Polish furniture in China - how to export and

be successful

By

Polish Investment and Trade Agency China Trade Office in Shanghai

August 2017

Suggestions for Polish furniture companies to enter China market

Competition among industry players in China’s furniture market shows that rivalry in this market has

come of age. Today, furniture brands are no longer fighting for first-tier cities but are gradually shifting

their focus to the furniture market in second- and third-tier cities. Rapid urbanisation has also spurred the

growth of home marts in second- and third-tier cities. Besides, the market for furniture marts and brands

is almost saturated in first-tier cities. While the economic and consumption scale is smaller in second-

and third-tier cities, the market offers more room for development. As a result, tapping into the medium-

and low-end market will become a key marketing strategy.

Compared with overseas brands, local furniture brands have a greater competitive edge on the mainland.

In 2016, eight of the top 10 brands in retail sales are local ones. The main reason is that they have better

distribution channels and can attract consumers in the rural areas and second- and third-tier cities with

cheaper prices.

Key consumers

Mainland furniture consumers can be divided into roughly three groups, namely, avid consumers,

luxury/branded goods consumers and average wage-earning consumers.

Avid consumers: A very rich group with little concern for prices, they usually favour expensive

western style, classical Chinese style or avant-garde furniture.

Luxury/branded goods consumers: These consumers want furniture to reflect their taste and

style. While making their purchase, they would also like to enjoy aesthetics and cultural elements.

They are at the forefront of trends in aesthetics, lifestyle and price concepts.

Average wage-earning consumers: Representing the majority of consumers, with price and

quality as dominating factors, they would often shop around in making a purchase.

Polish furniture companies potential in Chinese market

An increasing number of consumers, in particular mid-to-high end consumers and children’s

furniture consumers, choose to embrace new living concepts, such as the ‘eco home’. These

consumers have a strong preference for environment-friendly furniture, such as odour- and

formaldehyde-free products, despite the fact that the price of most of such furniture is higher.

According to HKTDC’s consumer survey, over 90% of respondents are interested in using green,

eco-friendly materials and are willing to pay a premium of 14% on average in purchasing products

made of green materials. In view of this, many furniture and building materials brands have added

the idea of eco-friendliness in their brand concept. Examples in the mainland market include ‘smart’

furniture incorporating indoor air purification function and lightweight honeycomb board furniture.

Demand for children’s furniture is on the rise. As living conditions improve, parents are increasingly

willing to buy suitable furniture for their children to create a good environment for their development.

With the full implementation of the two-child policy under the 13th Five-Year Plan, pundits believe

that the market has further room for growth. According to preliminary data from the National Bureau

of Statistics, the number of children aged below 15 reached 230 million in 2016, including 17.86

million newborns, representing a birth rate of 13 (per 1,000 people). Surveys show that in the

children’s furniture market, beds and desks and chairs make up the biggest share. Currently in this

market, the ratio of plywood furniture to solid wood furniture is approximately 7:3, but as people’s

income levels rise and they become more health and environmentally conscious, the ratio of solid

wood in children’s furniture may rise.

In the children’s furniture market, domestic brands account for the lion’s share. Currently, some

famous brands including Aokok and Colorlife have already emerged in the mainland children’s

furniture market. In entering the mainland market, some foreign children’s furniture brands choose to

use locally sourced materials or imported boards for processing in the mainland in order to appeal to

the local market.

Green is the underlying trend in the furniture industry and more and more enterprises are using

water-based rather than traditional solvent-based paints. Water-based paints refer to coatings that

are water soluble or dispersible. The biggest difference between water-based and traditional solvent-

based paints is that the former require no addition of hardener or thinner and therefore do not

contain toxic substances such as formaldehyde, benzene and xylene, which makes them more safe

and compliant with environmental standards.

Faced with rising property prices, young home-buyers have limited choice in the size of flats and are

inclined to choose multi-function and foldable furniture for easy storage. Sofa beds are immensely

popular because they are ordinary sofas that can be used as beds for overnight guests. Data from

Euromonitor reveals that retail sales of sofa beds amounted to RMB19 billion in 2016, accounting for

32% of the total retail sales of seating furniture.

China’s imports of selected furniture products in 2016:

HS Code Description 2016

(US$ million)

YOY change

(%)

94016900 Other seats, with wooden frames 86.7 1.3

94016190 Other upholstered seats, with wooden frames 80.9 11.8

94036099 Other wooden furniture 338.9 -0.1

94034000 Wooden furniture of a kind used in the kitchen 140.2 45.0

94035099 Other wooden furniture of a kind used in the bedroom 162.2 5.2

94032000 Other metal furniture 58.7 -2.1

94038990 Furniture of other wooden materials 24.8 -38.2

Source: Global Trade Atlas

After China became a WTO member, tariffs on furniture dropped significantly. Apart from the furniture

products listed below, which are still subject to import duties, a zero tariff has been applied to all other

furniture items since 2005.

