. IKEA is on sale, as more as 95% off!
I believe IKEA intentionally put this product as the first article in the store people can see – so creating an atmosphere of big on sale…. Cheap but… With the drop of price, unfortunately, many of urged that the drop of quality also. Before, people never worried taking the bad product home. But now, they have to examine carefully for anything to put into their shopping cart, to make sure it is not broken. But gradually customer begins to complain the poor quality of IKEA. For example, many one cannot install the curtain pole because of the hole is a little bit smaller than required.
The newly bought GLANT table has two obvious area of color-difference… many of the customers are not sure whether they have been moving out of the target customer segment or the quality does drops.
7. 8 FEAR OF CHEAP IMPORTS (From China)
The Indonesian Furniture Producers Association has welcomed the government’s reaction to its request for consideration to be given to delaying the full implementation of the FTA with China amid fears that hundreds of thousands of Indonesian workers in the wood processing sector could lose their jobs. According to the Association, cheap furniture imports from China could overwhelm local manufacturers.
They quote an example where a computer table made locally from particleboard sells for about US$65 while an imported Chinese made table of similar material could sell for about US$45. The Association added that the FTA between ASEAN and China could result in huge job losses at major Indonesian furniture manufacturers. Table: 05 [pic] Source: China Furniture Market Report, 2006-200 Chinese Furniture market (at a glance)
7. 9 FURNITURE EXPORTS IN 2009
The furniture sector saw a big drop in exports for the second consecutive year. Brazilian furniture exports ended 2009 with a fall of 28. 5% compared to the previous year.
The sector’s foreign sales totaled US$ 706. 9 million. US imports of Brazilian furniture declined 41% in 2009, dropping to a value of only US$ 95 million in 2009. Nevertheless, the US continues to be the main importer of Brazilian furniture, accounting for 13% of the total exports of the sector. Argentina follows in second place with an 11% share of the total Brazilian furniture sector exports, but sales were down 37% in 2009 to US$ 75. 7 million. In third place was the UK which accounted for a 10% share of furniture exports from Brazil. This business was worth around US$ 72 million in 2009, representing 1. % drop compared to 2008. Cuba was the country with the highest growth in purchasing Brazilian furniture, despite having only a minor share of Brazil’s exports at only 2% of total export sales. Exports to Cuba increased some 60% in the period, and the Southern state of Rio Grande do Sul was the main exporter. | |
8. Furniture’s of Bangladesh in International market So far this report has analyzes the worldwide markets for Furniture to the global market analytics. Now it is time to take a brief look on Bangladesh point of view. This portion is now basically emphasized trade of Bangladesh and SARRC and another one is rest of the world.
8. 1 Trade between Bangladesh and SARRC This paper analyses the determinants of trade flows between the countries of the South Asian Association for Regional Cooperation (SAARC) and Bangladesh through furniture prospective. The results show that while the high intensity of bilateral trade of these countries is not explained by high complementarily, a policy of non discriminatory import liberalization in India would significantly benefit the SAARC countries in terms of export expansion.
Bilateral trade between Bangladesh and SARRC Product: Wood and articles of wood, wood charcoal Chart: 08 [pic] Sources: ITC calculations based on COMTRADE statistics.
9. Possibilities of matching standard and price in International market: Bangladesh is looking forward to grab some market share in the international market. At present the main furniture trade relationship of Bangladesh are with India, Japan and Malaysia. 1. Bangladesh with India Bangladeshi Furniture Plans to Foray into Maharashtra Market “Changing Lifestyle”
Bangladesh Furniture Owners Association is set to foray into the Indian Subcontinent with its 2 leading brands of Furniture, “Hatil and Navana” with unique and stylish furniture designs to express your individual style at very affordable prices. Furniture and furnishings add beauty to your home. Stylized furniture gives your home an envious look which others die to achieve… Needless to say that the Indian Furniture industry is poised to expand to meet the surge in demand. Almost every international furniture manufacturing country is looking to enter this vibrant market.
