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According to recent reports, the gross profit margin in the furniture hardware sector currently stands between 20% and 30%, while the net profit margin averages around 5%. For those engaged in agency processing, the profit margins are even lower, with a maximum gross profit cap of 15%. As the furniture industry matures, larger manufacturers in places like Shunde have begun to adopt diversified growth strategies once they reach a certain scale. These businesses are redirecting their resources toward sectors such as steel, textiles, real estate, and credit, significantly reducing their reliance on furniture as a core business component.
Despite this shift, China's per capita furniture spending remains well below levels seen in developed countries in Europe and North America, suggesting significant untapped potential in the market. Future competition in this space will no longer hinge solely on manufacturing prowess but will increasingly involve elements such as product R&D, marketing, branding, communication strategies, and efficient management practices. Luo Baihui, an expert in Chinese manufacturing brands, notes that while the supply chain in the Foshan furniture cluster is robust and highly efficient, the overall competitiveness still needs strengthening. He argues that fostering influential big brands through strategic brand development is essential for accelerating regional industrial upgrades.
In response to these challenges, the Shunde Furniture Association recently established the Pan-Home Furnishing Union, the Shunde Furniture Brand Alliance, and the Raw Materials Alliance. This initiative has been perceived externally as a strategy to leverage premium brands to boost the influence of Shunde’s furniture brands, thereby enhancing market dominance and discourse power.
Yet, amidst this backdrop, some enterprises in Shunde continue to demonstrate stable growth trajectories. Lan Xiaohua, a researcher at the Chinese University of Hong Kong, discovered that a top-tier fabric sofa brand in Longjiang embraced channel innovation to carve out a novel growth path. Instead of opening physical stores or seeking traditional distributors, this brand entirely entrusted its distribution network to elite interior designers. By leveraging the designers’ expertise, products flowed seamlessly into the market, and designers received a commission for each sale. According to the brand’s leadership, field surveys indicated that discussions around high-end furniture often revolve around interior designers. When designing luxury homes, hotel spaces, villas, or government buildings, these designers frequently incorporated the brand’s offerings, significantly increasing consumer awareness compared to conventional promotional methods. Lan Xiaohua estimates that such collaborations can yield hundreds of millions of dollars in sales annually. Moreover, this approach not only ensures steady product sales but also elevates the brand’s prestige.
Luo Baihui also acknowledges the benefits of diversifying channels as a risk-mitigation strategy. Generally, multi-channel models include domestic and international markets, direct retail outlets alongside distributors, and private-label production coupled with OEMs.
Our company primarily focuses on the dual-channel model—both domestically and internationally. Over time, while expanding our national footprint, we’ve simultaneously prioritized overseas expansion. We consistently emphasize global perspectives in our product designs. During major trade shows like the March and September events, the audience comprises more foreign buyers than domestic ones. Last year, our brand achieved sales of approximately $200 million, with three-fourths coming from international markets. A brand representative mentioned that just the Japanese market secured tens of millions of dollars in orders last year, while South Korea and Dubai also performed exceptionally well. Domestically, we’ve started adopting a multi-channel strategy, relying heavily on distributors but complemented by select direct-operated stores.
Luo Baihui believes that a diversified channel strategy can effectively mitigate risks. Following this round of industry consolidation, entry barriers will rise, and standards will become stricter. Companies with forward-thinking strategies will likely seize more market opportunities.