China’s import tariff rates on furniture in 2017

HS Code Description %

94012010 Seats of a kind used for motor vehicles, of leather or composition leather 10

94012090 Other seats of a kind used for motor vehicles 10

94019011 Seat angle regulating devices 10

9404 Mattress supports/articles of bedding and similar furnishing fitted with springs 10

Source: Customs Import and Export Tariff of the People’s Republic of China 2017

Marketing Strategies and Business Solutions

Traditional furniture enterprises mainly market their products in three ways: first, consignment through

distributors in various places; second, renting premises in various places and selling the products

themselves; third, displaying and selling products through large furniture malls or furniture marts.

Meanwhile, some specialised stores and chain stores with financial clout have emerged. Large home

centres are the major channel through which consumers obtain information on furniture products.

In recent years, furniture hypermarkets have been developing rapidly. Many of these hypermarkets

develop in various places across China in the form of single-brand chain operation. There are also

hypermarket clusters, i.e. a high concentration of different types of furniture hypermarkets within the

same region, as well as general merchandise stores, which not only sell furniture but also other

household supplies and even building materials. Where product mix is concerned, many chain operated

hypermarkets are also general merchandise stores. Red Star Macalline is currently the leading home

mart operator on the mainland.

The operation focus of different sales channels varies. For instance, large furniture marts mainly offer

home furniture but also sell office furniture. Specialised stores generally sell their own brand, with the

majority of these stores being larger domestic production enterprises and famous foreign brands, such

as IKEA from Sweden, the earliest foreign brand which set up specialised stores on the mainland. This

sales format is often adopted by foreign furniture companies.

In recent years, to make furniture part of the everyday life of consumers, some branded mart chains

have created ‘shopping district’ by such measures as bringing in famous foreign brands, setting up home

experience stores, building commercial complexes or establishing furniture villages. This way, they have

successfully raised brand awareness and increased sales several folds.

The O2O e-commerce model is gaining popularity in China’s furniture market. O2O refers to the linking

online sales and marketing with offline business operation and consumption. There are now different

types of O2O e-commerce operators on the mainland and the O2O model takes various forms in

practice. Qumei is a typical example of furniture manufacturing enterprise and e-commerce operator.

The company uses its website as its sales platform, showcasing the images of various products and

accepting online orders from consumers. Consumers may also opt for offline experiences by visiting

dealers’ stores and place orders there at online prices. This not only allows furniture brands to carry out

sales and marketing but also to boost product sales within a short time, therefore speeding up cash flows

and reducing inventory pressure. Another type of furniture e-commerce is conducted by traditional

furniture sellers. Easyhome, for example, has developed the Juran.cn website to move the offline

experience stores online. It targets consumers who like the brand but wish to select products online.

Some O2O e-commerce operators start as pure online brands and open offline experience stores

afterwards. In other words, they build up their e-commerce platform by extending their coverage from

online to offline channels. Meilele.com is an example of such practice.

Furniture and Building Materials Supermarket

1. JSWB

http://www.jswb.com/en/

In 1989, JSWB Furniture Group was founded in the city of Changchun in Jilin province. Targeted at

middle-and-high-end market, with good sense of style trend and persistent in integrity and quality, JSWB

has created a successful business model in China’s furniture industry.

Strive to choose from home and abroad with decade years of experience and professional insight, JSWB

has created a successful business model in the management and supervision over the factories and

their products which proves being perfectly effective and efficient for Chinese market.

Existing international brands:

2. MMACALLINE

http://www.chinaredstar.com/EN/

Founded in 1986. By now, there’re more than 150 chain malls in Beijing, Shanghai, Tianjin, Nanjing,

Changsha, Chongqing and Chengdu.

3. Yuexing Furnishing

http://www.yuexing.com/

Founded in 1988, Yuexing Furnishing belongs to the Yuexing Group. It’s one of the private enterprises

that are mainly supported by the provincial government of Jiangsu province. There’re more than 20 large

chain malls in Shanghai, Jiangsu, Zhejiang, Liaoning, Jilin, Heilongjiang, Gansu, Ningxia and Qinghai.

Brands:

4. B & Q China

http://www.bnq.com.cn/

British B & Q is one of the world's top 500 in Europe, the world's third home building materials chain

supermarket, belongs to the Kingfisher Group. B & Q started its business in China from 1999 and soon

became one of the most famous home furnishing materials chain supermarket. Now there’re 39 chain

stores in 17 cities like Beijing, Shanghai, Guangzhou, Shenzhen, and so on.

5. Home Mart

http://www.homemart.com.cn/

Founded in 1998, Home mart belongs to China’s largest commercial group – Bailian Group. There’re

more than 25 chain furnishing and home building materials malls in China.

