Foshan Furniture Situation in 2023

As an important furniture manufacturing base in the Pearl river delta Greater Bay Area, Foshan Furniture, Mainly Shunde district, in addition to being home to two Fortune 500 companies, Country Garden and Midea Group, also has the most complete domestic home furnishing industry chain.

Among them, the most well-known is the “twin stars” of Shunde furniture – Lecong Town and Longjiang Town. The former focuses on sales and exhibition, while the latter focuses on production and operation. These two furniture towns are separated by a river, forming a “front shop, back factory” pattern.

In a “Top 100 Industrial Clusters in China in 2023” report released by relevant institutions in March of this year, Foshan’s overall home furnishing cluster ranked 30th, becoming the only home furnishing industry on the list, while the more concentrated market of home appliances had three entries.

Current Scale for Foshan Furniture

According to publicly available data, the industrial output value of Foshan’s home furnishing industry has exceeded 1 trillion yuan, mainly from the Shunde district, covering 26 sub-industries including aluminum materials, hardware, and furniture.

Although Shunde has a complete furniture industry chain, most of its furniture companies are small and dispersed, still lagging behind in terms of cluster effects.

According to information released by the Guangdong Furniture Association in March, there were about 1,740 furniture industrial enterprises above a certain scale in Guangdong Province last year, accounting for about 23.9% of the national total.

Data released earlier by Shunde showed that there were more than 30,000 furniture-related enterprises in the entire Shunde area, including over 9,000 manufacturing companies and over 20,000 furniture trading companies. Unfortunately, only more than 270 industrial enterprises were above a certain scale, accounting for only 16% of the total in Guangdong Province.

“At present, overall it is still relatively scattered, showing the characteristics of labor-intensive industries. There are only a few factories that can achieve intelligent production, and there are no particularly large enterprises,” said a manager of a local furniture factory in Shunde.

Dong Ying, associate professor of the Industrial Design Department at Foshan University of Science and Technology, also stated in the research that the highest output value of a single furniture enterprise in Shunde is about 1 billion yuan, while furniture enterprises with a scale of over 100 million yuan are mostly distributed in Zhejiang.

“The development relying on traditional manufacturing methods has reached a bottleneck, and the transformation and upgrading of the manufacturing industry are urgent.”

To this end, the Interface Home reporter visited the furniture landmark of Foshan Shunde – Lecong Furniture City, which originated in the early 1980s.

Most stores only wait for customers to come.

This nationally renowned furniture and building materials city stretches for more than ten kilometers. Along Foshan Avenue, you can pass through five main stores: Shunlian North, Louvre Palace, Shunlian South, Imperial Dynasty Home Furniture City, and Red Star Macalline.

According to official data in the past, the operating area of Lecong Furniture City reached more than 2 million square meters, accommodating over 3,000 domestic and foreign dealers, catering to both wholesale and retail.

Different stores have different focuses. Most of the businesses in Louvre Palace are high-end brands, including separate import brand halls. The interior decoration is magnificent, and the prices of products generally exceed 10,000 yuan, targeting high-end retail.

Shunlian North mainly houses brand and factory direct stores, with the lowest product price above 7,000 yuan, focusing on mid-to-high-end retail. Most of the businesses in Shunlian South are factory direct stores, with a wider range of product coverage and prices as low as three digits.

The main focus is on wholesale of mid-to-low-end furniture, with Royal Home Furniture City catering more towards wholesale procurement for hotel furniture.

Generally speaking, the foot traffic pattern in offline stores is light on weekdays and busy on weekends and holidays. When Interface Home Furnishings visited the store on the first Monday after labor day, there were almost no customers inside the store.

Store staff are hopeful for weekends but occasionally they can be slow as well. The foot traffic on Saturday, May 20th, was even lower compared to the previous day, Friday.

A store manager at a laminated furniture store in south Shunde expressed his nostalgia for the past when there used to be queues of customers, but now there is more idle time in the store.

Over the course of ten years, the store has moved from a row with significant customer flow to the sixth row with cheaper rent. Only those who have completed their visit to the entire shopping mall would reach the sixth row.

Meanwhile, several furniture store employees informed reporters that there was a brief increase in foot traffic during the Labor Day holiday this year, but almost all of the customers were from outside the province. However, they unanimously stated that the final order acceptance situation was still not ideal.

