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| | This set from Fenghua Hartsun includes single- and 2-seater sofas. |
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The latest sofas utilize imported genuine leather, Russia fir and iron.The latest sofas from China come in an expanded range of materials as suppliers deal with rising costs. Because maintaining current prices would cut into margins, a growing number of companies are increasing value to make the higher prices palatable to customers. The use of imported materials, which raise product quality, is among the popular steps taken toward this end. Foshan City Zhihao Furniture Co. Ltd, for example, employs genuine leather from Brazil and Italy. Models in the material are typically 5 percent more expensive than older releases. Other suppliers are taking the opposite route by utilizing less costly materials, which can reduce final prices by 2 to 3 percent. One manufacturer has begun replacing larch with Russia-sourced fir. In addition, makers such as Sunya Garden Outdoor Furniture Co. Ltd are emphasizing iron products. These versions are priced between 10 and 20 percent lower than standard aluminum sofas and deliver comparable performance. Reacting to the ongoing labor shortage, many businesses are improving living conditions in order to retain existing and attract new staff. Foshan City Zhihao fits its workers’ dormitories with air conditioners and computers. Sunya Garden has installed air-conditioning systems and televisions in its dormitories as well. At Zhejiang Jinmao Bamboo & Wood Furniture Co. Ltd, medical insurance and housing funds are offered to employees. The supplier even provides gifts during traditional Chinese festivals, and arranges travel and educational opportunities for advanced workers. Select makers are shortening the effective period for prices due to the yuan’s appreciation. Estimated value changes for the next six months may already be factored in prices. Preferred customers, however, are often given discounts. Some companies also try to collect earlier to avoid losses from currency revaluation. Prices for China-made sofas climbed between 2 and 10 percent in the past three months due to surging material and labor costs. With petroleum outlay on the rise, further price increases of between 5 and 10 percent are foreseen in the next half-year. Expenditure for the various materials, including genuine and synthetic leather, foam, aluminum, rattan and wood, is now 5 to 40 percent higher than the same period in 2010. Currently, Zhejiang Jinmao spends $3.01 for each meter of PU, reflecting an increase of 8 percent over June in the previous year. In the same month, polyester wadding was at $2.24, up 7 percent YoY. Labor costs are now 5 to 15 percent more than in 2010. Companies based in Guangdong and Zhejiang provinces, in particular, are severely affected. These coastal locations are China’s main furniture hubs. Currently, inland cities offer nearly the same wage levels and lower living expenses. To keep staff headcount adequate, Guangdong and Zhejiang makers are resorting to raising salaries. In addition, suppliers that ship to the US are anxious about the Formaldehyde Standards for Composite Wood Products Act. Implemented in early July 2011, the legislation reduces allowable emissions from 0.3 to 0.09ppm for particleboard releases. Composite wood models are now limited to 0.05ppm instead of the previous 0.2 level. According to interviewed manufacturers, only E0-grade panels can meet the requirements thus far. Utilization of these parts, however, raises costs by 15 to 30 percent. A 120x1.4x18cm panel, for instance, goes for $17 if E1-grade and between $21.09 and $21.64 if E0-grade. The regulation is causing select companies to consider shifting export focus to Europe instead of the US. The appreciation of the yuan is affecting margins as well. From 2005 to 2011, the currency’s value against the US dollar rose more than 25 percent. The price increases generally affect small and midsize operations, which compete mostly via prices, to a greater extent than large enterprises that leverage quality and variety.
Sofas in diverse materials
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