Henceforth, Bangladesh Furniture Owners Association backed up by the Bangladesh High Commission and Export Promotion Bureau is all set to foray into the Indian Subcontinent with its 2 leading brands of Furniture, “Hatil and Navana” and by showcasing Modern contemporary furniture with unique and stylish furniture designs to express your individual style at very affordable prices. The company offers best quality furniture with latest 7 contemporary designs at very affordable prices. The range includes office furniture, home furniture, medical furniture, lab furniture, industrial furniture and also interior designing furniture.
Since furniture and furnishings form one of the most important ingredients in the interior decoration of a room, the demand is more for stylish furniture and such furnishing materials that enhance the look of a room. Keeping this in mind, the leading furniture brands of Bangladesh with their exotic Ranges of the most stylish products have entered India through the Panelexpo 2009 thus proving to be an excellent platform to leave their mark in the minds of the Indian customer. Bilateral trade between Bangladesh and India Product: Wood and articles of wood, wood charcoal Chart: 09 [pic] Sources: ITC calculations based on COMTRADE statistics. .
Bangladesh with Japan Background Trade fairs are considered to be one of the identifying important marketing tools for new export destinations. For any fair, it is critical to choose the right products and communication tools for branding and to sensitize the trade bodies and business community. In 2009, Export Promotion Bureau (EPB) of Bangladesh selected the International Furniture Fair in Tokyo (IFFT) for furniture trade promotion. Katalyst and EPB jointly supported five firms, namely; Akhtar Furnishers, Hatil Complex Limited, Furnitec, Partex and Quality Agro Forestry Limited (QAFL) to participate in this fair.
Major activities Katalyst appointed Csil, a Milan based consultancy firm to help in product selection, pricing, understanding Japanese business culture and other technical details. The consultant also advised the firms on maintaining environmentally and socially responsible business practices. Katalyst also worked with the Bangladesh Embassy in Japan to organise a reception for the business Community to meet. Key achievements
1. The participants received orders worth USD
2. 1 million. Prospective companies like Nitori, Tokyo Hands, Francebed, Korimoku are interested in visiting Bangladesh in early 2010.
2.2 Significant number of Japanese furniture retailers and manufacturers expressed interest to import furniture and parts from Bangladesh.
3. Japan External Trade Organisation (JETRO) expressed their interest to work with BFEA (Bangladesh Furniture Exporters’ Association).
4. EPB showed interest to incorporate public relations and branding in their activities.
5. The Bangladesh Embassy in Japan wants to help the exhibitors of IFFT 2010 to organise regional business-to-business meets in July-August prior to the exhibition.
6. The Bangladesh Embassy in Japan is keen to assist Bangladeshi companies to hold regional business meeting.
7. The Bangladesh Embassy in Japan and JETRO intend to work with Katalyst to promote furniture export from Bangladesh. Way forward In January 2010, Katalyst and EPB will be signing a Memorandum of Understanding to develop a 3 year’s national plan to promote furniture export. Katalyst aims to work with Bangladesh Embassy to sensitise the Commercial Wings of Bangladesh Embassy in different countries to take up similar initiatives. Ministry of Commerce and the Ministry of Finance are encouraged to allocate funds for the Commercial Wings to organise effective programmes for the exporters.
A steering committee has been formed comprising of furniture exporters to ensure sustainable export to Japan. Bilateral trade between Bangladesh and Japan Product: Wood and articles of wood, wood charcoal Chart: 10 [pic] Sources: ITC calculations based on COMTRADE statistics. 3. Bangladesh with Malaysia Call for Malaysia to Invest in Bangladesh’s Furniture Industry [pic] The furniture fair is organized by Malaysia’s Furniture Industry Technology Malaysia has vast scope to invest in Bangladesh’s furniture industry and both countries will benefit from such investments, Bangladesh Commerce Ministry’s Secretary Firoz Ahmed said on last month. Malaysian entrepreneurs can set up furniture companies in Bangladesh through joint ventures or direct investments,” he said at the opening of Malaysia Fitec Furniture Showcase 2009 in Dhaka. He said that foreign investors should be able to earn profit with lower labour cost and the government providing special incentives. The four-day furniture fair is organised by Malaysia’s Furniture Industry Technology Centre (Fitec) to display the latest Malaysian furniture and furniture technology from 20 of its top manufacturers.
