Furniture Manufacturing in China

The main reason for the decline in exports of furniture from China-a significant reduction in demand from the U.S. and the EU, which was a consequence of the global financial crisis.

In 2009, the index of consumer confidence in the U.S. declined in October was 47.7 points (Consumer Confidence Index reflects the total population and consumer expectations of favorable conditions for large purchases.) In November and December, there was a slight increase-up to 49.2 and 52, 7 points, respectively, which, however, has not changed very disappointing situation for the whole year. Many foreign customers have dramatically reduced delivery volumes and kept a very conservative strategy of placing orders at Chinese factories-small amounts for a short period of time.

The downturn in the U.S. economy, the overall global economic recession, rising raw material costs and the appreciation of the yuan overnight made bankrupt about 4,000 Chinese enterprises. According to the China Furniture Association, over the past year in the Guangdong province about 400 enterprises went bankrupt furniture industry and almost 70% of factories have cut production capacity by 30%. More than 50% of investment projects in this period were postponed. In these circumstances, companies have tried to keep the business activity and were taken even for small orders. Large enterprises have directed their efforts to the domestic market, but also for small companies closure was inevitable.

Growing markets, such as in regions such as the ASEAN countries and Hong Kong, have contributed to the growth of exports of Chinese furniture in 2009, however, China is closely linked for decades in this field with the U.S. and the EU countries, so little progress in emerging markets are not able to change the overall picture of exports. In addition, in early 2010, Russia increased the size of the export duties on timber, which also adversely affect Chinese manufacturers. All this gives rise to many analysts do not even the most optimistic projections for exports of Chinese furniture in the near future.

Trade barriers

At present, the world economy is slowly recovering, but it is unclear what will be developed in the future, what trends are most pronounced. Many countries are taking consistent measures for the protection of national furniture industry. In addition, more stringent rules and requirements for environmental safety of production and manufactured goods.

For example, in 2009 the United States released the following documents:

1. The Lacey Act (as amended). According to the document suppliers of all goods made of wood, are required to provide a certificate of legality is used in the production of wood, as well as full information about it (the Latin name, country, cutting down the number, size, and cost). Otherwise, these products will not be sold in the United States.

2. Security Act of consumption goods. Stricter rules to the content of lead in products for children (including children's furniture). The new version of the document lead levels should not exceed 1/10,000 against the previous score of 6/10,000.

3. Quarantine requirements for the production of wood, imported from China, cause to certify all products made of bamboo and wood.

4. Rules limiting the amount of formaldehyde in plywood, hardwood and MDF (medium density fiberboard)