Pan Home Furnishing Industry in Foshan-Dongguan Area
The article is translated from the ” yicai.com -China Business Network “.
Abstract
Bay Area Industrial Belt Research:
120,000 companies have left the Foshan-Dongguan Pan-Home Furnishing Industrial Belt and are waiting for vigorous development.
Home Furnishing in Foshan Louvre Museum
The Louvre Museum in Foshan, which was once disdainful of catering to various promotional festivals, also celebrated Double 11 this year.
The Louvre Museum has become a local business card in Foshan, and it is the first home furnishing store in China to be rated as a “National 4A Tourist Scenic Spot”. “In fact, “We aren’t actually on Double 11, but we are just taking advantage of this ‘gimmick’ to hold a wave of year-end promotions.” A salesperson of a furniture brand in the store said. And the furniture in the whole store is 35% off.
In the stores on the first to sixth floors of the Louvre, you can see brand furniture from Foshan, Dongguan, Shenzhen, Guangzhou and even Germany, Italy, France and other places at home and abroad. During working days, there are not many people in the whole hypermarket, but foreigners can still be seen shopping here.
Louvre Furniture Expo Center in Foshan | Visual China
News About Foshan-Dongguan Area’s Pan Home Furnishing Industry
A few days ago, the Ministry of Industry and Information Technology of the People’s Republic of China announced the winners of the third round of cluster finals. Among them, Foshan and Dongguan pan home furnishing industry clusters were on the list, becoming the only advanced manufacturing industry clusters selected in the Guangdong-Hong Kong-Macao Greater Bay Area.
What is Pan Home Furnishing Industry?
The pan home furnishing industry usually refers to the manufacturing and service industries closely related to home life, including building materials, doors and windows, bathrooms, cabinets, furniture, accessories, lamps, home appliances, household items and related services.
The Foshan pan home furnishing industry has a development history of about 40 years, with the complete industrial upstream and downstream chains. According to “Foshan Yearbook 2021”, during the “13th Five-Year Plan” period, the scale of Foshan’s pan home furnishing industry exceeded one trillion yuan. And it has the titles of “China’s Home Appliance Capital”, “China’s Hometown of Coatings”, “China’s Famous Ceramics Capital” and “Furniture Materials Capital”.
The Dongguan pan home furnishing industry has also achieved rapid growth. In 2021, its furniture manufacturing industry has grown by 18.9%, the metal products industry has increased by 12.8%, and the household electrical appliance manufacturing industry has increased by 7.5%. Houjie Town, under the jurisdiction of Dongguan, has been rated as the first “Guangdong Furniture International Sourcing Center” and “China Furniture Exhibition and Trade Capital” successively.
Therefore, Foshan-Dongguan has formed a strong brand effect. Up to now, among over 70 domestic and overseas listed companies in Foshan, the home furnishing and building materials related enterprises including Midea Group, Foshan Lighting, Lesso, Mona Lisa, Wrigley Home Furnishing, Xinghui Co., Ltd., etc, most of which are the upstream or midstream enterprises in the pan-home furnishing industry.
In June this year, Deuce Healthy Sleep Co., Ltd. successfully landed on the main board of the A-share Shenzhen Stock Exchange, becoming the first and currently the only furniture listed company in Dongguan. In addition, Dongguan has also nurtured many local brands, such as city window furniture, model furniture, and the livable home brand of military and horse furniture.
If you expand your horizons to the first-tier cities of Guangdong-Hong Kong-Macao Greater Bay Area, Guangzhou and Shenzhen have more well-known furniture brands. Guangzhou has listed furniture companies such as Oupai, Sophia, and Shangpin Home Furnishing. While Shenzhen has leading enterprises such as CBD home furnishing.
However, furniture companies that rely heavily on offline stores have a difficult time in the post-epidemic era. Digital transformation, brand building, product iteration, e-commerce… A series of changes are gathering and fission within the industry.
