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Considered as a furniture exporter giant in the industry, China has built a long reputable image in selling furniture to developed countries, especially to the United States, an advantage of its affordable price and abundant variety of choices.
Except for manufacturing furniture for exportation, China has a large domestic market in home decoration and there are more and more local furniture manufactures want to share a piece of the pie. However, there is another trend approaching inland, which is purchasing imported furniture and furnishing products due to the consumption upgrade of Chinese consumers. For the sake of premium lifestyle, higher quality of living experience, aesthetic home decoration to convey a unique personal image, China turned out as a consumer market to welcome western or designer brand of furniture.
Look into current industry market and market development potential, it will amaze us. According to China Furnishing industry development report, finished furniture product has over 724 billion market scale and for custom made furniture one, it covers 235 billion shares and is expected to grow 15% every year afterward. The whole market is expected to reach 4 trillion of China domestic furniture and imported furniture is evaluated to reach 400 billion.
In the imported categories, American style furniture takes the biggest part. It is suggested that the young generation who has strong purchasing power, prefer to buy American style ones due to the influence of America films, drama and faddish lifestyle, so as nurtured in the American up-to-date trend and culture.
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A SUSTAINED GROWING OF HOUSING SELLING AND RENOVATION
Followed by increasing selling volume on apartment, and accompanied with second child policy, a gradually growth in home furnishing and decoration is a destiny for the industry. Suggested that renovation on a 10 year basis, China currently has over 770 million populations of citizens who may plan to re-decorate their living area with way more eco-friendly, good-looking and well-functioned furniture.
By 2020 about 54 million houses will have been renovated under the country’s shantytown reconstruction project, and these renovated houses will also generate demand for more modern furniture and eco-friendly furnishing materials. There is sustained growth in domestic real estate building and selling, as well as an orientation from ruralization to urbanization which can result in a significant need in furniture, decoration materials.
LOWER TARIFF FOR FURNITURE IMPORTATION
After China entering WTO, tariff on furniture dropped significantly. Apart from few particular items still are subject to import duties, a zero tariff has applied to all other furniture products since 2005. As the domestic manufacturing cost increasing rapidly, well-design, comfortable and cost-effective imported furniture appeal to a great amount of Chinese consumers. Most of time, Chinese consider imported products are synonymous as best quality that they are more intending to buy even with a certain degree of premium.
NEW TREND IN FURNITURE MARKET
Contrary to the stereotype of Chinese consumer in buying furniture, Chinese buyer not put a lot of attention on price nowadays, rather focusing on quality, practical and unique style. They look more into the value in it. One element on top of the list is whether the product is eco-friendly. According to HKTDC’s consumer survey, over 90% of respondents look for green material made furniture, and are willing to pay a premium of 14% on average in products made of green, Eco-friendly material. A kind of low formaldehyde content or recycle material is more popular to urban young parents who furnish their home for their upcoming child or middle class who preparing for their second child home. The safety consciousness arises. Chinese parents put a lot of attention on children and insist in give them the best no matter in bunk bed, desk and chairs to all living items.
Turn to the need of urban millennial, the group with greatest consumption potential and take the majority of population in China, is the custom-made furniture take place. As the fiercely rising of housing price, young generation can only afford smaller apartment in big cities, which is under 90sqm on average. That leads to the desires for multi-function, good-to-receive furniture, including closet, built-in kitchen cabinet and so forth. Further, personalized furniture can present individuals’ style.
Another change in furniture consuming is the way of buying it. People buy furniture offline in certain brand store or brands concentrating mall all the time in the past. Some of the consumers still choose to buy at a furniture mall while an increasing numbers of people choose to buy online via official brand website or on an e-commerce platform. Therefore, selling furniture in O2O concept is a top choice.
To reach this, digital promotion stands out in the near future to come. However, in China, it may not be simple or even adoptable to use the same digital marketing strategies applied in any other countries.
ECONOMICS DEVELOPMENT CONTRIBUTE TO FURNITURE INDUSTRY GROWTH
As the standard of living continue improve in China, people became increasingly willing to invest in home decoration. Consumers’ strong and growing purchasing power has driven the furniture market leaps and bounces. In addition, as China’s leading policy of stimulating domestic demand the years to come, urbanization became the force to drive furniture market develop. In the urbanization process, Wage and salary earners, peasant family and new middle class who have settled in towns and cities are the main consumption groups.