One salesperson specializing in custom-made solid wood furniture mentioned receiving over 30 orders during the Labor Day period. Another salesperson specializing in high-end French furniture stated that the highest single order value was several hundred thousand yuan, but it did not reach the overall expectation of 600,000 yuan. Both of these stores are located in Shunlian North District, selling mid-to-high-end products.

For the traditional furniture industry that heavily relies on offline foot traffic, the decline in foot traffic is a major blow. Will businesses consider online customer acquisition?

Among the dozens of factory-owned stores surveyed by reporters, only one factory-owned store specializing in high-end French furniture stated that they have already launched online live-streaming sales and have been driving traffic to offline stores.

Intelligent home products are still a minority.

After intelligent home products gradually became a new trend in the furniture industry in recent years, traditional stores have also made changes.

Reporters observed that a small number of intelligent home products have appeared in Shunlian South District.

One store that mainly sells bedside cabinets has already launched smart charging table products in 2020. According to the store staff, placing a phone on the tabletop can achieve automatic charging, and some products can also connect to the phone via Bluetooth for playing music.

Upon careful observation, it can be seen that these are ordinary cabinets with built-in charging devices and speakers. The cheapest product is priced at 400 yuan, with wholesale prices as low as 300 yuan. However, when the cabinet is opened, one can smell the strong smell of paint on the thick plates, and the interior panels of the cabinet have not been laminated.

Despite being a product with an intelligent “gimmick,” the business stated that it was very popular once launched, and there have been nearly 2,000 orders recently, mainly from hotel customers.

Factory-owned stores also focus on the trending functional sofas of the past two years.

A sofa factory-owned store that claims to manufacture for Cheers Sofa showcased an intelligent sofa product. It is a regular three-seater sofa, with only the leftmost side having smart functions, allowing for extension and reclining, which is similar to the products promoted by major recliner sofa brands.

The retail price of this product is around 6,000 yuan, and removing the smart functions makes it 500 yuan cheaper. Many customers who expressed their liking and appreciation for the sofa simply left after experiencing it.

Although this price range is relatively high in the Shunlian South District, it matches the prices learned by the reporter at home furnishing exhibitions in the first half of the year. For example, CBD Home, a Shenzhen soft home brand, has entry-level products priced at around 6,000 yuan at the Dongguan Furniture Fair.

In addition, this store also has a replica of the sofa launched in collaboration with Lin’s Wood Industry and Wang Yibo, replicating the light green color and the design that allows rocking and 360-degree rotation.

It is not difficult to see that this store, compared to others, has a sense of trendiness, perhaps because it can keep up with major brand trends, allowing it to establish a foothold in the second row of the expensive rental area in the South District.

However, stores capable of selling intelligent home products are still a minority in Lecong Furniture City.

The furniture industry chain in Foshan mainly focuses on the manufacturing of finished furniture, which is mainly divided into two categories: panel furniture and soft furniture, including cabinets, sofas, beds, mattresses, and more.

The sales distribution in Lecong Furniture City is also observed in the same way. Meanwhile, the customized home furnishing industry chain, which has been favored by the capital market for nearly seven years, is concentrated in the neighboring city of Guangzhou.

When strolling through Lecong Furniture City, it can be noticed that over half of the panel furniture stores do not have the capability for customization, and if customization is required, an additional several hundred yuan fee is charged.

“To achieve customization, the factory needs to be intelligent, which is necessary for mass production. However, many furniture factories in Foshan still have a traditional factory mindset and do not possess this capability,” said a store manager of an offline panel furniture store. Additionally, many small and medium-sized factories cannot afford the high purchase and maintenance costs of expensive machinery.

However, a major core of intelligent home products is personalized customization. Without the genes for customization, finished furniture naturally cannot be equipped with intelligent home features.

Currently, major well-known companies that focus on intelligent lighting, intelligent panels, and intelligent speakers as the entry point for smart home products are concentrated in Shenzhen, the technological hub. There is a smart home building materials city located in the square of Shenzhen North Station.

Some manufacturers are catching up with the live-streaming trend.