Origin of Home Furnishing Industry in the Bay Area
In the eyes of industry insiders, Foshan Shunde Furniture is the origin of the entire Greater Bay Area and even the national furniture industry belt.
About 40 years ago, in Shunde, Foshan, which was still a mulberry fish pond, farmers took advantage of the reform. And they came into contact with a number of foreign-funded manufacturing enterprises. Gradually, they began to undertake the manufacture of industrialized products from all over the world, including furniture manufacturing which also gradually becomes popular locally.
The commerce and trade of Lecong Town, the manufacturing of Longjiang Town, the furniture hardware of Leliu Town, the woodworking machinery of Lunjiao Town, the paint of Ronggui Town….. They started from Shunde, Foshan, and gradually extended to the periphery of the industry in the process of development. But they have maintained close contact.
Furniture Materials Trading Center, Longjiang, Shunde, Foshan Huang Qiong / Photo
The development of Foshan's home furnishing industry chain
“Foshan’s home furnishing industry belt actually revolves around a ‘home’. From construction to decoration, including tiles, coatings, hardware, bathroom, finished furniture, home appliances, etc., constitute a whole home chain.” Shunde Furniture Association Secretary-General Nie Xirui Xiang Xiang First Financial said.
With the extension of the chain, the scope of the entire furniture industry belt is getting wider and wider. “However, the core logistics and material procurement are still concentrated in Longjiang Town in Foshan. While some production facilities are gradually being transferred to surrounding areas, such as Jiujiang Town and Xiqiao Town in Nanhai District of Foshan and Heshan in Jiangmen City.” Nie Xirui said.
Shunde, Foshan, is known by the locals as the “Huangpu Military Academy” of China’s furniture industry. It has cultivated countless craftsmen to bring the seeds of furniture manufacturing to all parts of China and take root and sprout. At present, there are dozens of furniture industry gathering places in China, such as Nankang in Ganzhou in Jiangxi, Xianghe in Langfang in Hebei, Chengdu in Sichuan, Rongxian in Guangxi and so on.
According to Nie Xirui, since the 1980s and 1990s, people from all over the country began to go south to work. Later, group of outstanding industrial workers started their businesses after returning to their hometowns. Relatively speaking, the reproducibility of furniture production is stronger, with low regional requirements.
Comparison of the home furnishing industry in Foshan and Dongguan
Also benefiting from the geographical advantage, in the early 1990s, Dongguan also undertook a number of labor-intensive manufacturing industries, one of which was the furniture industry. Among them, Houjie Town in Dongguan has attracted a large number of furniture factories from Hong Kong and Taiwan to move in due to its geographical advantages and many compatriots from Hong Kong and Taiwan. And that not only brought a lot of capital to Houjie Town, but also brought trendy product design and well-informed information channels. More importantly, they brought a brand-new view of modern furniture and marketing, as well as many well-known furniture brands in Hong Kong, Taiwan and even internationally.
According to data from Tianyancha, there are currently 125,000 pan home furnishing enterprises in Dongguan and Foshan whose name or business scope includes furniture and home furnishing. Among them, Shunde has 53,000 pan home furnidshing related enterprises, and Houjie Town has more than 6,000 pan-furniture-related enterprises.
In Nie Xirui’s view, the furniture enterprises in Shunde, Foshan are relatively more stable and have a more simple business environment. Therefore, they have missed the best period for brand building, but the business owner has the spirit of craftsmanship for excellence. While in Dongguan and Shenzhen, thanks to the local production and construction of many foreign-funded enterprises, the international vision has been opened, and new things are accepted faster. There is also a lot of room for cooperation in the development of the two industries.
Cold winter of the Home Furnishing Industry in the Bay Area
38 years ago, Zhang Weiming’s father established Jin Aobao Furniture (the predecessor of Weifu Home Furnishing) in Shunde, Foshan. As the second-generation successor, Zhang Weiming gradually began to take over the business after graduating from university in 2001.
