Despite its stature, China's furniture industry faces formidable challenges. Domestic demand stagnates amidst sluggish growth, exacerbated by global factors like interest rate hikes and inventory issues. Rising labour costs and evolving international trade policies also hinder traditional manufacturers, leading to narrowing profit margins despite large-scale operations.
Photo: Dreamstime
In response, many companies are turning to cross-border e-commerce. This shift is driven by high logistics costs for large furniture items and market homogeneity. Products like ergonomic office furniture have found niches on platforms like Amazon, where early entrants leverage manufacturing scale and capital to dominate.
Henglin, a major player in Anji's chair industry, embraced cross-border e-commerce in 2019 under its brand Nouhaus. By offering competitive prices through supply chain efficiencies, Henglin quickly gained traction on Amazon, securing significant market share.
Similarly, Zhejiang-based Loctek entered cross-border e-commerce early with its FlexiSpot brand, focusing on ergonomic products like height-adjustable desks and desk bikes. Despite smaller revenue compared to Henglin, Loctek boasts higher profit margins, driven by innovative business expansions into overseas warehouse ownership, anticipating rising logistics costs.
Loctek's strategy involves strategic land acquisitions near US ports, enabling cost-effective logistics solutions amid a competitive market.
Both companies navigate challenges unique to the furniture industry, where adapting to e-commerce and investing in logistics infrastructure are crucial for sustained growth. The trend towards direct consumer engagement through online platforms reshapes traditional business models, emphasizing agility and market responsiveness.
Source: www.kr-asia.com