With all eyes on the Middle East, Asean nations are rewiring their approach to cater to demand emanating from the region reports MANISHA KOSHY
South East Asia is emerging as a force to reckon with on the global furniture manufacturing circuit. With some of the largest resources of timber, the region caters to a large demand emanating both from within and outside its own regional boundaries. And now thanks to extensive investments in design research and modern technologies, firms in the Asean region are on the path to ensuring their brands have greater global receptivity.
The Asean furniture shows held across South East Asia in March 2009, provide ample evidence that furniture manufacturers are moving at par with market trends and that greater push towards better design and innovation is ensuring that the region has a strong bargaining power in the Middle East. However, post show reports indicate that the partnership is now free flowing in both directions.
At the 26th Asean furniture show in Singapore, there were new initiatives launched to ensure that the region and Singapore in particular forge ahead on this route to cement ties with the Middle East. According to the SFIC-SPRING Furniture Industry Survey 2008, Singapore’s contribution to the world furniture market stood at US$3.4 billion in 2007.
Singapore Furniture Industries Council (SFIC) is the official representative body of Singapore’s furniture industry and represents 95 per cent of the furniture manufacturers in Singapore, 65 per cent of whom have subsidiary manufacturing plants in the region, including China, Indonesia, Malaysia, Thailand and Vietnam. Singapore’s furniture industry which enjoys a four decade history, has evolved from small workshops offering basic furniture, to highly evolved business enterprises that have today, built up strong global positioning through the development of customer-driven, innovative, creative design-motivated furnishing competencies.
Comprising more than 2,000 companies employing in excess of 14,600 people, the Singapore furniture industry is growing at an average of 15 per cent per year, twice that of the global average forecast in CSIL Milano’s World Furniture Outlook 2007.
Drawing on Singapore’s unique blend of Eastern and Western business practices, up-to-date design capabilities, efficient methodologies and versatile production resources, Singapore‘s furniture companies are fast gaining international recognition as trustworthy and customer-oriented business partners, offering a diverse portfolio of furniture solutions for the global market.
Continuously exploring new frontiers, these firms are branching out to new markets under the newly created brand Singapore Mozaic, which brings together a collection of successful Singapore furniture companies that offers a diverse portfolio of consumer, business and specially crafted products.
Last year, Singapore mosaic debuted with 12 companies at Index 2008, as part of the Singapore Pavilion. They enhanced their 2009 IMM cologne presence and participated for the second time at the Salone Internazionale del Mobile 2009.
These initiatives are assisting furniture companies spread their wings into virgin markets such as the Middle East. Among them is a Singapore SME, Grandwork Interior which has managed to clinch commercial projects with a high-end lifestyle brand in Dubai.
Besides this SFIC is now paying close attention to developing a design focus among its members. “Singapore based firm Office Planner is all set to strengthen its design capability by working with renowned international designer, Karim Rashid, on a new home and office collection. Office Planner believes that the strategic partnership will enable creative knowledge and skill transfer that will help develop sustainable, innovative designs in a competitive marketplace,” says Lee Yi Shyan, Minister of State for Trade and Industry at the official opening of the International Furniture Fair in Singapore that occurred in March.
He said that working with versatile international designers like Karim Rashid is one way for Singapore furniture companies to move out from competing in the mass market where margins are thinning. Rashid was one of the main guest speakers to address the Furniture Design Forum at the Asean and Singapore Mozaic.
On the occasion Lee Yi Syan also announced the launch of the $1.4 million Design DNA Programme which will help establish Singapore to become the Asian hub of design excellence.
Design DNA stands for ‘Develop design capability,’ Nurture local design talent ‘and ‘Accelerate Business growth’ through design adoption.. This 3-year programme will include a series of design seminars and workshops, overseas immersion programmes and study missions.
SFIC hopes to nurture over 300 local designers in the next 3 years. The industry also hopes to see a bigger pool of experienced designers on whom they would be able to tap and build innovative designs in their companies’ DNA. “I applaud the industry’s focused approach and strongly encourage designers and enterprises alike to make use of Design DNA to develop and cultivate innovative, unique designs that will differentiate yourselves from the competition, create new market and demand for your products, and help Singapore become a centre of design excellence in Asia,” said Shyan.
Elsewhere in the region too similar drives that are focused on growing market share are ongoing. With a reserve of probably the largest timber resource in the world, Asean nations have the potential to leverage this on the global front.
After all whether it is teak wood or Abaca which is an Asian plant similar to the banana leaf whose fibres are used to make furniture materials; Nyatoh, which is Indonesian redwood that is moderately durable and made of medium texture or plain Rattan which is endemic to these habitats and used to make wicker woods and furniture; Whether it is crushed bamboo which is used to coat all types of wood to render a bamboo-like finish or then plain MDF which is medium density fibreboard made from wood fibre – the abundance of all these types of wood lend an impetus to the furniture trade of the region and their ability to increase market share in the imports of the region is growing exponentially.