Zhang Weiming told CBN that at the beginning of the reform and opening up, his parents came into contact with some overseas resources. So they gave up stable job opportunities and went to sea to start a business. In the era when the country was still dominated by hardwood furniture, Weifu Furniture began to produce upholstered furniture, and then gradually turned to the functional furniture track.
But when it comes to this year’s performance, Zhang Weiming told China Business News that the company’s overall sales are expected to drop by about 30% year-on-year this year. The reason, he believes, is that due to the impact of the epidemic, offline sales have decreased, and people’s desire to consume has weakened. Second, due to the downturn in the real estate market, the demand for new houses has weakened, and the demand for natural furniture is also decreasing.
Under the epidemic, Jingyi Furniture, which has always focused on domestic sales, has vigorously developed overseas markets. Regarding this year’s market, Zhu Zhengchen, chairman of Foshan Jingyi Furniture Co., Ltd., told CBN that this year is the most difficult year in the three years since the epidemic, and the performance is expected to be the same as last year or slightly increase.
Related data and the analysis of the whole home furnishing industry
Data from China National Bureau of Statistics shows that in the first 9 months of this year, the operating income of furniture manufacturing enterprises above designated size was 546.79 billion yuan, a year-on-year decrease of 5.5%. The total profit was 30.58 billion yuan, a year-on-year increase of 4.8%.
The report “China’s total export value and total volume of major commodities from January to September 2022” released by the Statistics and Analysis Department of the General Administration of Customs shows that in the first 9 months of this year, the export value of China’s furniture and its parts was 340.420 billion yuan, a year-on-year decrease of 1.3%.
According to the observation of Shunde Furniture Association, the home furnishing industry is not expected to improve until the second half of the year. Nie Xirui also said that large pieces of furniture are not fast-consuming goods. In the case of increasing downward pressure on the economy, people are reluctant to increase consumption, and there are many consumption delays. Coupled with the impact of real estate, the sales of furniture has dropped significantly.
“But the winter will eventually pass, so don’t be too pessimistic.” Nie Xirui said that many resources are hidden under the deep snow, which may eliminate a group of weaker companies. But at the same time, more space and richer resources will be given to these surviving enterprises. In the next 10 years, the development of the industry may be more nourishing.
Industry 4.0 for Home Furnishing Industry
As for where the home furnishing industry will eventually go, in Nie Xirui’s view, one is to take the route of high-end, customization and artwork. The other is to take the route of scale. Under the wave of Industry 4.0, the construction of intelligent factories in the furniture industry has gradually started.
Mousse has built two Industry 4.0 smart factories across the country, one in Jiaxing, Zhejiang, and the other in Houjie, Dongguan.
The production workshop of Rousse intelligent factory Huang Qiong / Photo
The mattress digital factory in Houjie Town has basically achieved automatic assembly, and workers only do auxiliary work. It can produce 5,000 mattresses every day.
Since 2017, Deuce has started the exploration of its sleep industry Industry 4.0. It took three years to maximize the process dataization, production automation, information automation, and logistics automation in the manufacturing process, and to open up the fully automated process from customer ordering to product delivery. In the past three years, the production capacity of main products has increased by 30% to 60%, the labor cost of a single product has dropped by 9% to 59%, and the qualified rate of product quality will reach 99.56% in 2021.
In fact, in recent years, the two major manufacturing cities, Foshan and Dongguan have quietly set off a wave of digital and intelligent transformation and upgrading of the manufacturing industry. In the field of pan home furnishing industry, related projects of the industry leaders have been completed and put into production. Behind the active investment of enterprises in the transformation of intelligent factories, the government’s support policies are also increasing.
Home Furnishing Industry Construction in Longjiang, Foshan
In recent years, Longjiang Town in Shunde, Foshan, has promoted the structural reform of the supply side of the furniture industry, and introduced the “Ten Measures for Revitalization” and “Ten Measures for Strengthening” of Longjiang Furniture. That promotes the high-end development of the Longjiang furniture industry. Among them, a very important measure is to free up industrial land for the increase of capital and production of furniture enterprises.
