Market research: Interior design in China
Being one of the biggest economies in the world with 1.38 billion population and 9% average growth rate, China faces increasing urbanization level, with a growth over 50% in a per year basis. In these circumstances, interior design market in China is rapidly shrinking. With a lot of Chinese people moving from villages to urban areas or foreign companies locating their offices and headquarters in metropolitan cities such as Beijing, Shanghai or Shenzhen, more and more companies offer their interior design service in China. The industry need to be able to fit tastes of different types of consumers while implementing office design projects in business districts across China. Customers can be small companies, which seek to minimize their spending on office interior design thus not requiring high quality expensive furniture or lighting, while multinational corporations, for whom office design is crucial for meeting clients and partners, may ask for luxury European furniture with special lighting effects. Similar concept can be applied to Chinese and foreign companies, which may have different preferences in office interior design due to cultural differences. All this implies high pressure on design agencies and variety of material suppliers in the market. Domestic furniture suppliers may offer lower price but worse quality that European furniture supplier. This concept is also applied to other design materials such as lighting, wall murals, office doors and floor cover. Here is our focus on interior design in China.
Furniture market in China
Furniture market has been growing fast for the last few years in China with 16% average growth rate due to global construction and urbanization in the country. Furniture industry is widening every year with new companies entering the market. It has foreign, in particular European, and Chinese suppliers due to diversified consumer demand and preferences. Louvre International Furniture Exhibition Centre, based in Guangzhong, exhibits 60,000 square meters of furniture 30% of which is European. Being one of the main centers representing the major Chinese and European furniture suppliers, it gathers together European top 10 luxury furniture brands. The major furniture styles exhibited, which are dictated by consumers’ demand, are Chinese, Continental, American and Japanese; modern style is dominating among office type furniture. Office furniture market in China is highly competitive and consists of many firms including Chinese, European, Indonesian, Korean and many others. Production value of furniture industry has risen by 6 times for the last decade and currently gives revenue of US$ 12 billion. However, some companies play more significant role in the market than others due to good quality, reputation or experience. They are Lizhiyanghang, Paiger, UE Furniture, Wosen, Victory, Henglin Chairs, CR Logic, Saosen, Diou, Green Link, Sunon, Lamex, Jinwei, Mingli, Xinnou and Shengao with Sunon and Lamex experiencing double digit growth. Of all producers, UE Furniture is the main manufacturer in the area of office seating and it accounts for around 3% of market share. Sunon and Lamex are controlling office desk sector, where each has approximately 2% of market share. In terms of geographic location, almost 50% of office furniture industry is concentrated in eastern part of China, 28% is in southern and only 10% in northen. Furniture store market is growing fast in China with leading European and Chinese brands such as IKEA Group, Jinan Fangzhen Furniture Co. Ltd, Kinhom Group, Shenzhen Hoba Home Furnishings Chain, Yuexing Group. These four companies share most of the market. The industry is growing fast with average growth rate 22.2% per annum with US$20 billion revenue in 2013. The industry accounts for over 86,000 employers and 5,000 businesses and has recently overtook the US as a leading global furniture producer. Furniture store market accounts for 34% of total revenue from China’s furniture sector. However, volume of sales of furniture to public sector is gradually decreasing over the last few years; on the contrary, the increasing demand for furniture comes from private companies in particular European companies, which gradually move their headquarters to urban Chinese areas. As statistical data shows, furniture industry in European countries is gradually decreasing giving a way to emerging global economies, such as China, with comparatively cheap labour and materials. European producers either switch to retail rather than production of furniture or they move their factories to Chine and other Asian countries, where they enjoy the presence of cheap labour and materials. This increases competitiveness in the market as long as European producers have good knowledge and log experience of production of high quality furniture. As data shows, Chinese furniture import is significantly increasing over the last few years being US$ 668 million in 2004 but reaching US$ 1,230 million in 2009.
Lighting market in China
As well as furniture, lighting market in China is growing with 13.4% average growth due to increased demand for interior design materials. International Light Centre, based in Guangzhou, offers 30,000 square meters of lighting products including lighting accessories. This is one of the biggest wholesale lighting markets in China with many foreign and local brands. Lighting industry in China is expanding every year with both Chinese and foreign firms entering the market. As a result of openness to foreign business, the quality gap between Chinese and a foreign producer is gradually narrowing. Chinese producers accumulate knowledge and experience from foreign producers in the market thus increasing their competition and effectiveness. Lighting market in China consists of a lot of manufacturing and selling companies including AD Lighting, Beghelli, Civilight, Cooper, Cree, CX Lighting, Crestron, Dahom,Davinci,Dongsheng, DZ-YC, Eglo, Elec-Tech, ESN Lighting, ET Lighting, Fagerhult,Feelux, FSL,Greeble, Huari, Huati, , Huayi Group, HuaYu Lighting, Ikea, JK Lighting, Jiufo, Kingsun, Koizumi, Meses, Nanker, Neo-Neon, Neonlite-Megaman, NVC, Okes, Olympia, Opple, Pak Electrical, Philips, Plusrite, Tao Light, TCL Light, TCPShanghai, Top Century, Top Lighting, Topstar, TopTech lighting, Toshiba,Tospo, Touve-Gangfeng, Unilumin, Violet Lighting, Yajiang, Yaming, Yankon, Youyao, Zhongfa, Zhongyu, Zhongzhen, Zumtobel. However, leading players in the market, which control considerable part of lighting industry, are Neo-Neon Group, NVC Lighting Technology Corporation, Opple Lighting Co. Ltd, Penglei Energy Saving Component Factory, Zhejiang Yankon Group Co. Ltd, with some companies being international while others being domestic. According to statistical data, combined revenue was estimated to be around US$ 32 billion with 1,742 businesses and more than 370,000 employers in the industry. Such a spectacular growth of the industry is explained by 12% increase in electricity consumption over the last few years. This number is expected to increase in the future due to rapidly growing economy thus boosting lighting industry’s growth even further. The industry is heavily depends on export, which account for almost 60% of total revenue. However, it is expected to drop in 2014 due to quality restrictions set up by United States and EU anti-dumping policies. The industry is extremely competitive and entry barriers are quite low due to a large number of small and medium size enterprises in the market. As a result, top four companies operating in lighting market account for less than 5% of total revenue and top sixty receive over 30% of total revenue. The majority of lighting enterprises are located in eastern part of China due to lack of capital, technological innovations and skilled labour in other parts of the country.
