Taiwan's Furniture Makers Look to Rosy Future

Taiwan's furniture manufacturers have been trying to keep up with world trends in recent years, and to remain profitable, by putting more emphasis on the development of innovative "green" products.

To avoid the intense competition that characterizes the field of traditional furniture, Taiwan's furniture makers are looking for niches in virgin markets or markets without cutthroat competition. Fred Chen, chairman of the Taiwan Furniture Manufacturers' Association (TFMA), suggests that domestic furniture manufacturers should be aware of world trends and put more effort into the development of eco-friendly products. He also urges them to cooperate with each other or form alliances for the joint development of the international market.

During his more than three years as chairman of TFMA, Chen has focused on revitalizing Taiwan's weakening furniture industry by consolidating the strength of the island's furniture makers at home and abroad so that they will be better able to compete against their international rivals. Joint efforts, Chen believes, can give Taiwanese manufacturers more influence in the world arena.

Taiwanese furniture manufacturers have been moving production to China since the late 1980s and to Vietnam in more recent years, and have become the main driving force behind the burgeoning furniture industries in those countries. Some of the manufacturers now have only one production base, in Taiwan, China, or Vietnam; some operate in two of the countries, and some even in all three.

Last year Taiwan's furniture exports grew to US$1.5 billion, up from US$1.2 billion the year before for a growth of 25% and a record high in recent years. Also last year, China saw the value of its furniture exports reach US$20 billion (half of which was contributed by Taiwan-invested manufacturers) while Vietnam boasted furniture exports of US$4 billion (about 95% of which came from Taiwan-invested factories).

Diversifying Into the Green

Taiwan's manufacturers, Chen says, believe that the diversification of their manufacturing operations to cover "green" products will make their products more welcome throughout the world. They also think that cooperation can benefit all of them, in both production and marketing. The members of a cooperative alliance, for example, can share marketing information and procure materials jointly to reduce costs through economies of scale.

About two years ago the Taiwan Mirror Glass Enterprise Co., the island's leading maker of glass furniture, cooperated with scores of other glass and metal furniture makers in forming an alliance for the joint development of the industry. The alliance is also aimed at helping its members explore the international market; to that end it participated in several international furniture shows both at home and abroad during the past two years, and the products displayed at the alliance's common booths attracted strong attention from visitors and buyers alike.

Five makers of metal furniture and related products in southern Taiwan formed another alliance in the middle of this year, aimed at the joint development of high-end metal furniture. Each of the members is from a different sector of the industry: molding, electroplating treatment, metal tubing, surface polishing, and leisure outdoor chair manufacturing.

Insiders say that the alliances will help domestic furniture makers develop furniture products to U.S. or European standards, and enter markets for high-end customers. They stress that local furniture makers are no longer able to engage in cutthroat competition, and should develop high-end items instead. The manufacturers should switch from OEM (original equipment manufacturing) to ODM (original design manufacturing) or OBM (original brand manufacturing) production as a way of making inroads in upscale markets.

Industry experts emphasize that Taiwan's furniture industry should be upgraded and that the government should help the industry in that effort. They urge manufacturers to improve their manufacturing technology so that they can turn out more innovative, higher-value-added products. In addition, the experts say, the government should offer as much assistance as possible to encourage manufacturers to promote themselves in the furniture market.

In the meantime, the future is looking rosy for Taiwan's furniture industry. Its exports are projected to soar 30% to reach US$2 billion in 2010, and unit prices are expected to experience five-fold growth.