During the last two decades, China manufacturing has exploded as a furniture source for markets throughout the world. And this is not least in the USA. However, between 1995 and 2005, the supply of furniture products from China to the USA increased thirteen-fold. This resulted in more and more US companies opting to move their production to the Chinese mainland. So, what exactly accounts for the revolutionary impact of China on the global furniture industry?
The Big Boom
During the 1980s and 1990s, it was actually Taiwan that was the major source of furniture importing to the USA. In fact, Taiwanese furniture companies gained valuable expertise in the production of furniture that met the demands of US consumers. After the China mainland economy opened up, Taiwanese entrepreneurs moved across. There, they quickly learned to take advantage of the lower labor costs there. They also benefited from the comparative autonomy of local administrations in provinces like Guangdong, which were eager to attract investments.
As a result, although there are an estimated 50,000 furniture manufacturing companies in China, much of the industry is concentrated in Guangdong province. Guangdong is in the south and located around the Pearl River delta. Dynamic furniture manufacturing conglomerates have formed in new industrial cities like Shenzhen, Dongguan, and Guangzhou. In these locations, there’s access to an expanding cheap labor force. Furthermore, they have access to networks of suppliers and constant infusion of technology and capital. As a major port for export, Shenzhen also has two universities which provide furniture and interior design graduates.
China Manufacturing of Custom Furniture and Wood Products
All this helps to explain why China manufacturing offers such compelling value for US furniture companies. The products incorporate design features that cannot be cost-effectively replicated in US plants, and these include the complex finishes that are demanded by US consumers, often needing at least eight clear, stain and glaze coatings. China manufacturing has an abundant supply of coating companies with extensive US experience, who provide expert technicians to work with furniture producers. These finishes also allow the use of less expensive wood species.
Real Savings Benefits
Along with the design quality, China manufacturing costs are low. Building-space costs per square foot are about 1/10 of those in the USA, hourly wages even less than that, and these low labor costs justify simple single-purpose machinery, which is cheaper. In addition, there are much lower overhead costs, as China manufacturing plants do not have to meet the same stringent safety and environmental regulations as US plants do.
These manufacturing savings more than balance out the cost of shipping a container of furniture across the Pacific. In fact, the cost of shipping a furniture container from Shenzhen to the US west coast is quite affordable. It’s about the same as that of transporting a trailer of furniture from the east to the west coast. This low transport cost means that it’s easy to transport North American hardwood lumber and veneer back to China for use in furniture manufacture, using the empty containers. The imbalance of trade means the costs of transit back to Shenzhen are one-third of the transit costs from Shenzhen to the USA.