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Jun
2015

Home & Interiors May 2014

International luxury furniture brands are marking time

The explosive growth of the Chinese luxury market pre 2012 was seized upon not only by fashion, accessory, watch and jewellery brands, but also luxury furniture brands, and all had planned aggressive market expansion strategies.

In August 2012, there were 8 international high-end furniture brands operating stores in China, these brands included Natuzzi, Ligne Roset and Hulsta and all were planning to open 10 to 20 new stores in 2013. However, without expectation, these brands were caught on the wrong foot by the government’s anti-corruption policies at the end of 2012. The result was the rapid decline of the Chinese luxury market the following year, but unlike luxury fashion, watches and jewellery brands that are suitable as business-related gifts, the luxury furniture brands have suffered less, but this challenge has still greatly affected their plans.

The graph below shows store numbers from August 2012 to May 2014, the number has actually increased and is consistent with operating numbers previously with the exception of B&B Italia which closed five stores.

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Bo Concept, B&B Italia, Natuzzi, Ligne Roset and Roche Bobois, have each closed 1 store in Beijing, and invested in other cities.

Compared with the slow market performance of International luxury furniture brands, the business for Chinese unique red wood luxury furniture has achieved great success.

Red wood furniture is always popular in China

On May 12th this year, Agence France-Presse reported in an article entitled ‘China’s demand for luxury furniture kills a lot of red woods’, that the rapid expansion of the Chinese demand for luxury furniture was stimulating the illegal deforestation across the entire Southeast Asian region. London-based Environmental Investigation Agency recently also released a report, showing that Chinese demand for high-end furniture and red wood cultural renaissance was creating a problem for forests in Southeast Asia.

Compared with the special emphasis on design and workmanship in European furniture, the Chinese traditional luxury red wood furniture focus’s more on the material quality and rarity. The material of red wood is not a specific wood species, but a range of rare hardwoods that has been defined since the Ming and Qing dynasties. The common high-end woods in the market are Hainan Scented Rosewood, and East India Rosewood.
Hainan Scented Rosewood is the best in the eyes of the Chinese. Owing to the character of hard wood, its uniform structure, anti-corrosion strength and unique wood aroma, this wooden furniture has become the premium variety red wood choice. Because of the rarity, there are few large transactions of Hainan scented rosewood on the market, the price is unpredictable at about 1 to 6 thousand RMB/kg according to the quality. However by comparison, the price of Nicaragua Goiabao that is imported into China, we have some idea of the market price. (Unit: RMB/Ton)

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Red wood furniture can be divided into two categories, traditional and modern red wood furniture. Traditional furniture is used mainly for display and collection, which is based on traditional construction techniques and retro design, such as square chairs and tables, cabinets, etc. A normal set of chairs were valuated at about US$ 5,000 in 2013, rising rapidly to US$ 30,000 today. A whole set of furniture maybe sold for over 1 Million RMB.

The modern designs are more practical, using traditional techniques to make beds, coffee tables, dining tables, bookshelves and desks.

The reasons for the popularity of red wood furniture

The reasons of Chinese preferences for red wood are largely influenced by traditional culture. China is an society that regards official dom highly, traditional presents’ greatest dream is for their child to be selected as a government official and in ancient times, red wood furniture was a symbol of being an official or a wealthy businessman. Collectors these days are attracted to antique pieces.

With the characteristics of its hard and durable nature, unique texture and rich luster, red wood furniture is also applicable to modern life. The quality of the wood is likely to make the furniture last much longer that modern European furniture, which represents good value for money to the Chinese. Some of them will pass the furniture to their offspring as a family heirloom.

Because of the limited resources and the long growth cycle, the red wood is increasingly rare, which makes is quite unique and expensive. When something becomes so expensive in China, people rush to buy it. To own such a high priced product represents face and status to the Chinese and they love it.

Some investors are looking for a safe harbor for their money after the real estate market and the stock market have slowed. They have realised the promising market of the red wood, and it appears to be a good investment choice for them.


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