WOOD FURNITURE INDUSTRY
In 2003, the value of Chinese furniture industry reached US$24.6 billion, an increase of 23.7%
over 2002, with about 25% of total production exported. The industry has maintained a yearly growth rate of over 20% since 1996 and an annual export growth rate of over 15%. Domestically, this growth has been fueled by 30% annual growth in home ownership in China since 1999, a result of government deregulation, rising personal income and increased availability of mortgages. According to some estimates, China will add 5.5 billion square feet of new residential housing every year for the next twenty years and all of it will need to be furnished.
The furniture industry is characterized by strong regional clustering. The Pearl River Delta, with Dongguan at its center, is the largest furniture manufacturing center and China¡¯s preeminent export base, accounting for 1/3 of the China¡¯s total output value and half of its total exports. Dongguan, in turn, is home to a third of Guangdong¡¯s 6,000 manufacturers. The Yangtze River Delta, including Shanghai and neighboring Zhejiang province, has also grown very fast in recent years, emerging as China¡¯s second large manufacturing base.
A serious threat to the industry has been a logging ban in place in China since 1998. China has been forced to rely on imported hardwoods (including 60% of US hardwood exports) and other nations such as Vietnam have been given a competitive opening.
IMPACT OF WTO ACCESSION
China¡¯s tariffs on furniture items, currently at 7.5%, will be completely eliminated by January 1, 2005.
China exported US7.3 billion worth of wood furniture in 2003, an increase of 37.1% over 2002. About half of China¡¯s exports go to the United States, where furniture manufacturing costs are 30% higher. In 2003, China ranked second as a global exporter of wood furniture.