Dining Room Furniture-Overcoming Tougher Times in China With Creativity and Craftsmanship

- 2006/11/23 -
Dining room suites used to be a staple item for Taiwanese furniture makers, who turned out mainly wooden dining tables and chairs to deliver mostly to the United States during the peak in Taiwan`s furniture exports in the 1980s. However, the furniture makers felt their supplies of wood strangled due to export restrictions placed on forest-rich countries literally in the wake of lobbying by tree huggers worldwide.

So, to overcome the shortage of lumber, furniture makers have gradually diversified into metal and glass, which seem to be widely used for dining room suites today. However, some manufacturers are still crafting wooden dining room furniture to meet the demand from top-end markets.

Catching a Second Wind in Furniture Making

Founded in 1988 in Kaoshiung, southern Taiwan, Lucky Home Furniture Co. has since developed into a specialized manufacturer of leather-upholstered furniture, mainly dining room suites, occasional tables and chairs.

"More than two decades ago I ran a small factory in Taichung, central Taiwan, to produce hand bags, purses, and suitcases; but failed because of sluggish business. So, I moved to southern Taiwan to turn over a new leaf in the furniture industry," recalls Ke Yu-chu, company`s chairman. "It was rough going at the start in the furniture industry. I began by turning out furniture in a rented warehouse with a couple of machines that I had installed, then I sold the products locally."

"Being experienced in manufacturing technology for leather purses and hand bags, I got the idea of applying leather or synthetic leather to furniture. Usually, furniture made of metal or wood expose the raw materials. To give metal furniture a warmer look, I decided to upholster the bare metal surfaces in leather or artificial leather to enhance product value," Ke said.

Unlike typical metal furniture exposing bare surfaces, leather-upholstered ones are relatively more labor-intensive. "Leather-upholstered furniture is made half by machinery, calling for manual labor for the other half," Ke explains. "While we purchase some of the leathers locally and import some from Brazil and New Zealand, which are famous for high-end cowhides."

"Compared to relatively stable prices for cowhides, the metallic materials, mostly stainless steel, have seen their prices continue to rise over the past five years. We hope that such prices will ease back to lower levels, otherwise we are in for even harder times and thinner margins," Ke laments.

To survive, Lucky Home targets mid- and high-end markets, which bring better margins. The company not only develops its own products, but also welcomes designs specified by clients. Currently it delivers about five or six containers monthly, 80% of which is shipped overseas, mainly to the U.S., Europe, Japan, and Australia, and the remaining 20% is distributed locally.

"Our motto is to run a business diligently and sincerely, and adhere to strict inspections to ensure quality. Moreover, we also offer after-sales services in the first one to two years after introducing a product," Ke affirms.

Lucky Home has so far been producing furniture in a rented factory, but is now constructing its first plant in Kaohsiung, slated for completion in 2007. To occupy an area of 1,200 pings (1 ping = 36 sq. ft.), the new factory will upgrade the company`s operations to more efficiently meet the growing demand.

"Once the new plant comes online, we will expand 0perations and develop more specially-designed or customer-preferred products to further tap upscale market niches," Ke anticipates. "I believe the future market will be more diversified and value-added innovations will be increasingly popular with young customers. Lucky Home will step up efforts to meet such market trends."



Grin and Bear it in China

Established in 1990, Phoebe & George Enterprise Co. ran a production base with an area of 3,300 square meters in Changhua, central Taiwan. Turning out mainly dining room furniture for about eight years, the company found it increasingly difficult to stay in business on the island due to soaring wages, land prices, and labor-right movement.

Seeing its peers move offshore in droves, Phoebe & George`s outlook was shaken. After carefully assessing the manufacturing environment in China, the company decided to build its production base there. "In the mid-1990s, we experienced obvious drops in orders, which we found were being placed in China. Consequently, we felt an urgency to relocate to the mainland," says Lee Yi-chieh, a senior executive.

In 1998 Phoebe & George finally established a plant in Huizou of Guangdong Province, occupying 30,000 square meters, and in the same year moved all its production across the Taiwan Strait. "In the beginning, we felt out of place both business-wise and in terms of personal life. Unfamiliar with the customs and culture, we were tripped by government red tape and lost money to bureaucratic fraud," Lee reveals.

Nevertheless, the company took the unhappy experiences in stride and saw it as an initiation to be inducted into a new manufacturing environment. Having been in China for about 10 years, the company seems accustomed to the official criteria and the mentality of the local people as well. "Compared to the people in Taiwan, those in China seem less educated and refined. They tend to ask what the company can do for them, not vice versa," Lee points out frankly.

"In recent years we have been feeling the pinch in China as costs have been rocketing--wages have shot up 10-fold since a decade ago. When we just arrived in 1998, a worker`s average monthly salary was about 300 renminbi (RMB or Chinese yuan), but today it is 1,200-3,000 RMB," Lee adds. "Besides, workers often aggressively fight for their rights now that labor-consciousness has been raised significantly."

Currently Phoebe & George has a workforce of around 200-300 in China, who produce per month some 20-30 containers of various furniture, including dining room suites, beds, coffee and end tables, TV stands, kitchen racks, bathroom racks, bar stools, and computer tables and chairs.

Plagued by price hikes in raw materials, Phoebe & George saw a drop of about 30% in orders last year. In the past the company targeted the U.S., but in recent years it has turned to Europe. "Today we export about 80% of our products to Europe, mainly to the U.K. and Germany, where they demand high quality," Lee says.



Lacquer as Technology

Founded in Taiwan in 1989, Der Chyuan Furniture Co. has been turning out a variety of wooden furniture, mainly dining room suites, coffee tables, TV stands, and curio cabinets.

"I started as a professional lacquerer by polishing furniture for local makers. A few years later, I wanted to be in furniture manufacturing and has been in the industry ever since," states Chang Shun-chung, chairman of the company.

"In the early 1990s I started to encounter labor shortages and later on was frustrated by limited imports of lumber and logs. To cope with the situation, I began to think about moving the production lines offshore," Chang recalls.

During that time, many domestic furniture makers either halted operations or moved offshore, mainly to China, Malaysia, and Vietnam. Following in their footsteps, Chang went to Vietnam and Malaysia in 1996 to size up the manufacturing environment, which he found unsuitable due to the different cultures and languages. So, he finally decided to relocate to China, setting up a plant in Dongguan of Guangdong Province in 1998, just a year after China retook Hong Kong.

Currently Der Chyuan`s plant in China employs a workforce of 250 persons, turning out a wide variety of wooden furniture. The company ships some 35 containers per month, valued at around US$800,000. Using sophisticated lacquering technology, the company can turn out high-end classic wooden furniture for sophisticated buyers. "To stand out in the industry, we do everything we can to develop quality products. Our team of four designers is the soul of the company since they decide on the trend of our lines," Chang indicates.

"The manufacturing environment in China has become tougher since 2005 when stricter criteria have been imposed on manufacturers. We therefore have to streamline manufacturing processes and better control operating costs, not to mention upgrading products," Chang adds. "We plan to build our own brand of products to further tap upscale markets in the future."

Today Der Chyuan exports its products mainly to the U.S., South America, South Africa, and the Middle East. The company has seen rapid growth over the past two years and this year it expects an annual rise of 25%-3o% in production volume. "Seeing such considerable growths, we are quite confident of the future. In July this year, we started to sell some of our products back to Taiwan, while the huge domestic market in China is our future target," Chang notes ambitiously. (By Judy Li)