The Furniture Sector in Pakistan: Export performance and ... - TRTA i

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Figure 2.1 Raw material and product flows in forest industries Managed natural regeneration forest (37%) Unmanaged natural regeneration forest (17%) Original boreal forests (15%) Plantation forests (29%) Tropical rain forests (1%) Roundwood production Forest production //// Non-wood fibres from forests Non-wood fibres from agriculture Large-sized logs Small-sized logs Bamboo, rattan & agro fibre plants Primary wood processing industries Sawmills, veneer and plywood mills Reconstituted panels plants 73% Wood pulp mills Collectors, primary treatment, middlemen Non-wood pulp mills Industrial wood residues 27% Recycling Paper mills Intermediate and final solid wood products F-jointing, glue-lam, mouldings, engin. wood veneering Components Particleboard, fibreboard Flooring Joinery Furniture and parts Further processing industries Pre-fab. houses, etc. Non-wood furniture Paper and paperboard products Recycling Bamboo panels, weaving, gluing Bamboo parquet, joinery Source: ITTO-ITC (a), 2004 Global shift in furniture-making Historically, manufacturing furniture for exports had remained firmly in the hands of the industrialised nations. Furniture-making by nature is one of the very basic and labour-intensive manufacturing segments that have existed in all cultures as a domestic and household craft. Consequently, the entry barrier to start this industry is fairly low. More recently, many developing economies have followed the previous paths and phases of the more developed economies in developing their furniture for exports. Countries like China, Indonesia, Vietnam, Malaysia, Mexico and Brazil have gradually industrialised and expanded their furniture industry’s operational scales better suited for the main markets, i.e. the United States and the European Union. 8 International Trade Centre
On the buyer’s side, there are globally operating furniture retail chains and buying groups representing the collective interests of nationally important furniture dealers. Both have stayed in the vanguard for changes in the international market. In fact, these have been important drivers in opening up furniture trade for more trade. They have realised new cost-slashing and earning opportunities in outsourcing labour-intensive manufacturing to the developing countries. As a response, there is an abundant stock of new manufacturing capacity that has been established with the help of government support and tax breaks. Not all of these are, however, profitable or competitive today Demand factors Wooden household furniture tends to be a durable good that is highly responsive to personal income expectations. Its purchase often represents a major investment by consumers in household and office furniture, for instance. There is a clear tendency to postpone the purchase when income expectations decline, and vice versa, increase purchase if personal incomes prosper. Consumption is also affected by demographic factors such as birth rates, marriage rates, life expectancy and household size. It is also responsive to the degree of social and geographic mobility of the population. The demand for household furniture and accessories directly correlate with new residential construction, and office furniture follows trends in non-residential construction. A growing segment, however, is the renovation, maintenance and improvement (RMI) sector, which already accounts for 40-50% of total construction in Western Europe. Increasing mobility of the population is also feeding furniture replacement purchases. For example in the United States, about 40 million people move home every year. This often triggers furniture shopping. Furniture is becoming more a fashion item with shorter change intervals, trend-setting and even seasonal styles. This means that the life cycle of household furniture is becoming shorter, and the collections themselves will have to be renewed more frequently. The key to success in mass markets is flexible and cost-efficient production, with savvy designs. In summary, the key factors that influence the demand for household furniture include: • Disposable personal income • Consumer confidence • New housing and non-residential building starts • Increase in the average size of new houses • Increase in the number of bedrooms in new single-family homes. Consumers in the United States and the European Union markets have been induced to accept more eccentric and ethnic designs and mixed styles from exotic countries. This is an indispensable opportunity for a “globalised” furniture trader, who sources items from all over the world. Equally, it is the lifeline for “traditional” furniture-makers in the developing countries. Trade nomenclature For the convenience of defining the product coverage (of the trade chapters), reference is made here to the commonly applied trade nomenclature (Table 2.1). International Trade Centre 9
Page 1 and 2: The Furniture Sector in Pakistan
Page 3 and 4: Acknowledgements The report was pre
Page 5 and 6: Abbreviations AFTA AHEC AKTRIN APFE
Page 7 and 8: Table of contents Acknowledgements
Page 9 and 10: Box 3.1 Multilateral discipline of
Page 11 and 12: Executive summary This study sets t
Page 13 and 14: the extent possible maintain or imp
Page 15 and 16: 1 Background and objectives 1.1 EC
Page 17: 2 Furniture sector in Pakistan 2.1
Page 21 and 22: According to the websites of import
Page 23 and 24: Global demand for furniture in main
Page 25 and 26: suppliers, both domestic and other
Page 27 and 28: Table 2.3 Pakistani furniture expor
Page 29 and 30: Figure 2.4 Distribution structure f
Page 31 and 32: freight rates have increased and do
Page 33 and 34: Price The prices of local machinery
Page 35 and 36: Indonesia has also announced a ban
Page 37 and 38: industry itself should support effo
Page 39 and 40: various counterparts, the supplier
Page 41 and 42: Box 2.7 UK Timber Trade Federation
Page 43 and 44: Figure 2.5 Simplified example on ch
Page 45 and 46: At least 70% of the wood used in ma
Page 47 and 48: Scope of joint ventures There exist
Page 49 and 50: • With FAO’s Forest Products an
Page 51 and 52: The contact information of many of
Page 53 and 54: Box 2.10 USAID initiative in the fu
Page 55 and 56: Opportunities Major opportunities m
Page 57 and 58: pressure on the price. There appear
Page 59 and 60: Pakistan does not export this furni
Page 61 and 62: 3.1.3 Functional scope The function
Page 63 and 64: Current status of efforts to libera
Page 65 and 66: 3.2.2 Information flow-upwards, i.e
Page 67 and 68: Commission (EC/EU) has established
Page 69 and 70:
Figure 3.3 Relevant intensity of WT
Page 71 and 72:
Box 3.2 Regional Trade Agreements (
Page 73 and 74:
Trade Related Aspects of Intellectu
Page 75 and 76:
Agreement on the application of san
Page 77 and 78:
country or materially retards the e
Page 79 and 80:
Relevance of the furniture sector T
Page 81 and 82:
3.4.2 Other countries’ access to
Page 83 and 84:
Table 3.2 Top 10 buyers of the Paki
Page 85 and 86:
Arabian market. Here again, there i
Page 87 and 88:
• Material from China is being us
Page 89 and 90:
4.2 Obstacles and shortcomings - im
Page 91 and 92:
Raw material recovery Raw material
Page 93 and 94:
• Consistent policy for supportin
Page 95 and 96:
A short-term but maybe a costly mea
Page 97 and 98:
5 Export services in Pakistan 5.1 E
Page 99 and 100:
5.1.3 Federation of Pakistan Chambe
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• Pakistan International Freight
Page 103 and 104:
The lessons learnt here could be re
Page 105 and 106:
6 Conclusion and recommendations 6.
Page 107 and 108:
6.2 Critical success factors • A
Page 109 and 110:
6.4 Global value chains 6.4.1 Poten
Page 111 and 112:
Benefits All timber tends to be air
Page 113 and 114:
• Optimise cutting; • Calculati
Page 115 and 116:
6.6.5 If we had US$100,000: A techn
Page 117 and 118:
• To modernise such a laboratory,
Page 119 and 120:
Annexes Annex A — Sources of info
Page 121 and 122:
• Federmobili information on the
Page 123 and 124:
• National Home Furnishings Assoc
Page 125 and 126:
International Trade Centre 115
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