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Report from
Europe
EU wood furniture surplus narrows as imports rise
The EU has maintained a trade surplus in wood furniture
since 2011 when exports to non-EU countries overtook
imports from outside the EU. This surplus remained
broadly flat between the start of 2015 and the first quarter
of 2016 (averaging close to euro3 billion per annum), as
both imports and exports were stable.
However, the trade surplus narrowed sharply in the second
and third quarters of 2017 (to around euro2.6 billion per
annum) as imports began to pick up. (Chart 1)
The narrowing of the EU trade surplus is an encouraging
sign for external suppliers of wood furniture into the EU
that have struggled to compete in a market where domestic
suppliers account for around 85% of total share.
The dominance of EU manufacturers in this sector is due
to various factors including the strength of domestic
brands in terms of innovation and design, the obstacles to
overseas suppliers complying with complex EU technical
and environmental standard, and the expansion of
furniture manufacturing in EasternEurope, a location
which combines ready access to raw materials, relatively
cheap labour, and the internal EU market.
Improved economic conditions in pe have been driving a
rise in wood furniture consumption in the last three years.
Rising consumption combined with the growth of
manufacturing in Eastern pe, particularly in Poland,
Romania and Lithuania, is reflected in a rapid rise in EU
internal wood furniture trade, from an annual level of
euro15 billion at the start of 2014 to nearly euro19 billion
by the end of 2017. (Chart 2)
The pace of the rise in internal EU wood furniture trade
tailed off a little during 2017. However, last year there was
a rise in the pace of EU wood furniture imports from
outside the region. Between January and September 2017,
the EU imported euro1.39 billion of wood furniture from
tropical countries, nearly 9% more than the same period
the previous year. EU imports from China also increased,
by 4% to euro2.38 billion in the same period.
However, the biggest gains in EU imports of wood
furniture in 2017 were from other temperate countries,
notably Bosnia, USA, and Ukraine. EU imports from these
countries increased 28% to euro1.01 billion in the first 9
months of 2017, building on a 14% gain recorded the
previous year. (Chart 3)
In the first nine months of 2017, EU imports increased
from all four leading tropical supply countries; rising by
3% from Vietnam to euro567 million, 4% from Indonesia
to euro246 million, 11% from Malaysia to euro154 million
and 16% from India to euro154 million.
There was also a significant rise in EU imports from Hong
Kong, Singapore and the UAE during the same period. In
contrast imports from Brazil fell 8% to euro85 million and
imports from Thailand declined 6% to euro45 million.
(Chart 4)
The increase in EU imports of wood furniture in the first
nine months of 2017 was concentrated in the UK (rising
9% to euro546 million), Germany (rising 4% to euro185
million), Netherlands (rising 21% to euro142 million) and
Spain (rising 31% to euro57 million).
Although the quantities are still quite limited, several
smaller EU markets also recorded significant percentage
increases in wood furniture imports from tropical countries
in 2017 including Sweden, Denmark, Poland, Ireland and
Greece. (Chart 5)
Global furniture production dominated by China
Total furniture production in the world¡¯s 100 largest
countries, by GDP, was valued at USUS$430 billion in
2017. This is a key conclusion of ¡°World Furniture
Outlook 2018¡±, the flagship publication of CSIL, the
Italian furniture research organisation.
The report includes details of the furniture sector in 100
countries which account for 90% of world population and
95% of world GDP. The report considers furniture in all
materials but excluding lamps and mattresses.
The CSIL report highlights the extent of China¡¯s
dominance as the world¡¯s largest furniture manufacturer.
Last year China alone accounted for nearly 40% of global
production. USA, the second largest producer, accounted
for 12%, followed some way behind by Germany (5%),
Italy (4%), India (4%), Poland (3%), Japan (2%), Vietnam
(2%), UK (2%) and Canada (2%).
The CSIL report shows that international trade in furniture
was USUS$140 billion in 2017, corresponding to around
1% of total global trade in manufactured goods. After a
sharp rise in the value of global furniture trade in the
decade prior to 2012, trade has remained broadly flat in
the past five years.
Furniture exports in China, the largest exporter, were
around US$51 billion in 2017, a slight gain on the
previous year but lower than in 2015.
Exports in Germany and Italy, the next largest, were both
valued at around US$11 billion in 2017, a level that has
hardly changed in the last 8 years. However, exports have
been rising in Poland and Vietnam, reaching around
US$10 billion and US$8 billion respectively in 2017.
The US is the world¡¯s largest furniture importer, with
imports of around US$34 billion in 2017 having risen
continuously from only around US$24 billion in 2010. The
value of imports in the next largest importing countries ¨C
Germany (around US$13 billion in 2017), the UK (US$7
billion), France (US$7 billion) and Canada (US$6 billion)
¨C were broadly flat during the same seven-year period.
CSIL forecast that global consumption of furniture will
rise by 3.5% in real terms in 2018. The fastest growing
region continues to be Asia, with all other regions growing
between 1% and 3% in real terms.
