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Taiwan's Furniture Industry Recovers Export Momentum

By Judy Li, CENS Furniture

Taipei National Theatre

Government encourages overseas Taiwanese manufacturers to come home Taiwan was once among the world’s leading furniture suppliers, but the island’s furniture industry began shrinking in the late 1980s because of the rising cost of labor and industrial land. Between 70% and 80% of the furniture manufactures which once thrived at home have now moved offshore, mainly to China and Vietnam as well as to Southeast Asian countries such as Thailand, Malaysia, and the Philippines.

However, some of the m migrating Taiwanese furniture manufacturers have kept part of their production in Taiwan, and a handful have kept all 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 1980s, 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. Taiwan’s furniture exports peaked at US$2.4 billion in 1987 and then went into decline, largely because of the factors mentioned above but also because of the liberalization of the Chinese economy. This resulted in the opening up a huge market and the offering an abundance of cheap labor, enticing local furniture makers to look for greener pastures across the Taiwan Strait. In recent years Taiwan’s annual furniture exports have been languishing at around US$1.1-1.3 billion, down by about half from their peak.

With its cultural and linguistic similarity, China quickly became the favored destination for Taiwanese furniture manufacturers relocating abroad. Today, Taiwanese furniture makers in China are clustered in three areas: south, east, and north. Those in the south settled mainly in cities around the Pearl River Delta, 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 centered in Shangdong Province and cities near the Bohai Gulf.

There are currently more than 1,500 Taiwanese furniture makers operating in China, 500 of them in the Pearl River Delta, 300 in the Yangtze River Delta, and the remaining 700 or so scattering 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 (CAPFA) 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.

Chen 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.

Taiwanese furniture manufacturers in Southeast Asia, mainly in Vietnam, have 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 Ming 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$1 billion mark about four years ago.

The elegant wooden bed is one of the upscale furniture items of Hwangs Co., Ltd., one of a few wooden furniture makers that still keep production lines in Taiwan

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 cooperation and competition seem to be fueling synergies among the three.

Furniture makers that have managed to stay in Taiwan have shifted their focus to metal furniture, where 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. The 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 come back. Thanks to efforts by Industrial Development Bureau (IDB), 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 cooperate with school designers in the joint development of innovative products, helping to cultivate furniture talent, and organizing contests to recognize 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 highvolume 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$1.32 billion that year to US$991.58 million in 2009. In 2010 the economic recovery helped boost the industry’s exports back up to US$1.22 billion, and last year’s shipments are estimated at about the same level. The main export outlets are the United States, Japan, Germany, the U.K., China, Canada, Australia, Italy, France, Mexico, Spain, and the United Arab Emirates.