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    Furniture and parts thereof 2001

    Furniture and parts thereof

    1. Industry Overview

    The export of furniture and furniture parts forms a significant part of Thailand’s economy, as the total value of exports in this sector reached close to US $1 billion in the year 2000, representing an important source of foreign currency and revenue for Thailand. As well, it employs a significant number of Thai workers.

    Furniture connoisseurs from around the world have always held pieces from Southeast Asia in high regard, both for their use of exclusive natural materials and elegant styles influenced by the unique cultures and lifestyles found in the region. Thailand's furniture industry is one of the strongest in the region due to its superior production quality, innovative and modern styling, and flexibility in material use, as well as the county's relative political and economic stability compared to competitors in Vietnam, Indonesia, and Malaysia.

    Western style furniture emerged in Thailand more than 200 years ago, when the first pieces were imported from France during the reign of King Louis XVI. These furniture pieces from the West made their way into the homes of Thailand's nobility and the country's wealthiest families, with citizens of lower rank and wealth settling for locally crafted replicas of the fine European pieces. The imported furniture influenced local craftsmen, predominantly newly settled Chinese artisans who quickly became skilled in using Thailand's large supply of teak wood to emulate the classical European designs. Along with production of classic designs, styles began to reflect Thai and regional culture, as well as incorporating traditional materials readily available in Southeast Asia.

    2. Production

    The 20th century saw Thailand emerge as the world's premier supplier of teak wood and related products, with the durable hard wood being used for furniture, flooring, in ship production and in countless other ways. However, unsustainable logging programs, political corruption, combined with unscrupulous business practices severely eroded Thailand's supply of teak wood. The process of deforestation contributed to a series of massive floods in Northern Thailand, which formerly had large swathes of the tropical tree, leading to a countrywide ban on the commercial logging of teak in 1989. The ban jolted the local furniture industry, forcing manufacturers to source imported teak wood or to find a new kind of lumber.

    Thailand's furniture industry quickly adapted to the teak logging ban and has largely relied and emphasized the use of substitutes such as parawood, a processed wood produced from old rubber trees that no longer produce sufficient quantities of rubber. Every 30 years, plantation rubber trees are felled and replanted as the tree's yield of rubber substantially declines after thirty years. The potential supply of parawood in Thailand is almost limitless, as the country is the world's leading natural rubber

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    Furniture and parts thereof 2001

    producer and has vast plantations of rubber trees that are replaced on an on-going basis. The shift in production by Thailand's furniture makers from teak to parawood has energized the local industry, while giving another source of revenue to rubber producers in the country.

    According to the Department of Industrial Works, the wood and furniture industry is currently composed of 8,237 manufacturers, most of them small entrepreneurs located close to raw material sources. The total capital invested in the industry amounted to 60,466 million Baht, employing 201,996 workers.

    Focusing solely on the furniture industry, there are currently 2,458 manufacturers of furniture and furniture parts. Most of them are among the 1,446 micro manufacturers (58.9 percent), followed by 758 small manufacturers (29.6 percent), 257 medium manufacturers (10.4 percent) and 27 large manufacturers (1.1 percent). However, the potential exporters are only medium and large factories, who total 284 manufacturers or 11.5 percent of total manufacturers. Most of these manufacturers obtain promotional privileges from the Board of Investment.

    42.8 percent of furniture and parts plants are located in Bangkok and surrounding areas, while the remaining plants are spread over the Northeast (17.9 percent), North (15.8 percent), South (12.9 percent), East (5.6 percent) and Central region(5 percent). The major factors taken into consideration when selecting production location are: the availability of transportation, marketplace and raw material source locations.

    Based on raw materials, furniture and parts can be categorized into 5 groups:

    1) Wooden furniture

    2) Metal furniture

    3) Leather furniture

    4) Rattan furniture

    5) Plastic furniture

    3. Domestic Markets

    As furniture, especially furniture beyond the basic pieces, is considered to be a luxury item, it is not surprising that all countries which make up Thailand’s top ten export

    markets are developed, industrial countries. Consequently, the export market for furniture and furniture parts is larger than the domestic market.

    Most of the furniture sold in domestic markets is produced from hard wood. This trend is due to the fact that the white color of para wood is unpopular among local consumers. Overall domestic consumption is projected to increase as the Thai government attempts to spur demand in the real estate sector by offering low interest rates. Consequently, an increase in real estate demand is likely to result in higher consumption for furniture among local consumers.