6. Easy home

http://www.juran.com.cn/Default.aspx

Founded in 1999, has won for 10 consecutive years the title of Top 10 Commercial Brand in Beijing.

There’re more than 107 stores all over China.

Exhibitions

Selected furniture exhibitions to be held in China in 2017-2018:

Date Exhibition Venue

11-14 September

2017

China International Furniture

Fair (Shanghai)

National Exhibition and Convention Center

(Shanghai)

12-15 September

2017

China International Furniture

Expo Shanghai New International Expo Center

18-21 March 2018 China International Furniture China Import and Export Fair Pazhou Complex &

(Phase 1);

28-31 March 2018

(Phase 2)

Fair (Guangzhou) Poly World Trade Center Expo, Guangzhou

28-31 May 2018 China International Solid

Wood Furniture Expo Meijiang Convention and Exhibition Center, Tianjin

1. Furniture China 2017

Time：September 12-15, 2017

Venue: Shanghai New International Expo Center/Shanghai Exhibition Center

http://www.furniture-china.cn/en-us/

2. 39th International Famous Furniture Fair (Dongguan)

Time: March 16-20, 2018

Venue: Houjie Dongguan China

http://www.gde3f.com/en/

Gigantic Scale

The last edition of the Famous Furniture Fair was held at the newly inaugurated 3G Exhibition Hall, with

nine exhibition platforms encompassing 770,000 m2 of space including the Famous Furnishings Expo

Park (Hall 9) and Xinye Home Furnishings Center. Over 1300 exhibitors from over 20 provinces and

regions in China as well as industry professionals from the United States, Singapore, Italy, Malaysia and

Turkey took part, representing over 80% of well-known brands in the market as well as almost 10,000

overseas buyers, thus cementing the reputation of Famous Furniture Fair as the top furniture exhibition

in China.

More Brands

With over 1000 exhibitors comprising well-established manufacturers from overseas and China and

encompassing well over 80% of well-known brands from the Greater China region and dozens of top

international furniture brands, the Famous Furniture Fair allows exhibitors to display their products in

specially designed booths that showcase the highest quality standards of Chinese furniture making.

Greater Publicity

Famous Furniture Fair organizer continually advertises in 23 professional magazines in Italy, Germany,

the Middle East, Singapore, Japan, Korea, the United States, France, Russia, etc., as well as in

exhibition guides published by important international furniture shows. In China, over 20 mainstream and

over 40 professional media outlets as well as a few dozen internet media provide coverage of the

Famous Furniture Fair. In addition, we visit top furniture fairs around the world to promote the Famous

Furniture Fair in person and distribute news about our event via Chinese companies overseas, and in

the process have established ourselves as the preeminent event of its kind in China.

More Buyers

Famous Furniture Fair attracts over 100,000 visitors from over 150 countries around the world, of which

over 10,000 are overseas buyers. During the event, our exhibition halls are packed with eager guests.

These professional buyers each spend an average of 2.6 days at the exhibition.

Key factors for success

Innovate: Innovative products are the result of intensive R&D investments and are increasingly

becoming the core competitiveness feature for many companies to stand firmly in their

marketplace;

Manage your human resources: Building a management of young and multicultural professionals

is critical to sustain your business. Professionals from different cultural backgrounds will help

your company develop innovative ideas and adapt your market proposition to the needs and

demands of customers from different regions;

Choose your partners carefully: Identifying a set of suppliers with the right capabilities to meet

your company’s supply chain requirements is critical for a sustainable and reliable business.

SMEs should recognize that their supplier base is dynamic and ever changing, hence, they

should constantly manage it effectively and proactively;

Comprehensive approach: It is crucial to provide your client not just a top product but also a

complete service, from the design to the installation.

Fun fact

Up to 2016, the global furniture retail giant IKEA had opened 21 stores in China. The company intends to

expedite its pace of expansion in China to increase the number of stores in the country to 34 by 2020.

The Polish Investment and Trade Agency (formerly Polish Information and Foreign Investment

Agency), helps investors to enter the Polish market and find the best ways to utilise the possibilities

available to them. We guide investors through all the essential administrative and legal procedures

that involve a project; we also support firms that are already active in Poland. We provide rapid

access to the complex information relating to legal and business matters regarding the investments,

help in finding the appropriate partners and suppliers, together with new locations.

Agency’s mission is also to create a positive image of Poland across the world, promoting Polish

goods and services.

Contact:

Dr Andrzej Juchniewicz

Chief Representative

Polish Investment and Trade Agency

China Representative Office in Shanghai

Suite 1708, Cross Tower, No. 318 Fuzhou Road

200001 Shanghai

tel. (+86) 21 63309206

mob. (+86) 13386080517