Furniture sector growth aligns with real estate boom in 2014

CEBU, Philippines -  While the real estate sector is expected to continuously take an upswing this year, the furniture industry will likewise take the rosy path as it has consistently been gaining a stronger grip on the domestic market in the last couple of years.

PhilExport-Cebu executive director Fred Escalona said that the furniture industry will have an advantage in 2014 as it aligns with the booming construction and real estate industries.

The domestic market this year will turn its eyes on the locally made furniture and furnishing, as noted in recent years, Escalona said.

New hotels, resorts, restaurants, condominiums, commercial buildings are seen to contract local furniture makers for their furnishing needs, and that purchase of imported furniture from the local market is seen to decline.

Local furniture makers confirm Escalona’s projection as it projects 10 percent growth this year on top of the robust local as well as improving export markets.

PhilExport-National trustee Myrna Bituin said that exporters and even non-exporters can serve the huge domestic market this year—even more.

“The local market buys billions of pesos worth of furniture overseas. Majority of companies that do researches, are open to the market, invest in design and in their people, they have always survived,’ Bituin said.

The lady export sector official added that there are some local companies that focus on the country, citing as an example a small group of manufacturers in Aklan that cater to hotels and resorts in the area.

“You save on your freight cost and you are here—serving the country. For those who are mechanized, for those who know about design, they can serve the local market,” she stressed.

Bituin also emphasized that the project of the Center for International Trade Expositions and Missions (CITEM) about branding also plays an important role in boosting the sector.

Although the domestic market is active now, she warned that companies have to work harder to brand their firms and their products.

She said that the export market is still growing despite the slowdown in demand from the United States.

She mentioned the Middle East as one of the growing markets for the local wood sector, while the Philippine exports to Japan is still huge due mainly to the high demand for pre-fabricated housing components.

“Europe is [also] a good market. Europe is very traditional--they can sell your product for 10 to 15 years. So you become good in what you are doing because it is the same product that you have been doing for the past 10 years,” she told furniture makers.

 Meanwhile, Cebu Furniture Industries Foundation Inc. (CFIF) president Angela F. Paulin in an earlier interview underscored that now that the Philippines is seen to be one of the biggest markets that will be shared by the local furniture makers, industry players are confident of market strength, despite the availability of “affordable” imported home furnishing products.

 â€œWe can’t go on a price war with the imported products like from Malaysia and China. We are much leveraging in the aesthetics and quality,” Paulin said.

The local furniture makers are now hitting the big-ticket furniture clients, such as hotels, condominiums, and other institutional customers, Paulin said adding that the industry is now taking advantage of the increasing demand for custom-made furniture products.

“We are now more sensitive to what the demands are,” she said expressing confidence that shift of market focus among the furniture companies in the Philippines, specifically Cebu is seen to sustain the industry if not in the medium term, but in long term.

Paulin admitted that the weakening of the global furniture market is not only due to the  financial crunch experienced by the giant economies like the United States and Europe, but other factors like natural calamities, disasters and political issues also affected the furniture export market.

While the local market is now taking the spotlight as the ‘savior’ market for the local furniture makers, it is also facing a challenge in embracing the production change, as they are more identified in producing only smaller-scale furniture pieces. Mass production is not yet the local makers’ forte.

Philippine Constructors Association (PCA) president Augusto Manalo said despite the aggressive campaign of furniture exporters announcing their shift to local market, the Philippine market both retail and institutional consumers are still inclined to buy imported furniture or home furnishing products.

About 80 percent of the Philippine furniture and home furnishing demand is still coming from abroad.

In fact, importation of home furnishing and accents in the Philippines grew by 67 percent as of October 2012.

“Yes, we have the capability, good design, and quality, but the problem now is how to translate this capability that would be appreciated by the public in general,” said Manalo.

If local players will not put their hands together and corner the profitable market for Philippine home furnishings both residential and institutional sectors, “we will be continuously eaten by our competitors.”

Largely, the retail consumers are still buying the imported home furnishing products, and even some new hotels and resorts or even restaurants are importing their home furnishing requirements from other countries. /JOB (FREEMAN)