There has been quite a lot of jabber on the pandemic that has plagued developed, developing & underdeveloped countries alike.
Apart from the public health crisis the virus has brought about by itself, there are also several issues brought about by the very nature of the social distancing protocols that several countries are having to follow.
Most of these negative and undesirable effects happen primarily due to the mental issues that accompany the isolation and commercial issues.
There has been much debate on whether the economic cost due to a lockdown far exceeds the public health costs due to the virus itself and today, we are going to cover the economic implications in the furniture market following the global spread of the pandemic.
The Stigma Associated With Buying from China
Before the onslaught of COVID-19, the furniture export market was largely dominated by China, the country had huge towns and provinces dedicated to manufacturing different components of furniture. The large scale of operations allowed it to achieve tremendous cost-benefits while retaining the quality of production.
However, in a post-COVID-19 word, there have been a few new developments.
Firstly, China itself was crippled with a severe nationwide lockdown that led to most of these manufacturing facilities run completely idle which seriously impacted the exports of furniture items.
Secondly, the gradual spread of the virus also caused a number of problems from the demand side of the furniture market overall. This further stifled exports from the country
Thirdly, a negative stigma has become associated with China following the pandemic. This is primarily due to the concerns around the lack of government transparency and also due to the swathes of anti-competitive techniques put into practice by the communist party.
This has led to the number of import orders from China to dwindle to record low levels, primarily due to the stigmas associated with the country and the number of trade wars and geopolitical conflicts the country is engaged in across the world.
None of these facts sound too shocking until one visits the numbers that accompany these stories. In 2018, China exported furniture worth more than 65 Billion US dollars across the globe. Some estimates put the number in 2019 at close to 90 Billion.
In comparison, Germany exported only 13 Billion US dollars’ worth of furniture across the globe. The United States is in a distant 6th position at 7.74 Billion. (Source: Statista)
It becomes increasingly apparent that China was a huge export market, however, Experts have already begun seeing a trend where Furniture wholesalers and buyers worldwide have already begun boycotting their relationships in China are they’re actively looking to source their goods from elsewhere.
This means two things, it presents a large opportunity for companies in the third world and developing countries that couldn’t compete with China’s might – to up their game and become a powerhouse of exports to the developed countries.
Secondly, China was not way too big in terms of design. The factors that made it stand a class apart were the effective reduction in costs due to advanced machinery put into use and the scale in which they could operate.
This is why, the types of furniture exported by China were not of a particularly great design. Although they were of standard modern designs and of relatively higher quality, the level of customization offered was much too less.
This is where companies in Vietnam and India have a golden opportunity to seize the moment as the woodwork, quality, level of customization, and most importantly the designs offered by companies located here are simply a class apart.
For instance, in India, mid-sized companies like FurnitureRoots are at the forefront for seizing this opportunity to showcase some really great designs that encompass all aspects of furniture manufacturing.
Reduced Demand
The pandemic has forced businesses to proactively look for alternatives to workspaces, this is in addition to the complete halt of footfall to restaurants, hotels & most travels worldwide.
This means a fall in demand for commercial furniture across the board which has significantly hit global demand. Furniture that was set up for hospitality segments has dropped to record low levels.
There is little respite on the consumer front as well, furniture is a purchased item that can be easily deferred. Given the tight hold on consumer expenditure, only the affluent segment is likely to drive the demand growth for furniture exports.
However, all things considered, the banishment of China’s products is likely to create a much bigger opportunity for the rest of the countries as compared to the short term fall in demand due to the global pandemic.
In any case, be prepared to see some non-china furniture which are much more vibrant and unique in terms of designs. However, also ensure that you purchase only the best quality furniture since a few companies in these countries do skimp on quality.
