Living-Room Furniture-Taiwanese Furniture Makers in China Holding Their Own Despite Difficulties

Today many Taiwanese makers of living-room furniture have moved production offshore to China or Southeast Asia, mainly Vietnam, with some running operations both at home and abroad. To survive and be more competitive, they are gearing up to use composite materials such as engineered glass, electroplated iron tubes, and carved wood to boost the value of their products, striving to find upscale market niches.

Some Taiwanese manufacturers are reassured to see their efforts paying off-evidenced by the loyalty of customers, while others are still trying to maintain strength in the market. Nevertheless, they all believe that those able to shift with the changes in manufacturing environment and market will survive.

Living-room furniture includes a wide range, while occasional furniture play supporting roles with coffee and end tables, occasional cabinets, TV stands, clocks, and magazine stands. However, occasional furniture with innovative designs can contribute significantly to brighten up the living-room environment.

Industry insiders note that the production of fancy occasional furniture relies on well-established production and design skills backed by well-trained R&D specialists. For most furniture producers, occasional furniture accounts for a minor part of the total output that includes dining tables, beds, and complete living-room suites.

Found Greener Pastures in China

Established in 1987 in Taichung, central Taiwan, Gracewood Co. started turning out gift furnishings such as planters, flower stands, and photo frames. Several years later, the company began to branch out into producing coffee tables, end tables and other occasional furniture, becoming now a prestigious living-room furniture supplier.

Having been in business for about 10 years in Taiwan, Gracewood has become one of the leading manufacturers of occasional furniture on the island, yet felt in the early 1990s more and more difficult to keep production in Taiwan due to the worsening manufacturing environment. Seeing an increasing exodus of its peers, the company finally decided to follow suit and moved some of its production lines to China in 1997.

Taking the advantages of abundant cheap labor, much lower land cost, and incentives offered by the government there, Gracewood performed very well in China in the years after its relocation, motivating the company to shut down the remaining production lines in Taiwan in 2000, and has since never looked back.

Today Gracewood has three plants in Shenzhen of Guangdong Province, with a total workforce of more than 800 persons, but still keeps an office in Taiwan to handle export orders and marketing development. Currently the company ships around 200 containers of occasional furniture per month, mainly to the United States and Canada, which together account for 80%-90% of the company`s total exports.

"In recent years, the manufacturing cost in China has been obviously going up-- wages almost doubling and prices of raw materials up by 30%-40%," indicates Tracy Hu, senior executive at the company. "Moreover, the government is reportedly to soon impose tariffs of about 25% on imported logs and lumber, which would cut into profits since the company imports ample green wood from Malaysia, Indonesia, and New Zealand."

"Besides, uncertain policies and reels of red tape have often pulled the carpe out from under Taiwanese manufacturers in China--usually costing a lot of time and money to grease the bureaucratic wheels-but they persist despite feeling helpless," Hu complains outright.

Nevertheless, Gracewood has seen smooth sailing in China and kept pretty good relationship with clients. "Good quality, reasonable prices, and punctual delivery are key factors to win trust from our clients," Hu affirms. Today Gracewood`s major furniture items are well-designed high-end cabinets in various styles, in addition to coffee tables and end tables. Last year the company started to diversify into office furniture, now actively exploring such segment.



Vietnam Outdoing China in Furniture-making

Established in 2003, Global Orbit Tech Co., an affiliate of Hsinya Fluid Power Co., and a precision furniture-making machinery maker for more than 20 years in Taiwan, "was set up by its parent about three years ago to produce furniture, and now has a plant in Vietnam turning out mainly metal and glass occasional furniture for living rooms," said Sisa Liu, general manager of Global Orbit.

"Seeing manufacturing costs rising in China, we decided to go to Vietnam where labor is cheaper and operating conditions are better, not to mention that more and more foreign buyers prefer sourcing products there instead of China," Liu explains. "Today Taiwanese furniture manufacturers are clustering in Vietnam, making it convenient for us to tap into the supply pool to produce high-end furniture there."

Currently Global Orbit`s plant in Vietnam has more than 100 employees, turning out mainly TV stands, coffee tables, end tables, occasional tables, and cabinets. "Our products are mainly of metal and glass. To enhance the quality, we cover the metal tubes with natural and artificial leathers via a special technique, making them quite different from traditional counterparts," Liu says proudly. "We purchase stainless steel tubes and metal parts from Taiwan and import some raw materials from China. So far the supplies have been quite stable, but the prices are going up."

Global Orbit works mainly on the OEM basis, shipping some 20 containers monthly worldwide, mostly to the U.S. and Germany, Holland, and Hungary. "To be more competitive, we have an R&D team in Vietnam who develops one or two new products per month on average. It`s critical for Taiwanese furniture makers to keep brainstorming new products to stay ahead of competitors in China and Southeast Asia," Liu comments.

To tap the growing demands for LCD and plasma TVs, Global Orbit has recently developed many different kinds of stylish TV stands. Besides, the company has also made a name for itself with its line of modern compact metal furniture.



Serving Only Quality-conscious Buyers

Going back more than two decades, Chen Founder Enterprise Co. is a dynamic manufacturer of wooden dining and living room suites. "Having been in the furniture industry for more than 20 years, we have seen the ups and downs of the industry on the island. Taiwan once thrived on robust furniture exports in the late 1980s and early 1990s, but saw the good times wane beginning in the mid-1990s when the manufacturing advantages deteriorated on the island," recalls Tsai Ya-wen, a senior executive at the company.

Wooden furniture makers in Taiwan have been struggling with supply shortages in logs and lumber since the green movement marched worldwide, gradually limiting exports of wood by forest-rich nations. "It has been a rocky road in Taiwan since the late 1990s. To survive, we decided to move all of our production lines to Vietnam last year, but have retained an office in Taiwan to handle export orders," Tsai states frankly.

Chen Founder produces mostly high-end products, which are fully exported to advanced countries, with Japan being its major export outlet that takes some 80% of the company`s total exports. The remaining 20% goes to Europe and the U.S.

"We manufacture the products mainly on the OEM basis and also develop some items in-house that target niche markets. With about 100 workers in Vietnam, we can turn out not only furniture to fill OEM orders, but also those with innovative designs to meet special orders, " Tsai says.

To stay firmly in the upscale segment, Chen Founder carefully selects its clientele. "We would rather keep a small pool of quality-conscious clients than have many price-sensitive buyers. For years we have been dealing with a group of faithful clients who care more about quality than price," Tsai emphasizes. (By Judy Li)