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China’s furniture industry faces lower profits
Asia Observatory

16 February 2006

China’s furniture industry faces lower profits

There are reports that China’s furniture industry saw lower profits in 2005 affected by higher production costs. Analysts indicate that one reason is price increases of timber raw materials due to declining timber imports. Analysts estimate that timber imports from Indonesia fell from 960,000 m3 in 2004 to 600,000 m3 in 2005, while those from PNG declined from 1.3 million m3 in 2004 to under 1 million m3 in 2005. The average unit price for timber climbed 15%-18% in 2005. Furthermore, prices for other materials, such as dope and adhesives, rose rapidly together with energy and transportation costs. According to a local furniture association, most manufacturers, especially panel furniture firms, have not raised furniture prices due to strong domestic competition. Only few furniture firms have adjusted the prices of their products. For example, the average price of redwood furniture had risen 30%. Analysts indicate that some of the firms producing branded furniture would increase furniture prices if raw material costs continue to rise. Source:ITTO Tropical Timber Market Report