On September 18, 2021, the Guowei intelligent furniture production base project invested and constructed by Guangdong Guowei Public Furniture Co., Ltd. started construction. This is the first furniture project in Longjiang to settle in the village reformed plot. Only 4 days later, the Jingyi Smart Home Industrial Park project also started construction in Longjiang. The project covers an area of about 84.4 acres and is the furniture industry project with the largest land supply area in Longjiang. It will invest 1 billion yuan to build a digital and intelligent furniture eco-industrial park, and the revenue will exceed 1 billion yuan after it is completed and put into operation.
Jingyi furniture automatic intelligent flexible sponge production line
Zhu Zhengchen said in an interview with the CBN reporter that since last year, the company has had a dedicated team to promote the intelligent transformation of the production side. The intelligence and digitization of the production end is the general trend. For some links that can be mass-produced, replacing manual work with machines and improving the degree of informatization can greatly improve production efficiency and reduce production costs.
According to local media reports, Longjiang has settled 9 furniture and supporting industry projects in the past two years, with a total land area of more than 500 acres, an investment of more than 5 billion yuan, and an expected increase in output value of more than 4 billion yuan. At present, there are 21 projects to increase capital and expand production of furniture and supporting industries, among which many high-quality enterprises have also started listing plans.
Home Furnishing Industry Construction in Houjie, Dongguan
Dongguan is also promoting the Industry 4.0 process of the furniture industry. Houjie Town, on the basis of implementing the “27 Dongguan Bailout Measures” policy to benefit enterprises, issued “16 Bailout Measures” in April, coordinating a special incentive fund of 1.6 million yuan. Encourage enterprises to increase investment in R&D and support digital transformation of enterprises. For enterprises with an annual increase in R&D investment of more than 1 million yuan, a maximum of 500,000 yuan can be obtained according to 1% of the increase in R&D investment. A one-time reward of 100,000 yuan will be given to benchmarking enterprises of industrial digital transformation in traditional industries.
In addition, Houjie Town lowered the entry threshold for key high-quality enterprises to increase capital and expand production projects, strengthen land use protection, and strive for priority allocation of land use indicators. At the same time, the strategy of “expanding space” will be implemented in depth, and full support will be given to the urban renewal projects of “renovation of industrialization”.
Lin Guorong, chairman of the Young Entrepreneurs Committee of Dongguan Famous Furniture Club and chairman of Dongguan Chuangyu Industrial Co., Ltd., said in an interview with China Business News that from the perspective of the future development trend of Dongguan furniture, There are four aspects for enterprises to transform and upgrade: high-end, full-case, standardization and digitization. Among them, digitization is a problem that every enterprise has to face in the future. If the company focuses on the high value-added ends of the smile curve, the headquarters is in the Pearl River Delta, and the market is national or even global. However, if the production link is to be relocated, the overall planning must be achieved through digital means, which is the general trend in the future.
Cooperation and Labor Division for Home Furnishing Industry
“As the two major manufacturing centers in Guangdong, Foshan and Dongguan have a very strong foundation for the development of the pan home furnishing industry. Both Foshan and Dongguan have formed a corresponding home furnishing industry chain, which has opened up upstream and downstream enterprises and has a certain industry influence. As two new first-tier cities in the Greater Bay Area, the two cities are often compared in the home furnishing industry. But in fact, the two have their own advantages in the development of the industrial chain. “ Sun Bin, assistant director of the Guangzhou Commercial Real Estate Department of Cushman & Wakefield, analyzed to Yicai.com.
For Foshan
After the reform and opening up, Foshan has nurtured a pan home furnishing industry covering ceramics, furniture, flooring, metal materials, textiles, hardware, electrical and other sub-sectors around the “home”.