The event is expected to attract around 1,000 furniture industry players from the two countries. “Bangladesh can also be a good market for Malaysian furniture since the purchasing capacity of our people is growing,” Ahmed said. “The furniture industry is also flourishing in Bangladesh and opportunities exist to develop this sector where Malaysians can help with their expertise,” he said. On the trade between Malaysia and Bangladesh, Ahmed said: “During the last five years the volume of bilateral trade has increased by 82 percent to US$500 million, but it is largely in Malaysia’s favor. The furniture manufacturers of these two countries are agreed that the trade gap could be reduced through cooperation between the traders and entrepreneurs of both countries to increase the volume of bilateral trade. Bilateral trade between Bangladesh and Malaysia Product: Wood and articles of wood, wood charcoal Chart: 11 [pic] Sources: ITC calculations based on COMTRADE statistics. 10. Competitive analysis’s between Bangladeshi manufacturer and International manufacturer
As far according to our research we are found that the international market of furniture is really big and large and our country has also have a vast scope to use our own potentiality to achieve a handsome amount of a market share. Before looking out our potentiality let’s have a quick look to the overall global market of furniture. Table: 06 |Wood Type |Kitchen |Household |Upholstered | TV, radio, etc. , |Office |Office and store | | |cabinets |furniture |furniture |cabinets |furniture |fixlres | |Particleboard 16 |4 |3 |23 |12 |28 | |Softwood plywood |11 |2 |5 |8 |6 |12 | |LVL (laminated veneer |1 |1 |2 |0 |1 |4 | |lumber) | | | | | | | |Total |100 | |Hardwood lumber |42. 60% | |Hardwood plywood |21. 30% | |Particleboard |13. 80% | |MDF (medium density fiberboard) |8. 50% | |Softwood plywood |7. 0% | |Softwood lumber |4. 30% | |LVL (laminated veneer lumber) |1. 10% | |LSL (laminated strand lumber) |1. 10% | |Total |100. 00% | Table: 07 Source: FOREST PRODUCTS JOURNAL VOL. S1, No. 9 Chart: 12 [pic] Source: FOREST PRODUCTS JOURNAL VOL. S1, No. 9 10. 1 High Standard and Competitive Advantages
The comparative advantages of suppliers from all over the world are especially the high quality of the final products and their ability to supply required quantities of products at a given time. This is due to the existing modern manufacturing capacities of the furniture industry. Priorities Include the ever growing attention to furniture design, and following the latest design trends. Emphasis is laid on the high use value of furniture, including the latest ergonomic and health trends. Strong Points of the International Furniture Industry
- Outstanding craftsmanship of workers employed in the sector
- Considerably lower wage costs compared with West Europe
- Good level of companies‘ technology. The staff ’s knowledge of languages, especially English and German, has been improving
- The furniture industry is an important sector of industrial production in the pro-export orientation, it has been recording a balance of trade surplus over the longer term, contribution to GDP
- There are considerable production capacities, production for large international retail chains
- Due to the size of the sector, there is a fast and quality delivery service and material supply
- EU stands up to world-wide competition, there are young growing firms, offer includes the manufacture of special types of furniture
11. Opportunities of Bangladesh Furniture firm towards Internationalization The Export Promotion Bureau plans to team up with Katalyst, a private sector development project, for furniture makers’ capacity building and widening the country’s export basket. The new partnership is expected to scope out further prospects of the sector, now growing at 20 percent a year, taking some steps to reach the goals. A memorandum of understanding (MoU) between the two sides, due tomorrow, will allow them to go into some initiatives.
