exporters go downmarket as sales slide

The Nation

The global financial crunch has hit all local manufacturing sectors, including high-end furniture, prompting exporters to focus more on low-end and middle-market models.

Thai Furniture Industries Association president Paiboon Pinitkanchanapun yesterday said niche products were facing difficulties everywhere, both here and abroad, due to purchasing power falling in line with the economic turmoil. As a result, premium goods have become hard to sell.

Due to the US sub-prime mortgage crisis, exports of premium Thai furniture products have dropped not only to that country, but also to the European Union.

However, manufacturers that are focused on mass production - 90 per cent of the industry - have not been much affected by the crisis. For instance, US retail giant Wal-Mart has maintained the same level of orders for mass-produced Thai furniture. Swedish-based home-furniture retailer and distributor Ikea has signed an agreement with the SPS Group in Chachoengsao province to purchase a Bt15-billion lot of furniture.

"It is possible the industry's export value will turn from negative growth of 3.8 per cent last year to positive growth of 3-5 per cent this year," he said.

Verachai Kunavichayanont, vice chairman of the Federation of Thai Industries Furniture Industry Club, said the world's stock of furniture had dropped last year, due to the sluggish economy. Manufacturers even closed down operations in China.

"The local industry's overall exports are expected to recover in the second quarter, and consumers will shift from premium Italian furniture to quality Thai products," he said.

Department of Export Promotion director-general Rachane Potjana- suntorn said his agency was hosting the Thailand International Furniture Fair 2009 in Impact Muang Thong Thani's Challenger Hall from March 11-15.

Some 180 Thai and international furniture producers will participate. The theme will be "Quality and Safety", in order to ensure market access against non-tariff barriers that hinder export growth.

Rachane said the fair would also work under the concept of "Imagine Green Living", with an emphasis on furniture made from natural materials.Last year, the value of the Kingdom's furniture exports dropped 3.8 per cent to US$1.24 billion (Bt44.95 billion). It also plunged 31 per cent year on year to $70.23 million this past January.

 Japan is the biggest importer of Thai furniture, accounting for 27.7 per cent of the exports, follow by the United States at 18 per cent.