Foshan’s “14th Five-Year Plan” has a clear plan, insisting on focusing on smart home appliances, furniture, ceramics, building materials, green lighting, high-end textiles and other fields, extending the development of industrial design, e-commerce and other pan-home industry service facilities. Improve the digital, intelligent, green, high-end and personalized development level of the pan-home industry. Promote the construction of Foshan famous home furnishing town, pottery town, weaving dream town, consolidate and enhance the popularity and market share of Foshan pan-furniture industry cluster at home and abroad.
For Dongguan
This year, Houjie Town and Dalingshan Town were identified as “Core Areas of Dongguan Furniture Industry Cluster”. At present, the Dongguan Municipal Bureau of Industry and Information Technology has allocated the first phase of capital of 10 million yuan to the seven “core areas of advantageous traditional industrial clusters”.
Houjie Town also invested 10 million yuan to support the furniture industry clustering, high-end, branding, digitization, greening and other directions, and build a high-standard furniture industry cluster core area. Official data shows that there are 62 furniture enterprises above designated size in Houjie Town, and more than 1,000 furniture-related enterprises.
Comparison of the advantages of home furnishing industry in Foshan and Dongguan
Sun Bin said that Foshan’s core competitiveness is concentrated in the upstream and midstream, with a large scale and strong production capacity. Dongguan, on the other hand, focuses more on brand power, and its core competitiveness is mainly reflected in high value-added ports. It has become a global home furnishing center with well-known brands, high-end products, with a complete industrial chain. It has a global home furnishing center with the characteristics of exhibition and trade linkage.
In the same way, Lin Guorong believes that the Foguang-Guangzhou pan home furnishing industry has formed a good complement of advantages. On the one hand, Foshan’s obvious advantage is that it has a complete industrial chain, including building materials, furniture, and home appliances. While Dongguan is more focused on the field of furniture, which is complementary in division of labor. On the other hand, due to the rich industrial chain in Foshan, there will be a clear division of labor between factories and a strong cost advantage. While Dongguan furniture has more than 40 years of development background, coupled with the promotion of exhibitions, it is in the leading position in the development of domestic brands. The status of enterprises, and the intensity of R&D investment of enterprises are also relatively large, and the two cities can learn from each other in terms of cost and R&D.
The cooperation potential of Foshan and Dongguan in home furnishing industry
Referring to the cooperation potential of Foshan and Dongguan, Lin Guorong said that:
- The first is to maintain the advantages of the original industrial chain
- And the second is to explore how to seize the two ends of the smile curve.
Therefore, the cost advantage will become weaker in the future, and the design, R&D and market will become the commanding heights of the pan-home industry.
In fact, after decades of development and integration of cities in the Pearl River Delta, the pan home furnishing industry chain has already extended beyond Foguang and Dongguan.
Taking the home furnishing industry as an example, according to the “14th Five-Year Plan” for high-quality manufacturing development in Guangdong Province, each city in the Bay Area has its own division of labor:
- Foshan relies on Lecong and Longjiang to build China’s home furnishing business and innovation capital, and China’s furniture design and innovation capital.
- An important manufacturing town and the capital of furniture materials in China; Dongguan relies on Dalingshan and Houjie to become the first town for Chinese furniture exports and the capital of Chinese furniture exhibition and trade.
- Zhongshan relies on Dachong, Shaxi, Sanxiang, Dongsheng, Banfu and other famous furniture industrial town, to build a professional town of mahogany furniture production in China, a famous town of Chinese classical furniture, and an important town of Chinese office furniture.
- Jiangmen relies on Jianghai, Xinhui, Taishan to build a traditional Chinese furniture professional town, and the capital of Chinese classical furniture.
- Huizhou relies on Huiyang, Boluo, Huicheng, Zhongkai and other cities to build a demonstration smart customized home furnishing integration innovation park to accelerate the transformation and upgrading of the furniture industry.
