Although much of Taiwan’s furniture manufacturing entities have migrated to China, the Taiwanese Government is working hard to encourage them to return home – and exports are rising accordingly, reports Judy Li.
Taiwan was once amongst the world’s leading furniture suppliers, but the island’s furniture industry began shrinking in the late 1980s because of the rising cost of labour and industrial land. Between 70 and 80% of the furniture manufacturers which once thrived at home have now moved offshore, mainly to China and Vietnam as well as to South-east Asian countries such as Thailand, Malaysia, and The Philippines.
However, some of the migrating Taiwanese furniture manufacturers have kept part of their production in Taiwan, and a few have kept all their manufacturing operations on the island. These latter companies have strived to survive by upgrading their manufacturing capabilities and facilities, and by developing innovative high-end products to meet upscale market demand, both at home and abroad.
In the 1970s and 80s, when Taiwan was regarded as a ‘furniture kingdom’ because of its large furniture exports, manufacturers turned out all kinds of natural-looking products made of wood, bamboo, and rattan. With the depletion of forests and other natural resources, however, they began turning to metal, glass, and other artificial materials.
“Today, Taiwan, China, and Vietnam are the three major production bases for Taiwanese furniture-makers. There are evident differences between the three countries in terms of production scale, mode of operation, and marketing strategies, but co-operation and competition seem to be fuelling synergies among the three”
Taiwan’s furniture exports peaked at US$2.4b in 1987 and then went into decline, largely because of the factors mentioned above but also because of the liberalisation of the Chinese economy. This opened up a huge market and an abundance of cheap labour, enticing local furniture-makers to look for greener pastures across the Taiwan Strait. In recent years, Taiwan’s annual furniture exports have languished at around US$1.1 to 1.3b – down by about half from their peak.
With its cultural and linguistic similarity, China quickly became the favoured destination for Taiwanese furniture manufacturers relocating abroad. Today, Taiwanese furniture-makers in China are clustered in three areas – the south, the east, and the north. Those in the south settled mainly in cities around the Pearl River Delta, in provinces including Guangzhou, Shenzhen, Huizhou, and Dongguan. Those in the east are concentrated in the Yangtze River delta, mainly in Shanghai, Suzhou, and Zhejiang Province, and those in the north are centred in Shangdong Province and cities near the Bohai Gulf.
There are currently more than 1500 Taiwanese furniture manufacturers operating in China – 500 in the Pearl River delta, 300 in the Yangtze River delta, and the remaining 700 or so scattered across China.
After years of development in China, some Taiwanese furniture-makers have expanded to several times their original size, and a few have even become world-leading furniture suppliers. Jack Chen, former chairman of the Council of Asia Pacific Furniture Associations and honorary chairman of the Taiwan Furniture Manufacturers’ Association (TFMA), attributes this success to the availability of mature manufacturing technologies, modern management, an enterprising spirit, and hard work.
Jack is also chairman of the Stylution Group, which runs furniture operations in both Taiwan and China. China, he notes, has been playing a growing role in the global furniture market, particularly in the last decade – thanks largely to the huge contribution of Taiwanese manufacturers.
The number of Taiwanese furniture manufacturers in South-east Asia – mainly in Vietnam – has also been growing rapidly. A wave of migration to Vietnam by Taiwanese furniture-makers began in 2006, and has since accelerated, with the manufacturers setting down roots mainly in Bihn Duong Province, outside Ho Chi Minh City.
Like those in China, Taiwanese manufacturers in Vietnam have helped turn furniture manufacturing into a booming sector of that country’s economy. Vietnam’s furniture exports, with vital contributions by Taiwanese companies, broke the US$1b mark about four years ago.
Today, Taiwan, China, and Vietnam are the three major production bases for Taiwanese furniture-makers. There are evident differences between the three countries in terms of production scale, mode of operation, and marketing strategies, but co-operation and competition seem to be fuelling synergies among the three.
Those furniture manufacturers that have managed to stay in Taiwan have shifted their focus to metal furniture – a sector in which they still enjoy the advantages of advanced manufacturing equipment and technology, a highly-educated workforce, and the backing of a comprehensive network of supporting industries. These manufacturers are working to develop products that use new manufacturing technologies and materials, and that offer improved designs and functions. They are also developing products aimed at niche markets.
Taiwan’s domestic furniture industry was recently extended a helping hand by the government, which has worked out measures to upgrade the industry by offering assistance and subsidies for the development of uniquely-designed products and new techniques. These measures are designed to keep the island’s furniture-makers at home, and to encourage those operating overseas to return.
Thanks to efforts by the Industrial Development Bureau, an agency under the Ministry of Economic Affairs (MOEA), Taiwan’s furniture manufacturers operating overseas are increasingly willing to bring their production back to Taiwan. In recent years the MOEA has been encouraging domestic manufacturers to co-operate with school designers in the joint development of innovative products, helping to cultivate furniture talent, and organising contests to recognise creative furniture products.
With the government’s encouragement, some of Taiwan’s overseas furniture manufacturers are planning to return to Taiwan or expand their operations on the island, and more than a dozen have already taken concrete action in that direction. The returning overseas manufacturers have all turned their attention to the production of design-oriented products instead of the high-volume OEM orders that they concentrated on in years past, confident that such products will find market niches at home and abroad.
Under the impact of the economic downturn following the global financial tsunami that struck in the second half of 2008, Taiwan’s furniture exports tumbled from US$1.32b that year to US$991.58m in 2009. In 2010, economic recovery helped bring the industry’s exports back up to US$1.22b.
According to statistics provided by TFMA, the trading value of Taiwan’s furniture industry was about US$1.84b in 2011 (an annual growth of 11.5%), of which, US$497m was imported (an annual growth of 16.2%) and US$1.34b exported (an annual growth of 9.9%).
Ruca Chien, chairman of TFMA, indicated that in 2011 mainland China exported furniture products worth of US$37b, and about half of that value was contributed by the Taiwanese furniture manufacturers there.
The annual export of furniture products by Taiwanese furniture manufacturers today remains around US$12-13b. The main export outlets are the US, Japan, Germany, the UK, China, Canada, Australia, Italy, France, Mexico, Spain, and the UAE.
Events/links
Taipei International Furniture Show (TIFS) will next take place between 21st-24th February at the Taipei World Trade Centre
Judy Li is the senior reporter for the leading Taiwanese industry magazine and International Alliance of Furnishing Publications (IAFP) member CENS Furniture, published by the Taipei-based China Economic News Service (CENS).