While China¡¯s furniture production continues to rise
rapidly, export growth is more subdued according to
CSIL.
Drawing on commentary from Chinese manufacturers,
CSIL reckons that Chinese furniture export growth is
unlikely ever to return to levels seen earlier this decade for
several reasons including: rising labour rates in China; the
progressive appreciation of the Renminbi against the US
dollar between 2003 and 2016; rising competition
particularly from Vietnam; and the rapid growth in
China¡¯s internal demand.
Currently around 30% of China¡¯s furniture production is
exported, but this proportion is gradually declining as
more product is sold into the domestic market.
For further details:
https://www.worldfurnitureonline.com/research-market/worldfurniture-
outlook-0058524.html
Growth in hospitality sector creates new opportunities
According to recent CSIL research carried out with focus
on 16 Western pean countries, the total value of the pean
market for contract furniture and furnishings in 2016 was
euro7.5 billion while total production was 9 billion.
The sector was expanding in 2016 with yachting, luxury
retail, and the hospitality sectors (hotels, bars and
restaurants) being the fastest growing segments while
sectors dependent on public funds, such as schools and
hospitals, were much less dynamic.
CSIL has also carried out detailed research on the global
development of hotel rooms, a sector significant for
tropical hardwoods due the relatively large amount of
higher end furniture and finishing materials used. CSIL
estimate that in 2016 the total global stock of hotel rooms
was 16 million with most recent growth in the Asia-Pacific
region.
Between 2012 and 2016, the share of hotel room in the
Asia Pacific region increased from 22% to 26%, while the
share declined in pe from 30% to 28% and in North
America from 41% to 38%. The share of hotel rooms in
Africa, the Middle East, and South and Central America
remained stable with values ranging between 3% and 5%.
CSIL estimate that 650,000 hotel rooms were under
construction globally in 2016, of which 40% were in Asia-
Pacific, while North America accounted for 29% and
Europe only 10%. However, demand for new hotel rooms
is expected to remain high in all regions with the glow
flow of tourists forecast to increase 3% per year on
average until 2030.
While Asia-Pacific has seen the most recent growth, the
US continues to be the leading world market for hotel
furniture and furnishings, accounting for 36% of total
global demand in 2016. The Asia-Pacific region is now the
second largest market, accounting for 28% in 2016,
overtaking Europe which accounted for 26%, followed by
Africa and the Middle East (7%), and Central and South
America (3%).
Total sales of hotel furniture and furnishings were at a
similar level in the United States and China in 2016, in the
region of US$5 billion in each country.
Other large markets with demand between US$1 billion
and US$5 billion are Germany, the UK, Japan, Canada
and Russia. Countries currently with smaller markets but
where demand is rising rapidly include Australia, UAE,
Thailand, Indonesia, Singapore, and the Philippines.
CSIL estimates that the rate of worldwide construction of
hotel rooms is likely to have increased nearly 10% in 2017
to 710,000, with Asia-Pacific accounting for 37% of the
total, North America for 33%, the Middle East for 12%,
Europe for 10%, Africa for 5% and South America for
4%. CSIL expect that this rapid rate of growth will
continue in 2018.
ITTO/EC IMM Report
ITTO/EC IMM Report
New IMM website with regular information on tropical
trade in the EU
The FLEGT Independent Market Monitoring (IMM)
mechanism, which is hosted by ITTO with EC funding,
has just launched a new website at www.flegtimm.eu. The
first edition of the free IMM Newsletter can be accessed at
the website and there is also the opportunity to sign up to
future editions which will be released at least quarterly.
The IMM, which began operation in 2014, uses trade flow
analysis and market surveys to independently assess
market impacts of FLEGT Voluntary Partnership
Agreements (VPAs). During 2017, the IMM expanded its
market research programme to cover seven key EU
countries, which account for roughly 90% of EU tropical
timber imports from VPA partner countries.
IMM market research has been based on online surveys
and structured interviews with trade representatives,
government agencies and NGOs.
This market research programme runs alongside IMM¡¯s
analysis of trade flow statistics and other timber trade
related data, most recently presented in the IMM report
"FLEGT VPA Partners in EU Timber Trade 2014 to 2016"
(also now available at www.flegtimm.eu).
The IMM Newsletter includes insights from the IMM EU
market scoping surveys as well surveys of Indonesian and
Ghanaian companies exporting forest products into the
EU.
It also covers an analysis of EU-Indonesia timber trade
since the start of FLEGT licensing and background
information on how the Indonesian system works, as well
as analysis of FLEGT-licensing teething troubles and EU
economic trends.
Interviews with Mike Worrell of the UK Timber Trade
Federation and Dr Rufi¡¯ie of the Indonesian Ministry of
Environment and Forestry provide further insights into
Indonesian FLEGT licensing, while VPA Joint
Implementation Coordinator Edwin Shanks explains next
steps towards VPA implementation in Vietnam.
The IMM website will be developed further in 2018,
providing constantly updated data on EU timber trade and
market trends, as well as details of IMM research and
activities.
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