Various measures ease spending

	Tradewinds’ Victorian-style living room set has handcarved birch frames with gold tipping.

The high expense of compliance spurs companies to cut costs by streamlining processes and purchasing materials in bulk.

Faced with swelling material outlay as they follow stricter environment-protection standards in key markets, China makers of living room furniture are adopting different strategies to trim operating expenses.

These regulations are forcing suppliers such as Foshan Yushi Furniture Co. Ltd and Anji Tonghui Furniture Co. Ltd to spend more on procurement. For one, companies have to revamp their network of providers to include only those that offer conformant materials. Further, such manufacturing inputs are 40 to 50 percent costlier than noncompliant variations.

One example of these directives is the Airborne Toxic Control Measure implemented by the CARB in January 2009. The ATCM mandates the reduction of formaldehyde levels in hardwood plywood, particleboard, MDF panels and finished pieces made of these materials.

Further, makers are compelled to use sustainable and lawfully harvested timber to obtain FSC certification for their products. Doing so is also in accordance with the Lacey Act Amendment of 2008, which requires furniture entering the US to have documents declaring the wood’s species and origin country, inhibiting illegal trade.

As part of measures to control outlay, many companies are sourcing manufacturing inputs in large volume, keeping their stocks full to protect against sudden increases in costs.

Further, suppliers are expediting payment periods from 90 to 60 days to avail of substantial discounts. Some midsize and large enterprises also opt to settle purchases in cash, obtaining a 1 to 3 percent markdown in rates.

In addition, makers are boosting manufacturing efficiency to keep expenditure low.

Companies are investing in worker training, particularly in QC, to avoid unnecessary wastage of materials. Systems to keep track of each lot’s weight, quantity, application and order number are in place while a production director audits the ratio of utilization and wastage.

Suppliers are also streamlining processes. For example, Anjui Tonghui has divided its sofa sewing team into smaller groups focusing on different parts. This approach decreases sewing time and defects.

Moreover at the design stage, the company’s R&D team creates models that utilize fewer wood-based panels, taking into consideration product durability and structure. This enables Anjui Tonghi to save 3 to 5 percent in costs.

Currently, the Zhejiang province-based maker’s monthly output reaches 100 FEUs, an increase of about 20 percent from the previous year.

	Baotian’s model 0598 sofa is covered in top-grain or split leather, and utilizes D30 and D35 foam for cushion.

Sofas continue to dominate shipments in the line. These are mostly offered in sectionals or sets consisting of two armchairs and one three-seater model.

The design and manufacturing inputs determine prices.

Fabric sofas: Quotes for fabric sofas range from $120 to $800 per set. Most low-end releases are upholstered in locally purchased T/C or pure cotton and top $250. Frames are also in domestic materials, including softwood, and particle- and fiberboard. These are stapled, nailed and glued together.

For fillings and padding, unwrapped PU foam with a density below 25kg/m3 is adopted. Models also come with sinuous S-shaped springs made from a continuous piece of metal affixed to the frame.

Midrange versions go for $250 to $600 per set. They are covered with domestically procured polyester and linen. Furniture-grade plywood is used for frames. Several layers thicker than ordinary variations, the material is as durable as hardwood but less costly. Oak, pine and birch are also used.

Foam employed is wrapped in polyester, including Dacron, with densities ranging from 25 to 35kg/m3. For cushioning, S-shaped or pocketed coil springs, and self-contained units encased in muslin are adopted.

Prices of high-end releases range between $600 and $800 per set. They are upholstered in stronger imported microfiber or chenille with luxurious weaves.

Products have sturdy frames of similarly sourced kiln-dried hardwood such as walnut, cherry and maple.

These are more resistant to splitting, warping and cracking. Some even incorporate metal frames, although these cost 25 percent more. As a result, 304 stainless steel and aluminum alloy are typically used only for legs.

PU foam with a density ranging from 35 to 50kg/m3 is utilized. They are cushioned with eight-way, hand-tied springs for optimum comfort, support and durability. Upscale fabric sofas usually undergo rust and moisture proofing.

Leather sofas: Both synthetic and genuine types are used in the segment.

A growing line in China, models in PU and PVC leather range from $120 to $1,500 per set. Genuine leather sofas, meanwhile, come in top-grain and split cowhide or pigskin. Quotes start at $400 and can top $2,500.

The least-expensive releases have front parts upholstered in split leather with backs in matching PVC and PU leather. Sets are $400 to $600. Midrange units in top- and full-grain versions go for $600 to $1,200.

Aniline cowhide is the most luxurious sofa material, particularly those from the US, Italy and Australia. Also known as naked leather, it undergoes the least amount of processing, rendering it extremely soft and supple. Models in this material are $1,200 to $2,500 per set.

With regard to design, some products come in classical themes with manually carved wood details, raising quotes 10 to 50 percent.

To enhance user-comfort, a number of models boast pop-out footrests and reclining backrests. Some high-end armchairs perform rocking, swiveling and massaging functions. Prices of these are 20 to 50 percent higher.

Some designs have passed USA CA117 and BS5852 fire resistance standards, increasing quotes 3 percent.

	The model 0612 chair from Baotian has microfiber upholstery and a pocketed coil for cushioning.

Mainland China is home to an estimated 50,000 furniture makers with a labor force of roughly 5 million. These figures are from the China National Furniture Association.

Approximately 10,000 of these offer living room pieces. In addition to sofas, the line includes coffee tables and entertainment units.

The majority of suppliers are privately owned, with a number of midsize and large companies with external backing, usually from Hong Kong and Taiwan.

Small and midsize enterprises generate $1 million to $10 million in sales annually and have 100 to 500 employees.

They have R&D teams consisting of two to 25 personnel focused on countersampling and can release at least 10 designs each year.

Tier 3 players have semiautomated manufacturing lines, while some procedures are subcontracted.

Midsize makers have imported machines such as computer-controlled saws and automatic cutters. Production at most of these factories, however, is not fully mechanized.

Large suppliers, meanwhile, have separate facilities for each product category. Most are equipped with sophisticated vacuum and air filtration systems that ensure a sawdust-free environment.

Some also boast drying machines that keep wood’s moisture content between 8 and 12 percent, preventing shrinkage and swelling. A number even have stoves for burning wood waste, turning heat into an efficient energy source. As means of maintaining quality, top-tier companies also have dedicated testing labs.

Annual revenue for these companies ranges from about $10 million to $30 million. They usually have a workforce between 500 and 1,200, including specialists who handcraft details in high-end releases.

Guangdong and Zhejiang provinces are the main sourcing hubs for all types of furniture in China.

The former is the top production center with the cities of Foshan, Dongguan and Shenzhen playing key roles in the industry. It also accounts for more than 25 percent of the country’s total number of makers.

Dalingshan and Shunde districts in Dongguan and Foshan, respectively, are not only well-developed manufacturing hubs but also major suppliers of materials and components.

The latter is home to about 2,000 enterprises catering to the low-end and midrange markets. A number, however, do not focus on overseas markets, sending their minimal overseas shipments through trading companies.

Dongguan, on the other hand, hosts 2,300 export-oriented businesses, most of which are Taiwan-invested. They focus mainly on upscale designs.

There are 1,800 suppliers in Shenzhen concentrating on board, wooden and steel furniture. Zhejiang is the second-largest hub in the mainland. There are about 2,000 furniture makers in Wenzhou alone, targeting the low-end and midrange markets.