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Under the Pressure of the Situation, Export-oriented Enterprises Should Accelerate Turning to Exploit Domestic Market
Article origin:DONGGUAN FRUNITURE  |  By Zhang Jingmei     [TIME:2008/7/8]
 

 

 

In March 2008, Guangzhou, Shenzhen and Dongguan 3 cities of Guangdong performed a furniture industry’s feast. The best feature of this feast was that some expert-oriented enterprises which were unwilling to show on the domestic exhibitions appeared, and attempted to enlarge domestic market on the exhibition, such as Taisheng Furniture, Guangrun Furniture.

 

Then, what forced the export-oriented enterprises entered into domestic market at this time with this opportunity? And the affect to the furniture industry will be good or bed?

 

Furniture Exporting Profit Shrinking

 

In 2007, the total value of Chinese furniture and components export has broken through 20 billion US dollars, China was still on the top of world furniture export. But the growth was just on production value, the export quantity was dropped. As for the furniture export situation in 2008, insiders think, the furniture industry’s exporting production value growth was slow down in 2008, export quantity will drop further. Expert analysis, the reason affects the drop and slow down is the export profit’s further shrinkage.

 

Recently years, furniture enterprises’ export profit has been shrunk because of Chinese some policies, for example national export policy’s continually adjusting, tighten monetary policy’s implementation, RMB value’s appreciation. According to authority’s forecast, the RMB appreciation still has large space; export rebate will decrease further or even cancel. And with resource tighten, human resource cost rise and inflation pressure, raw, and processed material price will rise continually. According to the reflection form export-oriented furniture enterprises insiders, the above reasons have “vaporized” 10% of their profit.

 

Besides, in the USA — the major country we export to, subprime lending crisis’s influence has shown, the demand of furniture in America dropped. The reporter understood from one producing American furniture and exporting to Europe and America oriented enterprise that, in the past year, their orders from America decreased 40%.

 

From the above reasons, we can see that export-oriented enterprise’s competitiveness and profit has dropped unavoidable, future situation will be worse. Most export-oriented enterprises have shut down under the strike of economy, and seeking for other resource. In present economy atmosphere, rely on export may have a lot of problems, Board Chairman of Guangrun Company Gao Hanguang said, some years ago, furniture export risk is small, and easy to do, but today the risk enlarged, for enterprise, if depends on only export, will hard to go well. They should go with both export and domestic sale, only this can bear the pressure from outside and inside. For example, recently years Chinese furniture industry suffered American’s anti-dumping, some export-oriented enterprise export only to America has dropped in sales from billions to none, if haven’t other marketing channel, enterprises will hard to afford daily operation cost, and at last bankrupt. Guangrun has recognized the trend, and in the past two years, on the basis of enhance export business, enlarged the domestic sales, and in 2008, the domestic sales will be enlarged further.

 

Domestic Furniture Market Full of Vital Force

 

At the time of export becoming harder, the domestic market filled with vital force. Although in domestic furniture market, the competition is more and more fierce, the demand is also more and more strong. This is surely the best opportunity for export-oriented enterprises with perfect management, advanced technology, high quality etc advantages enter into domestic market. The opportunity, will gives export-oriented enterprises an effect of “every cloud has a silver lining”

 

Recently years, Chinese real estate industry’s hot has brought development opportunity to relevant industries, domestic furniture market is one of that have been driven by real estate. Although form last year end, some big city’s real estate industry is turning cold, as influenced by the short-term regulation, some demand have been inhibited and delayed to buy house, but in the long term, the demand must be released. At the same time, with the citify process quickening and Chinese long-term bullish economy developing, the real estate industry will back hot again in a short time. Besides, with the enact of National 6 Policies and National 12 Policies, all over the country are executing “commercial residential building less than 90 sqm should account for 70% of total building area”, then in the same area, residence will more, and can afford more people’s demand of house, and so the furniture demand will also increase, so, future domestic furniture market will larger, particularly the mid and low-class furniture.

 

Besides, hotel, restaurant, modern office’s increase, will also stimulate the demand of furniture updating. 

 

Except for the strong demand, the market capacity is also huge, the whole furniture industry, has a lot of irregular and lack of personality problems in product, brand, channel, terminal, management etc aspects, furniture consumers know few of brand, and this brings good opportunity to enterprises and brands. For export-oriented enterprises which seeking for domestic market, this is surely the best opportunity.

 

Export-oriented Furniture Enterprises Quickly Turning to Domestic Market

 

In fact, most export-oriented enterprises have recognized some years ago that the export will be harder and harder, and the domestic market capacity will increasingly enlarge, but as haven’t any domestic sale experience, they came across a lot of never-seen problems when turning the market, so most enterprises are still hesitating, and at last drop into a dilemma situation of want to do domestic business, but don’t know how to do, and dare not to do.

 

2008 will be a key year for export-oriented enterprises to turn to sell in domestic market, some insiders even think, if missed the 2008, export-oriented enterprises will be blocked off from domestic market for ever.

 

Haier Group Zhang Ruimin has ever said, “No stabilization without domestic market, no mightiness without foreign market”. Some Chinese scoped export-oriented furniture enterprises have finished the stimulation of fund and technique in long-term marketing practice. For long-term development, the time to back home to build own brand has come, and also a trend.

