Malaysian Furniture Industry Seeks Opportunities In New EU Markets

Rivalling the US in terms of economic strength and size, Europe's prosperous growth is supported by the European Union (EU). Expanded to a 25-member entity on 1 May 2004, the new EU forms an enormous opportunity for market exploitation. From 2002, the EU as a whole, has been producing less furniture while increasing imports, thereby creating a furniture trade deficit to supply its furniture needs. Slightly smaller than that of the US, the European furniture market is worth about RM50 billion a year after the enlargement. Such an appealing market provides a wealth of business opportunities but it takes a proactive approach to succeed in such a venture. On this note, the Malaysian Furniture Promotion Council (MFPC), an organisation tasked with promoting and developing the Malaysian furniture manufacturing and export industry, organised a seminar on "Opportunities in the New Europe Market and Its Challenges" on 8 June 2004 in Kuala Lumpur. The main objective of the seminar was to encourage Malaysian furniture industry players to penetrate the medium and high-end European market.

The seminar was officiated by the Minister of Plantation Industries and Commodities, Datuk Peter Chin Fah Kui. In his address, Datuk Peter Chin said Malaysians should be proud of the country's furniture industry which has experienced tremendous development over the past 10 to 15 years. "Gaining momentum ever since the discovery of the Malaysian Oak (Hevea brasiliensis) as a suitable raw material for furniture production, Malaysian furniture has now been firmly established as a much sought-after product in many parts of the world, making Malaysia the I0' largest furniture-exporting country in the world," said the Minister. In 2003, the furniture sector remained the star performer in the wood-based industry earning some RM5.78 billion in export, thus surpassing its previous high of RM5.6 billion in 2000. The sector now accounts for about 30% of the entire wood-based sector with furniture being exported to over 150 countries. Malaysia's furniture exports are poised to reach RM6 billion this year and RM7 billion by 2005.

Datuk Peter Chin also highlighted the scenario of stiff competition which the industry players have to confront. He elaborated that the Malaysian furniture industry has two challenges in terms of its growth. Firstly, the need to penetrate the medium and high-end markets and secondly, the competition faced from new furniture-producing countries. "Having traditional markets such as the US, the Far East and Australia where our furniture is commonly found in the lower market segments, the industry will now need to move forward to enter the medium and higher market segments where prices are better and where designs and marketing play a major role. The new EU market, with its wealth of opportunities, is possibly the best starting ground for Malaysian furniture," said the Minister.

Among the guests at the official opening. He added, "The EU market would be considered as the top priority due to their people's higher disposable incomes as well as appreciation for fine furniture. We must ensure a proper entry into the right markets by adding more value to our products. We must strive to improve selling prices and if possible, transform our furniture into a piece of art, and not let it continue to be perceived as a commodity in the eyes of the targeted markets." The Minister noted that Malaysia has several advantages over other countries such as abundant raw materials, advanced equipment and skilled manpower. Coupled with design excellence, hi-tech production capabilities and the Government's full support, he is confident that Malaysia can be an important furniture trade partner to the new EU. The Minister mentioned that he has also instructed MFPC to take a holistic approach on global promotion of the furniture industry, from product development and design creativity to intellectual property rights and international image enhancement, to ensure the sustainability of the Malaysian furniture industry.

One of Europe's leading furniture experts, Mr. Franz Schafer from Germany, was the speaker at the seminar. With 25 years' experience in the furniture industry, Mr. Schafer is a familiar figure in the European furniture circle. Mr. Schafer's presentation covered several main topics such as a general overview on EU and its furniture industries as well as the market potential and furniture trends in the new EU member countries.

Among his recommendations, Mr. Schafer said Malaysian furniture manufacturers must strive to export high quality furniture with good design and fine materials, consequently tailoring to the demands of the high-end markets in the EU. Among the main furniture trends apparent in these regions are furniture with clear-cut forms and lots of aesthetic features, living room furniture in smaller units and modular systems as well as space- saving bedroom furniture with various ergonomics features and the use of some organic materials.

The seminar attracted some 200 participants including manufacturers, exporters, market researchers, academicians and professionals from other furniture-related industries.