Panels & Furniture Asia Nov/Dec 2018

PANELS & FURNITURE ASIA • Issue 6 • November / December 2018 IN PERSON 17 In fact, five years ago, Panels & Furniture China conducted an interview with a series of Taiwan’s furniture manufacturers, which told a story about the “Furniture Kingdom” that is confronted with many challenges while following industrial changes: from semi-automation to full automation, metal furniture to wooden furniture, and local production to factory relocation. And so, the upgrades in materials for wooden flooring to be used for construction and industry use should not be underestimated. The changes in materials used for solid wood flooring, composite floor and wear-resisting floor reflect the pursue for materials at different times, thus, causing the increasing reduction of timbers used in the flooring industry. As a result, wear- resistant flooring accounts for nearly 85 per cent of all flooring products in Taiwan. In contrast, there has always been a huge demand for packaging materials; with annual consumption of up to four million cubic meters, including logs and sawn timbers, plywood for packaging, particle board, fibreboard and other materials related to timber. As furniture enterprises move away from Taiwan, the timber supply is redirected towards foreign markets — from Mainland China in earlier years to now, Vietnam. However, on the other hand, it is the agents who are responsible for the spot supplies to other regions — by directly selling goods delivered to customers at docks, which then eliminate various costs, including warehousing fees and management expenses. In order to better meet the demand of customers, Mr Hsu set up Fancywood branch office in Vietnam 15 years ago. And together with other Taiwan’s entrepreneurs, they took the lead in making their businesses settled there, which has become an ideal place for whole sheet material and furniture industries. THE IDEAL PLACE FOR ENTRPRENEURS Vietnam is currently the best place for furniture manufacturing among the Southeast Asian countries, and there are two reasons for this in terms of human resources: firstly, the workers are young, with an average age of 27 or 28; secondly, it is easy to recruit workers due to sufficient labour resources. In addition, the workers also have an extensive experience—with over 10 years of experience in the wood furniture and systematic training, which lays the foundation for new enterprises entering the Vietnamese market. Although land costs are higher in Vietnam than the Philippines and Indonesia, Vietnam has the advantage of having a complete supply chain along with easy access to furniture hardware, plastic cement, paints and package process. “Only Vietnam has such a complete furniture supply chain among the Southeast Asian countries,” said Mr Hsu. With a complete supply chain, a young labour force, lower wages (labour cost in Vietnam accounts for about 30 to 40 per cent of that in Mainland China), and local policies that aim to stimulate investments, it is no wonder that more and more people are moving to set up factories in the country. For instance, in Binh Duong, the provincial government will provide tax exemption in the first four years for furniture manufacturers who are taking roots in the provincial industry park. Additionally, these manufacturers will also enjoy 50 per cent subsidies by the government for nine years. PAINS AND GAINS IN THE FUTURE When talkingabout the futuredevelopment of Asia’s furniture and woodworking industries, Mr Hsu remains optimistic about Vietnam. “For the countries along the Indo-China Peninsula such as Cambodia, it is in a stage of immature development; while Myanmar’s self-development has been seriously restricted by land, government efficiency and power resources. However, Vietnam will continue to develop consistently in the next 15 to 20 years in the case of no substitute for India and African countries.” Different from the domestic-oriented trend in China and export orientation in Taiwan, Vietnam will be subjected to both internal and external markets, which in turn will provide “double insurance” for the whole market. While we are not clear about the extent of how China, as the largest market in Asia and even the world, will be affected by the trade war with the U.S., there seemed to be no effect on the “recovery from a sluggish market” in Taiwan’s furniture industry. The influence by various societal problems, including late marriage of young people, declining fertility rate, and downturn of the construction industry, new housing and new furniture have limited contributions in driving the furniture market forward. But this situation has further created opportunities for Vietnam: If the sales are unable to cover the manufacturing costs in setting up factories, why not meet the local demand by directly importing the furniture? The industry development should be established accordingly with the region development. As each country and region faces different external environments, only mutual beneficial model such as learning from others and coordinated development can help everyone achieve what they need. No matter what kind of effects and relocations take place in the furniture industry for a certain region, the industry should strive to improve its technology and operation mode, be more open and inclusive between countries while generating positive energy in the big economic environment. And so, the road to success, though littered with frustrations and setbacks, will be an achievable one. ℗