Local firms try to come to terms with drop in market share as well as effect of slowdown

Shunde, the hometown of kung fu screen idol Bruce Lee and other martial arts legends, has a fight on its hands. This district of Foshan in Guangdong province is also known as the cradle of the mainland's furniture industry.

Visitors check out a high-tech mattress at the Qianjin Exhibition Center in Shunde, Guangdong province. Provided to China Daily

Since the early 1980s, taking advantage of its proximity to Hong Kong, more than 2,600 furniture makers and 3,000 dealers have set up shop along national highway 325, which runs through the towns of Longjiang and Lecong in Shunde.

Neighboring cities in the Pearl River Delta, such as Dongguan, followed the trend and the province became the main source of furniture for the domestic market and exports. But that cradle has been rocked hard and taken some knocks over the years.

Guangdong furniture gradually lost its dominant position as the domestic market grew and economic woes hit overseas markets. In 2009, its Chinese market share dropped from 50 percent in 2007 to one-third, and today is less than 30 percent, said Qian Jiang, general manager of the Asian International Furniture Material Trading Center, a 2,740-hectare park in Shunde that houses 1,100 furniture businesses, the largest of its kind in the world.

In November, it was reported that several companies were debt-ridden. Some had closed their factories.

"In our center, 20 percent of the shops were in the black, 30 percent broke even and 50 percent were in the red in 2012," said Qian.

Although the center's turnover in 2011 had been close to 30 billion yuan ($482 million), growth rates across the industry in Shunde and Guangdong had slowed down considerably and it was no longer sitting comfortably.

This has been put down to the combined effects of the economic slowdown in the principal overseas markets of Europe and the United States, stricter regulation of the property market in China, higher labor and land costs, attractive policies from other regions forcing companies to relocate, and shortfalls in the quality and design of furniture.

"Growth in Shunde has inevitably slowed down as a result of new policies and the macroeconomic environment," Qian said.

"Another factor is that Shunde is facing more challenges from other fast-growing furniture manufacturing bases in China, such as Likou in Jiangsu province and Chengdu in Sichuan province."

 

 

 

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