A customer reads a catalog on Italian furniture at a Shanghai store. More and more Chinese customers are attracted by the design and craftsmanship of Italian-made furniture. Yong Kai / for China Daily

Italian furniture makers have managed to regain reputation in china

The tables have turned for Italian furniture makers in China since a country-of-origin scandal last year severely dented their market. You could say they are sitting comfortably again.

Because of China's growing wealthy class and their desire for quality style and craftsmanship, Italian furniture is in high demand.

Currently, there are more than 100 Italian furniture brands on the Chinese market, including famous names such as B&B Italian and Fendi, compared with only a few in the late 1990s.

According to the Hurun Report, which tracks the number of millionaires and billionaires in China, there were more than 960,000 multi-millionaires in China in 2010. About half of them have annual disposable income of between 1 million yuan ($157,000, 127,000 euros) and 3 million yuan.

Not surprisingly, la bella figura of Italian furniture sits atop their shopping lists.

Wu Yuqi, marketing director of Shanghai-based Jisheng Wellborn (JSWB) Furniture Group, says average sales volume of Italian furniture has grown 20 percent in China in recent years. JSWB is a home furnishing retail chain that operates an international furniture exhibition village covering 140,000 square meters in the Qingpu district of Shanghai, and a 30,000-square-meter import furniture exhibition and trading center in the city's Hongqiao area.

"The Chinese prefer Italian-made furniture because it is world famous for design and delicate craftsmanship. Many Chinese consumers regard Italian furniture as luxury goods that can reflect their living standard and social status," Wu says.

In China, it tends to be owners of villas and exclusive apartments, and club operators who mainly buy expensive furniture.

Liu Wanyou, general manager of Blue Morning luxury furniture retailer and distributor in China, says the average decoration costs for families buying imported furniture run from 10,000 yuan to 40,000 yuan per square meter. Total household furnishing costs generally would be up to 300,000 yuan these days for an affluent family.

Analysts also believe the stagnation in the global economy has also caused companies to seek opportunities in China.

"China is very important for all European brands. If companies do not come to China, they sell the furniture to who? In Italy, people go to Ikea," says Fabio Massimo Nocciolini, an Italian designer working with furniture brand Zanaboni in JSWB's Hongqiao store.

Liu from Blue Morning says he has received more than 50 enquiries from participants at the Milan Furniture Fair in April who are interested in entering the Chinese market.

But in China, consumers are more wary now about the origins of high-end furniture following the Da Vinci scandal last year.

Da Vinci Furniture Ltd, a leading retailer of imported furniture in China, was accused of exporting Chinese-made products to Italy and importing them back to China as Italian-made. The scandal resulted in a credibility crisis for the furniture industry and many businesses saw a sharp drop in sales.

To re-establish its reputation, Italian furniture makers are inviting Chinese trade representatives to visit their production base in Italy and sending Italian staff to work with retailers in China to help and inform consumers.

"Consumers see me in the store and talk to me face to face, and it helps to establish credibility and trust," Nocciolini says.

And more consumers are learning to check product information carefully before confirming their orders.

"Consumers ask for detailed information about place of origin and ask to look at the official authorization certificates. They will also e-mail furniture makers to verify the authenticity of the furniture," says Wu from JSWB.

Currently, Italian companies are mostly working with distribution agencies to introduce their brands to China because agencies are said to have better knowledge of Chinese consumers. But in recent years, some Italian companies have decided to open directly managed stores in China to better control operations and get up-to-date information about the market. Zanaboni has opened two stores in Shanghai.

"We can eliminate intermediaries to guarantee more reasonable prices for consumers. Another important thing is we can directly control operations in the local market," Nocciolini says.

Many people believe retailers of imported furniture are making exorbitant profits from the Chinese market. A table costing 100,000 yuan and a sofa at 180,000 yuan are about 10 times the price of locally branded products.

But the companies and retailers say the high prices are due to increasing labor costs, import taxes and transportation costs.

"The profit margin of imported furniture might be the same or lower than some domestic furniture because some manufacturers do not want distributors charging extremely high prices on their furniture," says Liu from Blue Morning.

Nocciolini says the profit margin for Zanaboni furniture in China is about 30 percent, close to the figure in the Italian retail market.

Another challenge furniture makers face is the central government's policies on housing. To curb property speculation and contain high rises in property prices, the government has imposed a series of policies on buying property in large cities since 2010. These include limiting the number of properties that can be purchased by an individual and increasing mortgage rates. Analysts say this has had a negative impact on furniture demand.

But industry experts say the impact on the luxury furniture sector has been very limited.

"Most of our customers are high-end property owners and private club operators who will not change their preferences," Liu says. "Because of those rich consumers who have purchased property in the past few years, which is now ready to move into, there will be demand for new furniture.

"Meanwhile, some customers might consider replacing old furniture with new furniture. American-styled furniture was popular in previous years, but is not popular now, so householders might consider changing."

But Liu says that the value of Italian furniture needs to be appreciated more than just for its high prices.

"The gap between the Chinese market and the foreign market is huge. For many Chinese, they pay more attention to the value of the furniture rather than the story behind the brand," Liu says. "The market should be educated and people need to know what is truly beautiful."

tangzhihao@chinadaily.com.cn

(China Daily 06/08/2012 page19)