Indonesian exports to Middle East have risen dramatically over the previous three years. “In 2006, we exported US$48 million to the region. Whereas, the number grew to US$60 million in 2009 where UAE was the main market followed by Turkey and Saudi Arabia,” says Ir Hartono, director, ASMINDO, the Furniture Trade Council for Indonesia.
As to his expectations from the Middle East given the present climate, Hartono says, “First we perceived the region as not being extensively affected by the financial global crisis, however now we know otherwise and expect that this will have an effect on our exports too,” says Hartono.
Nuturing ambitions that will see Indonesia among the top five suppliers to the Middle East owing to similarities of religion and culture, Hartono says, “Through extensive support from the Indonesian Trade Promotion Centre we would like to evaluate further avenues to grow participation in the growing real estate projects in the region. More importantly we like to focus on furniture supply to the hospitality sector and then the residential sector,” he declares.
Exports to the Middle East from Philippines include wooden furniture for kitchens, bedrooms and offices and furniture parts/components. Metal and plastic furniture is also imported by the region. The Philippines plans to increase penetration, expand product ranges and intensify customisation says Chamber of Furniture Industries of the Philippines outgoing president, Roxanne Aquino. “We also would like to build awareness of our extensive products and would like to organize in business matching to and from key markets such as the Middle East. We would like to study the consumer behaviour, lifestyle and consumption patterns in the Middle East. What’s also on our priority list is to arrange an organized and authoritative certification process of exports (i.e FSC & Mutual Recognition Agreements with Middle East companies,” she adds.
Quite optimistic about the outlook on this market, Aquino continues, “Though a number of Middle Eastern economies are projected to post their first budget deficits since 2002, their governments (with their huge reserves) are still focused on developing the non-oil economy which includes sectors that we can cater to.
“We are aiming for an incremental increase of 3-5 per cent in the annual furniture & furnishings exports to the Middle East taking into consideration the current global economic slowdown. Our intention is to eventually be the leading Asian player in our target segment (the growing Specifier segment) in the Middle East,” she adds.
But such a growth cannot be seen unless there is a fresh look at how the region will have to be serviced. “ We have plans to intensify our capacity building efforts in order to meet the rigid requirements of the Middle East and to continuously improve the quality, design & eco-friendliness of our produce while remaining competitive. We would also like to expand the breadth and depth of knowledge of industry trends” says Aquino. Plans are also afoot to work harder to develop Middle Eastern “sensibilities” and create products aimed at niche markets and professionalise certification process of products for export.
Elsewhere within Asean, Thailand too expects much from its participation in the regional construction boom that is throwing up myriad opportunities for everyone. Thailand’s main furniture exports to the Middle East include office, residential and contract hospitality furniture. “Even within the current crisis the Middle East has a strong potential purchasing power. Thailand would like to have a 10 per cent market share in the Middle East market by 2012. To do this it is imperative that we start out on a campaign which has people associate Thai furniture with good design, quality, excellent value for money and as being eco-friendly. We hope to increase our sales channels in the Middle East by appointing local sales distributors and agents, by encouraging local Thai brands to set up stand alone showrooms in the region,” says Kitti Trakarnsakdikul, honorary chairman of the Thai Furniture Industry club.
Especially when it comes to contract furniture, manufacturers in Thailand have experienced strong growth over the past decade. While domestic demand suffered significantly during the economic crisis, exports have remained buoyant with the principle destinations being Middle Eastern countries such as UAE, Qatar, and Saudi Arabia .
In 2001, The Federation of Design and Construction Services of Thailand (FEDCON), a consortium made up of nine companies was formed to build the 2006 Asian Games Village in Qatar. The best route for Thai businesses to make inroads in Qatar was through forming consortia made up of four or five companies as it was difficult for a single company to effectively penetrate the market and compete with local operators.
As a pioneer, FEDCON is now ready to act as a consultant for Thai investors interested in Qatar . The Qatar Ministry of Municipal Affairs and Agriculture awarded the $28 million contract to build the 2006 Asian Games Village to FEDCON in 2002.
On completion of the 2006 Asian Games, FEDCON had a contract to convert the Asian Games Village into a medical complex called Hamad Medical City , designed to help build Qatar into a medical hub in the Middle East . The US$85 million facility, which was completed last year now has three hospitals with a total bed capacity of 1,100 contained in three towers. “With strong government support, Thai businesses could have a lot of opportunities available in Qatar,” concludes Trakarnsakdiku.