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    Furniture and parts thereof 2001

    4. Export Markets

    Overall, the total value of exports

    of furniture and furniture parts has

    recovered since it dropped

    following the 1997 economic

    crisis. In 1998 the total value

    stood at US $635.7 million, which

    climbed to $794.7 million in 1999,

    and $959 million in 2000.

    However, the trend of export

    levels appears to be on the decline,

    as the total value of exports in the

    first half of 2001, US $561.7

    million, fell short of the $619.7

    million total set for the same

    period in the previous year.

Most of Thailand’s top ten export markets have recorded a significant decrease in the

    total value of furniture and parts imported during the first half of 2001. Only three

    of the top ten importing countries; the United Kingdom, Canada and the United Arab

    Emirates, showed a positive increase over the previous year’s import levels, the rest

    recorded a decrease.

The largest export market for Thai furniture and parts is Japan, which accounts for

    38.6% of the total export market. In the first half of 2001, Japan imported US

    $216.8 million worth of furniture and furniture parts. Japan is followed by the

    United States in terms of export market share, constituting 28.8% of Thailand’s total export market. The third largest importer of Thai furniture is the United Kingdom,

    accounting for 6.4% of Thailand’s total export market.

    The export of furniture from

    Thailand is dominated by

    wooden products, which

    comprise over 70% of the total

    export figure. Metal furniture

    represents the second largest

    product in the category, making

    up just over 10% of the total

    export market. Wooden furniture

    manufacturers have adapted well

    to the shift toward parawood, and

    currently use this material in 60%

    of production and 80% of

    wooden furniture exports.

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    Furniture and parts thereof 2001

    Furniture and Parts thereof Export Value (Million US $) Classified by Countries 1997-2001 (Jan.-Aug.)

    364.61 258.23 315.54 387.76 231.53 216.79 -29.18% 22.20% 22.88% -6.36%

    155.36 179.53 226.44 277.75 188.25 161.65 15.56% 26.13% 22.66% -14.13%

    16.45 20.32 35.13 47.49 30.9 36.06 23.48% 72.88% 35.19% 16.70%

    24.6 31.05 23.96 26.17 17.45 16.18 26.24% -22.83% 9.22% -7.29%

    7.81 13.07 19.55 22.77 15.48 15.54 67.44% 49.57% 16.44% 0.38%

    8.68 8.93 16.67 22.79 16.26 12.07 2.95% 86.56% 36.74% -25.80%

    22.21 20.71 22.18 23.53 17 10.45 -6.73% 7.07% 6.08% -38.53%

    4.06 4.37 7.13 9.44 5.58 6.75 7.42% 63.33% 32.32% 21.02%

    12.83 5.36 9.57 11.95 8.62 6.75 -58.20% 78.41% 24.90% -21.71%

    17.34 13.09 15.46 13.95 9.91 6.15 -24.48% 18.05% -9.74% -37.97%

    633.95 554.67 691.62 843.59 540.98 488.39 -12.51% 24.69% 21.97% -9.72%

    91.78 81 103.05 115.44 78.72 73.29 -11.74% 27.22% 12.02% -6.89%

    725.73 635.67 794.67 959.03 619.7 561.68 -12.41% 25.01% 20.68% -9.36%

    Source: Department of Business Economics

    Furniture and Parts thereof Export Value (Million US $) Classified by Countries 1997-2001 (Jan.-Aug.)

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Furniture and parts thereof 2001

Source: Department of Business Economics

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    Furniture and parts thereof 2001

    5. Future Trends

Various government agencies and industry representatives have been active in

    promoting and encouraging Thailand's furniture exports. The Department of Export

    Promotion (DEP) stepped up its efforts to showcase Thailand's furniture exporters

    during the economic crisis when domestic purchases of furniture slumped by over 70

    percent. The DEP currently works with the Thailand Furniture Industry Association to

    stage an annual trade show, along with coordinating participation in relevant trade

    events abroad.

Furniture manufacturers have also been active in displaying their products in the

    DEP's newly constructed 'Export Mart', which allows exporters a site to showcase

    their products on a permanent basis to prospective buyers visiting Thailand.

    Thailand's Board of Investment has also been active in lobbying for the lowering or

    abolishment of import taxes on imported raw materials for Thailand's furniture

    industry, including those on paint, glue, lacquer and hinges.

With Thailand's domestic furniture sales beginning to recover from the crisis and

    continued strong export sales projected for the future, the industry appears to be

    headed for a bright future.

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