“In the past, I thought our factory missed two trends, one being e-commerce led by Taobao, and the other being live streaming on Douyin (TikTok),” said Zhang Guoyao, the product development manager of a furniture factory in Longjiang Town, which has been established for nearly 20 years.

Zhang Guoyao explained that the factory mainly produces panel cabinets and other furniture products, primarily selling through traditional distributors and not having its own stores. The factory occupies a large area of 10,000 square meters, but it hasn’t been fully utilized “because there is no money to expand the scale.”

This year, the factory collaborated with a Sichuan-based company, Renjian Impressions Furniture, to launch a new brand called Chitu, which was showcased at the Chengdu Furniture Expo in February. This is one of the few factories in Foshan that has collaborated with an external company to launch new products.

“When live streaming (on Douyin) just emerged, the factory knew about it very early on. The first group of people who knew about it were Taobao players, and we had cooperated with them before,” Zhang Guoyao said. However, due to the complexity of the furniture purchasing process and the lack of internet thinking among the factory’s leadership, the factory failed to keep up with the trend.

It’s worth noting that Zhang Guoyao revealed that the factory has been interested in exploring the live-streaming channel on Douyin for the past two years. They currently supply goods to an outsourced team, accounting for 1/5 of their sales. “I think the volume is still not large enough. The remaining 80% is still sold through traditional distributors and individual customers,” he said.

He believes that the biggest challenge for the factory at the moment is sales. “We have fewer repeat customers, both at trade shows and in general. The competition in the industry is increasing, and there has been an emergence of a group of speculators in recent years, which has had a significant impact on our sales.”

Zhang Guoyao explained that these speculators do not need to be responsible for production; they only need to obtain semi-finished furniture from different factories and then find subcontractors for processing before selling them. “These people have their own circles and can achieve lower costs.”

Live streaming e-commerce is seen as a new channel for growth that manufacturers are trying to tap into. However, from the conversation, it can be felt that the factory’s understanding of the entire operation mode of live streaming is still at an early stage and has not been deeply explored.

“I think the market already has a wide variety of furniture styles, and there is nothing new to research. It’s in a saturated state. So, the focus is on marketing, but we don’t know which channel is better,” Zhang Guoyao expressed his confusion.

Recently, a local brand enterprise in Dongguan, adjacent to Foshan, sparked industry discussions with its live-streaming sales. According to the news released by Houjie last week, Yuanmeng Home Furnishings (officially known as Yuanmeng Home Products Co., Ltd.) achieved a 40% increase in total e-commerce sales, reaching 50 million yuan through live streaming sales.

Among them, virtual anchors are the track that Yuanmeng entered early last year. Li Changsheng, the General Manager of Yuanmeng’s e-commerce division, said that the biggest advantage of virtual anchors is that they can work 24 hours non-stop. “We usually sell products during the nighttime and early morning hours. So far, the sales amount has reached 200,000 yuan.”

From a strategic perspective, FarDream’s virtual anchors seem more like a product created to fill the downtime of real anchors, and their earnings only account for a small portion. The virtual anchors are primarily aimed at maintaining continuous sales activities, but in the furniture industry, their earnings are relatively limited. Although virtual anchors can provide some sales support, they cannot completely replace the role of real anchors. Therefore, the development of virtual anchors in the furniture industry still requires further exploration and optimization.

However, in the furniture industry, companies and factories that originated from e-commerce can easily establish a presence offline, ultimately pursuing a dual online and offline approach. But for businesses that started from offline distribution channels, conquering the online realm has always been a challenge, especially considering the significant costs involved, which are beyond the reach of most small and medium-sized factories.

Zhang Guoyao mentioned that they had previously come into contact with a live-streaming training team, which charged a minimum of 150,000 yuan to develop an account through six months of tracking and nurturing. “At that time, even the team’s own account was just starting out, but recently I saw that they gained a large number of followers.” Currently, that account has more than 70,000 fans and is considered to be at an intermediate to advanced level among furniture sales experts in Foshan.

Clearly, as a traditional manufacturing industry, the furniture industry in Shunde, Foshan has seen many manufacturers starting to explore more smart products and live selling. However, they face challenges in terms of cost and short-term effects, and not all companies can immediately launch such initiatives. For them, transforming products and marketing methods will still require more time and effort.

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