Wall murals market in China
The market for wall murals in China is diverse and consists of many small domestic and foreign firms. The level of competition is very high while entry barriers to the market are low; as a result, a lot of European firms are entering the market and offering high quality wall murals and wall cover. This stimulates domestic producers to innovate and improve quality of its products. Although the market is large and diversified, there are some companies, which enjoy larger market share than others: Artshow Wallpaper Co. Ltd, Guangdong Magnolia Decorative Material Co. Ltd, Shanghai Euroart Decoration Material Co Ltd, Zambaiti Wallpaper Co. Ltd, Wellmax Wallpaper Co. Ltd, Rainbow Decor, Beijing Oriental Glamor Wallpaper, Topli Wallcoverrings, Shangmei Shijia Trading, Shanghai Xinwang Wallpaper, Yuhua Wallpaper, Beitai Wallpaper Products.
Door market, as any other markets inside the interior design industry, is expected to grow at 8.1% annually during the next few years due to increasing demand. As a result, experts expect the revenue reaching 570 billion Yuan in 2017. Demand for doors is growing in both residential and non-residential zones. However, due to shrinking business areas in metropolitan cities in China, the demand for doors in non-residential areas such as offices and shopping malls is increasing much faster. In 2012, more than 50% of total demand came from non-residential areas. Compared to residential demand, which is expected to grow by 6.2% annually, non-residential demand, will grow by 9.5% annual rate. While growth in non-residential is explained by massive construction is business areas, residential demand is pushed by the construction of single-family and multi-family housing. The Central-East region in China is the concentration center of door market and it accounts for around 45% of overall demand in China. However, it is expected that northwest will become the central market region by 2017 due to its rapidly rising annual demand for doors of 9.1%. This is explained by fast developing economic activity, rising income and living standards in the region. Due to high competitiveness and low entry barriers, there is a big number of companies in the market including both local and foreign. However, some companies seems to have slightly bigger market share than others including Hongqing Mexin, Yingkou Panpan Security Industries,Chongqing Specialstar Suit Door, Zhejiang Mengtian Wooden Products, Putian Honglong Muye, Sinocrane Group Jinhe Door Industry Development, Shenyang Zhili Luxury Door Industry, Quanzhou Jiasen Wood, Qiqihar Honghe, Wooden-Door, KD (Beijing) Home Product Inc. The major distributors also include Yongkang Yishite Industry & Trade, Beijing Tata Door & Window Co, Ltd, Zhejiang Zhongnan Jinggong Wood Co, Ltd, Jilin Haoda, Architectural Decoration Co, Ltd, Producers and importers in other countries, USA KD Home Product Inc, Kenls Inc, WOLSELEY Inc.
Market of floor cover is boosting for the last few years due to rapid development of Chinese economy. Due to massive construction of business districts in urban Chinese area, the demand for floor cover is significantly increasing every year. According to resent market data, around 1.75 billion square meters of new floor space will be needed each year between now and 2025 to accommodate China’s urban area. In 2011, the whole floor covering market in China was approximately 12.8 billion square metres. Floor manufacturing companies includes different types of floor cover such as wood, ceramics and carpet. These manufactures and retailers are Nature, Power Dekor Group, Elegant Living, Lamett, F&X Carpet and Feng Ya Carpet and many others. The market is extremely competitive and full of European companies, which push competition further up. As a result, quality gap between Chinese and European producers is gradually narrowing though many interior agencies still prefer working with European manufacturers when high-quality raw materials are required.
Interior design in China
Interior design industry is large in China and demand for interior design service is growing fast though the industry itself has a moderate growth rate of 0.7% in 2009. The main players in the market are China State Construction Engineering Corporation, Gold Mantis Construction Decoration, Shenzhen Grandland Decoration Group, Shenzhen Hongtao Decoration and Zhejiang Yasha Decoration, which enjoy only 1.6% of market revenue of which Gold Mantis accounted for 0.7% in 2013. However, there are many other smaller firms in the market, both foreign and domestic, which are successful. Great diversity and high level of competition makes the industry more open to new comers. As mentioned earlier, industry growth has not been significant over the last few years. However, it brought almost US$500 billion of combined revenue due to large government investment in infrastructure and building construction. Moreover, the industry constitutes for more than 180,000 businesses and over 13,000 employees.
See also: curtains market China