These measures include training for artisans, providing technical supports, putting all efforts to remove barriers to its flourishing and formulating a roadmap for exports. “Though EPB has been working on developing the furniture sector, there remains a lot to do to earn a sizeable amount of money from the sector. So we want to work together with Katalyst,” said Omar Faruq, a director of the state-run promotional agency for exports. Under the MoU, EPB will organize more trade shows for furniture manufacturers to explore new international markets and facilitate its exports. The sector’s contribution to the gross domestic product is 0. 29 percent on an average, according to Katalyst. Katalyst has been working for the sector’s development since 2004.
The industry constitutes about 41,560 enterprises, which employ around 1. 8 lakh people unskilled and semi-skilled. There are 121 clusters of furniture companies across the country — 93 micro and small, 17 medium and 11 large. The bigger clusters are mostly located in Dhaka and Chittagong. Otobi is the furniture market leader, while, Navana Furniture, Hatil Complex Ltd, Partex Furniture, among others, are the major players. “Though a formal signing of an agreement with EPB is imminent, we’ve been working with it for the last one year, and this time we want to strengthen the partnership,” said Zannatul Ferdous, business consultant (Industry and Rural Sectors Group) of Katalyst.
As the sector lacks proper knowledge about global trend in furniture design and competitiveness, Katalyst will bring consultants to the country to make the sector people aware of international market demand, she added. Katalyst will bear the consultancy fee primarily, but a manufacturer will have to share such fee with the facilitator in case specific consultancy and technical support is sought, the Katalyst official elaborated. Pointing her finger at policy limitations in some areas of the sector, Ferdous said, “We hope that EPB-Katalyst partnership will contribute immensely to resolving the problems like tax rebate, financing and wood sourcing. The committee is now working to make a paper in consultation with all the stakeholders of the sector.
Based on the paper and other things, a national roadmap will be formulated for furniture export. EPB data shows that Bangladesh fetched $3 million from exports of wood and furniture in FY 2008-09, $2. 4 million in 2007-08, $1. 8 million in 2006-07 and $2. 2 million in 2005-06. Chart: 13 [pic] Source: EPB (Export Promotion Bureau) 12. Contribution in GDP Growth Bangladesh’s GDP grew by 5. 9 percent in the 2008-09 fiscal year ended in June, slightly lower than 6. 2 percent in the previous fiscal year due mainly to global economic slowdown, the Asian Development in their last report.
According to the Quarterly Economic Update released through a press statement, the country’s industry sector growth declined to 5. 9 percent in 2008-09 from previous year’s 6. 8 percent as export production in the second half of the fiscal year slowed due to the global slowdown. But if now our country starts up with the goal of accelerate the overall furniture industry in the International level and this upward trend continues for some more years then surely within 2 to 3 year it will contribute our GDP growth from 5. 9% to 6. 4%-6. 5%. Then after maintain this positive trend and increasing their market share globally then we can dream to tag out the level of least developed country (LDC) to developed country.
List of Reference
- 1) www. intracen. org
- 2) www. epb. gov. bd
- 3) www. wikipedia. com
- 4) www. Bangladesh-bank. org
- 5) www. asiatradehub. com
- 6) www. bizbangladesh. com/export_policy_bangladesh. php
- 7) www. epb. gov. bd/export_Policy_2006-9. php
- 8) www. unescap. org/pdd/
Newspapers, Articles, Text Book
- I. The Daily Star
- II. The Financial Express
- III. FOREST PRODUCTS JOURNAL
- IV. CBI MARKET SURVEY: THE DOMESTIC FURNITURE MARKET IN GERMANY
- V. Daniels John D and Sullivan P Daniel, International Business: Environment and operations 12th Edition.
- VI. Hill Charles, International Business competing in the Global market place, 5th Edition, The McGraw Hill Companies.
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