Mainland consumers can be roughly divided into three groups based on the incomes and social levels as below.
- Avid consumer: They purchase beloved items with little interest to the price. They usually favor expensive western style, classical Chinese style or avant-garde furniture. They usually have exquisite taste in certain style that they don’t need to shop but order at home or pick a specific date just for them to the furniture mall to purchase.
- Luxury/branded goods consumers: These are the upcoming middle class and urban millennial. They want their purchasing reflect who they are and their unique taste and style that some certain beloved brands maybe their limited choices. Also, they enjoyed aesthetic and cultural elements to make differences from others. Always, they present the image as forerunner of trends in aesthetic, lifestyle and price concepts.
- Average wage consumer: representing the majority of consumers, considering most cost-effective as dominating factor. Search a lot of information and affordable price of furniture whether in a wholesale store or online shopping. Even they focus on price as a evaluation, a certain request on quality and design is important as well. They may try foreign niche brand with reasonable price or affordable price with good brand reputation, for example, IKEA.
Due to China’s large territory, above three kinds of consumers are not just limited in the first-tier cities but even in rural province, a great potential to buy expensive and western style exist.
Further, people focus on brand reputation and quality, or some favor in the unique style only sold oversea regardless of long logistic period. Most buyers are after 80’s or 90’s who proficient in online shopping and digital applications and they think buying international brands of furniture will become a trend due to society and economic development.
DIVERSE CLASSIFICATION OF FURNITURE PRODUCTS
Aside from great population of different levels of consumers, furniture market grows in a range of classification in China market currently. Not only the home decorated furniture stands for the main figure but hotel, guesthouse, office, outdoor furniture and public institution furniture also share a big part of the massive market.
OFFICE FURNITURE A DARK HORSE
Driven by large scale urbanization and China government strategy on infrastructure construction as well as house building to make economy soaring, more and more offices emerge. That, a high demand of office furniture increase. And some well-known company, such as Johnson &Johnson, KPMG would like to improve their workplace by using modern design and functional furniture to a higher standard of better working environment and feelings for staffs.
STAR-GRADED HOTELS DRIVE HIGH DEMAND IN HIGH-END FURNITURE
Another figure shows that Star-graded hotels are a major source of demand of upmarket furniture. Statistics have that four-star hotel owns an average growth rate of 5.3% in China; Likewise, five-star hotels grows in a 1.9% annual rate. In 2018, it is estimated that furniture replacement can hit 7.7 billion in four-star and five-star across the countries.
CHILDREN FURNITURE MARKET INCREASE SHARPLY
An increasing number of children furniture consumers, followed by lots of newborns and children aged under 15 years old accounts for 250 million in 2017. Demand for children furniture is on the rise related to the high-quality living notion in fresh and young parents to provide a safer and healthier environment for children. Among the many consideration factors in buying children furniture, the majority of parents would give priority to safety and eco-friendly. Parents may worry about the non-eco-friendly furniture that may generate toxic and hazardous substances threatening their children’s health.
GUESTHOUSE IN TOURISM CITIES GO UP
There is a classification cannot be ignored that is guesthouse. It became a new trend all around the world, China is not an exception. Lots of guesthouse show up in different cities in various province due to domestic tourism rise, accompanying with preference for travelling experience. A big portion of tourist may try cultural-featured, vague style guesthouse to stay. Therefore, most of the host would purchase fashion-designed, western style furniture to decorate their rent.
HOW TO SELL FURNITURE IN CHINA?
TO BUILD BRAND AWARENESS IS FIRST STEP TO SUCCESS
Chinese people usually search before buy, so build a nice online reputation to make target audience know you and reach you can be a really smart method. In China, the biggest search engine is Baidu which stands for 80% market share of the industry, having over 60 million visitors per day.
GMA worked with Ethnicraft in order to help them to increase their awareness.
A well-established website that people can reach you while searching means an authentic, trustworthy and reputable company. Unlike other international search engine, Baidu serves mainly for Mainland market, so give priority to a Chinese website and with a host inside China helps a lot. Since consumers have less patient with slow loading speed, which giving an expression of not so well established or not so professional to the visitors and they turn their back to you to seek for other furniture brands.