 

These two years, the step export-oriented enterprises turn to sell in domestic market has quickened. Dongguan Taiwan-funded enterprises magnate---- Taisheng Furniture appeared on the 2008 Spring Famous Furniture Fair for the first time is a mark of Dongguan export-oriented enterprises turn to domestic selling. On the fair, Taisheng Operation Manager Xu Fulian told the reporter that, at present, Taisheng entering into the domestic market still with import manner, when conditions are ripe, they will turn to direct sale manner. Manager Xu told the reporter that Taisheng has set stores in Shanghai. Mr.Qiu-- one of the principal of Taisheng Furniture has told the reporter that Taisheng has started research on domestic market. If the research accord to the company’s expectation, they will turn to do domestic businesses from 100% do export, so as to reduce the export risk.

 

Enterprises joined the fair with domestic market selling, except for Taishemg, still included Dongguan other leading enterprises such as Guangrun, Wanhengtong, Season, Putishu, these export-oriented enterprises have built special brand for domestic market, Wanhengtong’s English village style solid wood furniture “England Village”, modern Chinese furniture “Qin Mu Hao Ting” are all new brands that enterprises created for domestic market, according the principal’s introduction, the achievement of this fair is very good, achieved the expectation.

 

Everything on the fair shows that more and more furniture enterprises which did only export before has turned some of their sales to the wide domestic market.

 

Key point of export-oriented enterprises turn to sell in domestic market

 

Common characters of export-oriented enterprises are: production is large, throughput is huge, supply chain integration and management efficiency is high, have long-term stable customer, profit is stable, and operation standardization level is high. But due to lack of domestic market selling experience, they will easily take the export management system to manage the domestic marketing system, and the result will go contrary to the wishes. All export-oriented enterprises turn to domestic market should know some key points, if enterprise can not be accepted by the market, then rebuild the production line will increase the cost, and reduce the poor profit. Particularly the enterprises only do export, turn to domestic market means second times carve out, the risk will be very high.

 

First must grasp the position. Position is information that enterprises or institutions differentiate themselves from the competition and deliver the difference to consumer. For newly entered market enterprises, the grasp of position and cut-in of domestic market is very important. Mr. Qiu of Taisheng said, in order to enter into domestic market, Taisheng has researched the market for years, and hoped to set a position to accommodate the domestic market atmosphere. Chinese consumption habit is different that of foreigner, same product may like by foreigners but will dislike by Chinese. If try to sell the products with only a few change in shape from export products to domestic market, the enterprise will be just lifting a rock only to drop on their won feet. In 2007 exhibitions, some export-oriented enterprise tried so, and as result, they disappeared in 2008 exhibitions. So, make reasonable strategic planning and positioning with consumers, the competitive environment and the circumstances is the key and fundamental to determine whether export enterprises can or not stand in domestic market.

 

Second must control products. The consumption habits and aesthetic concepts of Chinese and foreigners are different, products popular in Europe and America may not also popular in China, so time must be spent on research of Chinese aesthetic concepts, currently exporting products must be improved before sell to domestic market. At present, sale in domestic market enterprises has two mistakes, one is thought change a little of Europe and American products in shape can sell in domestic market; one is copied domestic hot products. This eager for quick success and instant benefit operation, for enterprise’s long-term development is disbennifit, the product can hardly be accepted by domestic consumers.

 

Besides, brand building is important. Enterprise want to have a certain share in consumer’s mind but haven’t brand is just like a boat without water. Same as other domestic industries, in future, furniture industry will also develop from product competition to brand competition. Furniture enterprises’ branding process will follow the industry’s development to mature. Enterprises turned from export to sale in domestic market are haven’t brand because they were sell products to foreign countries before, so although the enterprises are large, and well-known, but they haven’t any image in Chinese consumers’ mind. For example, consumers may know something of Empire Furniture, but as for Taisheng, a lot of people may even don’t know it is a furniture factory. So, export-oriented enterprises must build up their own brand before turn direction. But, brand must depend on media advertisement to realize access consumer’s mind from enterprise planning smoothly. When furniture enterprises making integrate advertising plan, they should affirm the purpose in every stage with own marketing strategic and brand strategic, and use proper media to blaze abroad their core conception.

 

Export-Oriented Enterprises Join Into the Competition Will Refresh the Domestic Market

 

If large-sized export-oriented enterprises as Taisheng grasped the above key points, with their own management and technology, machinery equipment etc advantages, their strength will be hard to be reached by mid-sized enterprises. The large export-oriented enterprises join into the competition will refresh the domestic market again, then for the industry, it is good or bad?

 

Manager Li of a furniture company said, for some weak enterprises it is of course a bad news, because a lot of large enterprise enter into the market, the demand will unable to swallow all the products and brands. Then, the weak enterprises’ market share will take over by the newly entered enterprises very fast. But for the furniture industry it is good, these export-oriented enterprises controlled better in quality, and their management, technique are unreachable for other enterprises, they will promote the Chinese furniture quality to a new stage.

 

For the “wolves” entered into Chinese market, how should the other enterprises which emphasized on domestic market treat? A marketing director of a furniture enterprise in Dongguan said, the strike is real, but the advantage is different, the key is to see who can grasp the market, change with market. The “two quarrel” in furniture industry, will profit consumer at last.


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