Furniture Makers, Buyers Converge Successfully at 3F Show in Dongguan

Fair rises as platform for industry deal-making

The International Famous Furniture Fair (Dongguan), commonly known as 3F, has grown to become a leading furniture fair in China since its launch in 1999. This semi-annual exhibition, held in March and September, is jointly organized by the Dongguan City Government, Houjie Town Government, Dongguan Famous Furniture Association, and International Furniture and Decoration (Hong Kong) Association.

Dongguan is a prefecture-level city in Guangdong Province, southern China and also a rapidly growing industrial city in the Pearl River Delta, with clusters of manufacturers of various industries including electronics, footwear, textile, hardware and mould, toy, lighting, and furniture.

Dalingshan and Houjie are Dongguan's two major furniture townships, collectively accounting for over 70% of the city's total furniture output value. Houjie, which hosts 3F, is home to a cluster of private furniture enterprises. This strong local industry base has helped 3F to develop into one of the most important furniture fairs in Asia.

The 25th 3F was held concurrently with the Famous Furniture Woodworking Machinery and Materials Fair and 2011 Dongguan Home Accents Fair from March 16 to 20 this year. The trilogy of shows covered a record exhibition area of 270,000 square meters and attracted 1,022 exhibitors from mainland China, Hong Kong, Taiwan, and overseas. Companies showed off their latest furniture and related products during the five-day event, which drew a total of 102,700 visitors, including 10,520 from overseas.

According to the show organizer, 54% of the exhibitors rate the show results as "satisfactory" and 18% think it is "very satisfactory". Many exhibitors say they will attend the show again in the coming September.

The 3F in March this year hosted the first ever International Alliance of Furnishing Publications (IAFP), which held its annual meeting in China for the year with 15 journalists from 15 countries and regions attending the meeting.

"By hosting the IAFP meeting, we have chance to bring global journalists to 3F and they can closely observe and then publicize worldwide the latest development and progress of the furniture industry in China," says Yin Chengzhi, president of Dongguan Famous Furniture Association, one of the organizers of 3F.

Now in its 12th edition, 3F has developed rapidly to become more than just an ordinary trade show. Today the fair serves as an important trade platform where players in the global home furnishing industry meet, interact, and exchange new ideas and new ways of doing business.

Furniture Capital
Houjie is home to many leading furniture manufacturers, including those from other provinces of China and from Taiwan.

One such company is Lacquer Craft International, a famous Taiwanese furniture manufacturer that has a flagship store in Houjie just opposite to the 3F exhibition venue. The company is a pioneer among Taiwan furniture makers in expanding operations to China. The company moved its production base across the Taiwan Strait in 1992. After years of hard work and navigating through countless difficulties, Lacquer Craft has today become one of the most successful and highly respected Taiwanese furniture manufacturers in the mainland. Its chairman, Samuel Kuo, was elected last year as chairman of the Association of Taiwan Investment Enterprises on mainland China.

Today the company has two production bases in China-one is in Dongguan and the other in Jiaxing of Zhejiang Province. The two production bases have 10 manufacturing plants with more than 6,000 workers in total. Since the company has long been export-oriented, it has also expanded manufacturing operations to Bangladesh and Indonesia.

Lacquer Craft runs three R&D centers in mainland China, the United States and the United Kingdom and sells its products under 10 furniture brands, including Universal, Athome, ISA, Legacy Classic, Craft Master, Better Home & Gardens, Paula Deen, and Willis & Gambier. ISA represents European-style sofa featuring luxury leather and upholstery fabrics, Paula Deen focuses on natural furniture with an American rustic style, and Athome specializes in natural-looking pure wood furniture with simple design.

Lacquer Craft exports more than 95% of its products globally, mainly to the United States and Europe. However, in 2007, it started to tap the growing domestic market in China. The company now has 60 sales outlets in China's first- and second-tier cities to target high-income consumers. Of the sales outlets, 30 sell 'Universal' brand, 25 'Athome' and the remaining 5 'ISA'.

"We plan to open 10 to 15 new furniture stores in Shanghai and Guangzhou each this year," says Darren Shi, director at the company's operation and management department. "One of the planned stores will require an investment of around one million Chinese yuan. In addition to self-owned stores, we also plan to actively recruit franchised stores to quickly expand our market share in China."