There are various ways to build brand awareness. Either doing SEO or SEM is an effective way, they can precisely targeting your audience and draw more traffic. To have high visibility on Baidu is really important as a long term strategy. If your website ranked at the top of organic searching, somewhat deliver a clear and reputable international company image to potential consumers.
Search engine marketing can also be an adaptable method, since unlike most western digital players, Chinese is not skeptical to ads mostly, rather they consider a brand which is able to present ads has greater economic strength and strong support behind them. That putting ads is more efficient and accurate targeting.
E-REPUTATION SPEAKS FOR YOU IN CHINA
Chinese need to know all detailed news about the brand, a little negative comment about the products or brand may affect their final decision. As they are more careful for brand image, quality and reputation, an extraordinary reputation makes your brand stands out. Chinese consumers seek for high quality or brand assurance with little regard to higher cost. As long as the products make them feel worthwhile to buy and the value speaks for the price, they will not hesitate to act.
A good brand awareness and excellent brand image on social media, Chinese forums, Q&A, online media through positive comment, professional press release is an effective way to deliver.
KOL IS A KEY IN LIFESTYLE FIELD
A rise in economic development leads to new middle class surge, and young white collar workers have more disposable money. According to 2018 salary saving survey under 35 years old, less than 10% of salary on average will be saved in account, young generation are tending to spend their earnings on stylish lifestyle items. To show a premium life style image become a trend. Chinese like to follow lifestyle KOLs on different platforms. KOLs as a projection, speaks for majority of urban white collar people. Having powerful impacts on Chinese consumers, KOLs can drive lots of traffic via interesting content on their social media and the followers usually listen to the advices what KOLs posted.
In China, KOLs not only attract more consumers for your brand but also present a positive brand image of your company to target audience. It is an effective way to promote by accompanying with KOLs and sometimes KOLs is more reliable to some buyers.
NO ONE LIVE WITHOUT SOCIAL MEDIA IN CHINA
There are two main social media tools with most popularity. One is Wechat which ranked as the famous social media in China with over 1 Billion monthly active users. A function called official account build a strong impact on company page. With over 3 billion page views per day, Wechat official account post updated articles for customers and get intense connection with them. Therefore, you cannot skip building a Wechat official account to promote your furniture brand in China. Besides that, official account is available for opening e-shop to direct customers from browsing to purchasing. Chinese consumers also like to share fond ones with their friends on Wechat. By so, brand reputation spread and it works as recommendation to build word of mouth, thus generating more potential customers.
Weibo, another popular social media in China with monthly 411 million active users, should be put in consideration. Based on the huge user volume, communication on Weibo is an effective way to promote your brand and make connection with target audience to deliver more information to them. Weibo as a micro-blogging platform, providing a place for people expressing and sharing interesting stuffs, brands also utilize it for online communication and promotion.
E-COMMERCE AND M-COMMERCE
To shop online is a more popular way for Chinese consumers right now. There are two main e-commerce platforms in China, one is T-mall and the other is JD. The cross border e-commerce expands rapidly, with 90 billion revenue in 2015 and 190 billion in 2018. Also, according to the statistics of Double 11 of 2017 in Alibaba system, T-mall together with Taobao hits US 25.3 billion in one day, and 90% of it derives from mobile end. Addition, it is way easier to operate on e-commerce platform rather than an offline store. As the rising of O2O mode, people tend to experience the products and atmosphere offline, but order online. Due to the convenience and multi-style choices, a growing number of e-shoppers turn to buy furniture online.
And followed the spreading of mobile phone, it is a tendency to purchase via cell phone, instead of a laptop or computer in old days. That is why growing numbers of orders finished on mobile side. People buy on mobile when they are taking the metro, wait for bus, during a break time at work or a short period before sleeping. Mobile phone compared to computer is more convenient to reach then use. Therefore, build a good M-commerce page to develop furniture market in China is a smart option.
Start your expansion plan of furniture market in China, to capture this huge market, digital methods are the best ways to win. Since Chinese consumers rely on digital tools and information a lot, and to attract the target audience, digital solutions play more effective than any other ways.
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