Shi says that visitors flock to his company's flagship store twice a year during the 3F show and is therefore glad to see the rapid growth of the show.

Stylish Bedding
Like Lacquer Craft, Stylution International Corp. is a successful Taiwanese furniture maker located in Dongguan. The company has been a renowned mattress maker and marketed its mattresses globally, with the United States being its major export outlet.

The company's founder, Jack Chen, entered the furniture business in 1973 by establishing Restonic (Taiwan) Co. to produce mattresses for Restonic, a famous U.S. mattress brand. In 1983, his company was chosen as the sole agent for Restonic in Asia Pacific. In 1988 the company also was licensed by Mustering, a German mattress brand, to produce and market the mattress.

Seeing the booming market for branded mattresses, Chen opened a factory in Dongguan in 1996. The plant has since developed into a large production base measuring 100,000 square meters by 2003. Since then, the company has diversified its other furniture items and today offers a full furniture collection.

In 2004 the company was renamed as Stylution International and set up in the same year a branch in the United States to better control the marketing channels and after-sales services there. In 2006 the company completed the second-stage project of its production base in Dongguan and erected its fourth manufacturing building there with operating floor space of 45,000 square meters.

Today Stylution is the world's leading bedding manufacturer and one of China's largest producers of medium-priced high-end mattresses. Currently the company has 600 sales outlets in China's 34 provinces, with 100 self-owned and 500 franchised. "The market in China is huge and we intend to increase the number of sales outlets in the continent to 1,000 in 2012," says Alex Chen, Jack Chen's son and president of Stylution.

"So far only 5% of the population in China can afford high-priced, high-end products, even though the 5% market is big enough for brand makers to explore since China has such a huge population," the younger Chen indicates. "In recent years we have been actively promoting our products in China. Now we provide 50% of our products to consumers in China, 20% to those in Japan and 20% in the U.S.; while Taiwan and other countries make up of the remaining 10%."

"We have attended 3F every year over the past decade and witnessed the fast growth of the show," Alex states. "The mood was upbeat at 3F in March this year and gave a sense of the robust business climate in China. Visitors flocked to our booth during the five-day exhibition."

Eyes on Chinese Consumers
Der Chyuan Furniture Co., another Taiwanese furniture maker operating in both Taiwan and China, started to tap the market in China last year. In 1998 the company moved most of its production lines from Taiwan to China and built a factory in Dongguan with an area of 20,000 square meters.

"Our company specializes in the production of wooden furniture products including coffee tables, curio cabinets, dining room sets, dressing vanities and so on," says S. C. Chang, a senior official at the company. "Our products manufactured in China are export-oriented with 90% being sold globally and only 10% provided to the local market."

"Actually we started to explore the market in China just a year ago and we plan to put more emphasis on the market there," Chang reveals. "China is the world's second largest economy and its large population is very attractive to global manufacturers."

In addition to its OEM production, Der Chyuan exports its products under its own brand-"Der". It also has a New Classic line of furniture items that it sells in China. In an average month, the company ships 30 containers of furniture products valued at about six million Chinese yuan or about US$1 million.

"Our sales in China are growing while exports to other countries are falling. So, we have to adjust our manufacturing strategies to turn out more products for consumers in China," Chang says. "We usually roll out new products in March and September during the 3F show."

Exporters Look Inward
Ashley, the No. 1 furniture supplier in North America, participated in 3F for the first time, showcasing the company's dedicated product lines for Chinese market. Founded in 1945 in the United States, the company started to do business in Asia in 1984 and expanded operations to China in 2001 by establishing a factory in Kunshan of Jiangsu Province for export only.

Seeing China's economic boom over the past decade, Ashley has decided to tap the market there and set up its first flagship store in Shanghai in the second half of 2010. This year the company plans to set up franchised retail stores across the country. Throughout the 3F venue, signs touted the company's plans: "Ashley, now opening stores across China."

The company's 470 square-meter stand was packed with interested buyers during the show. "We have received around 1,400 applications from Chinese retailers who want to open Ashley stores. It's unbelievable!" says Chuck Spang, the president of International Operations for Ashley.

The company's China marketing manager discloses that Ashley will first focus on China's top-tier cities and then expand to the second-tier ones, focusing on the growing middle-class consumers there. "Ashley is quite famous in North America, but not in China. So, we have to make more effort to promote the brand here," the manager says.

Hong Kong Exodus
Taking the advantage of the geographic proximity to Guangdong, many Hong Kong furniture makers have relocated their operations to the province. Among them is Hong Kong Franciss International Co., which has a factory in Dongguan with workforce of 500-600 persons. The company also is a frequent participant in 3F.

"We have seen 3F grow rapidly in recent years and gradually become an important venue for manufacturers, buyers, designers and professionals of the furniture industry," a senior official at the company points out. "The show is an ideal place for our company to gain international exposure and orders as well."

Hong Kong Franciss sells 20% of its products to the market in China and exports the remaining 80% to the Middle East, Japan and the United States. "Our China focus is on middle- and upper-class consumers. We plan to further explore the market there in the near future," the official affirms.

Best Exhibit
Star Furniture Pte Ltd., a furniture manufacturer from Singapore, who is operating factories in China and Malaysia, has been attending 3F since March 2001, reflecting the company's international focus, says Kenny Koh, the managing director of the company.

Star Furniture won this year's "Best Stand and Exhibit Award," an accolade given to exhibitors for outstanding and innovative products. The company took the gold prize in the bedroom furniture category.

Branding
Local Chinese exhibitors were in the spotlights at 3F. Window of City Furniture Group is a leading Chinese furniture manufacturer with factories in Dongguan and Wenzhou of Zhejiang Province in the east coast of China. D. S. Wang, chairman of the group, says that 3F is a must-visit furniture show in China and Houjie.

"Furniture manufacturing technology has greatly improved in China over the last decade and Chinese manufacturers have not only played roles as OEM contractors in the global market, but also developed their own brand products," Wang notes. "Branding is critical for a company to build up its own image and win consumer loyalty--not to mention higher profits."

Other than having own brands, the group has also purchased U.S. furniture brands to grab more market niches in China. "In recent years we have seen more and more furniture brands from the U.S., Europe, Japan as well as many other countries enter the market in China. I believe that the market here is big enough for foreign competitors to share market niches and the entry of these foreign brands has on the other hand pushed Chinese furniture makers to upgrade," Wang analyzes.

Quality Focus
Xingye Home Furnishings, also located in Houjie of Dongguan, is a prestigious furniture maker in China with a history of more than 15 years. The company has been a strategic partner with "Guangzhou Design Week," which has operated an annual international event to promote innovation and design since 2006.

Under its slogan-"New Business, New Lifestyle," Xingye is committed to improving product quality and helping customers develop their business. Moreover, the company aims to build up a trade market for building materials, furniture items and related accessories at projected venue of 700,000 square meters just outside the international exhibition center in Houjie.

The first phase of the project will cover a construction area of 250,000 square meters with 150,000 square meters for home furniture and 100,000 square meters for building materials. The second phase will include an undetermined amount of space for a design club, a research center, and information center and a warehouse and logistics center.

Xingye hopes that the market will also further upgrade the position of 3F.

Keeping Pace with Industry Trends
With a history of more than two decades, Fushi Furniture Co., Ltd. is an experienced local furniture manufacturer in Dongguan where the company has four furniture plants with total workforce of more than 1,000 persons. Focusing on the market in China, it now has about 300 sales outlets across the country and a constant exhibitor at 3F.

"At 3F we can see furniture market trends and turn out products to meet the market need," states Wang Houliang, operating director of the company. "Living standards in China are rising and people there have ever-higher product demands. We have to keep upgrading the quality of our products and reinforce strength to cope with the increasing competitors."

According to the show organizer, 54% of the exhibitors rate the show results as "satisfactory" and 18% think it is "very satisfactory". Many exhibitors say they will attend the show again in the coming September.

The 3F in March this year hosted the first ever International Alliance of Furnishing Publications (IAFP), which held its annual meeting in China for the year with 15 journalists from 15 countries and regions attending the meeting.

"By hosting the IAFP meeting, we have chance to bring global journalists to 3F and they can closely observe the development of the furniture industry in China," says Yin Chengzhi, president of Dongguan Famous Furniture Association, one of the organizers of 3F. "We hope they can write in-depth report of the show for their publications and let the world know the progress made today by the furniture industry in China."