From January to February 2024, China’s General Administration of Customs reported a significant 39.8% year-on-year surge in exports, totalling 846.9 billion yuan. This growth rate, uncommon in the previous two years, underscores China’s dominance as the world’s leading exporter of furniture products.
Data from Chinese Customs reveals that in 2023, the export value of Chinese home furniture soared to 1.04 trillion yuan, marking the third consecutive year surpassing the trillion yuan mark in exports.
Breaking it down by destination, the top four markets for Chinese furniture exports in 2023 were the United States, the European Union, Japan, and the United Kingdom, jointly accounting for half of the total export volume. The United States, constituting approximately 27% of the total, emerged as the primary destination for Chinese home furniture exports.
Around 2018, the Chinese home industry witnessed a brief surge in brand acquisitions and the establishment of overseas factories. However, despite these advancements, integrating specific brands and overall business development still encounters numerous challenges.
Acquisition and Factory Setups
The international expansion history of China’s home furnishing industry enterprises dates back to the 1990s when home appliance giants like Midea and Haier first ventured overseas by establishing production bases abroad, initiating the first wave of Chinese companies going global.
Entering the 21st century, alongside the rapid development of the real estate market, the Chinese furniture market quickly scaled up, leading to intensified competition. During this time, industry leaders such as Kuka, Xilinmen, and Mlilybegan targeted broader overseas markets, exporting their high-quality products worldwide.
However, the brands struggled to become well-known even as products went out. With ongoing exploration and accumulation by Chinese home furnishing companies overseas, a mini-peak of brand acquisitions and overseas factory establishments gradually emerged around 2018.
In 2018, QuMei Furniture made a significant move by acquiring the Norwegian national treasure-level comfort chair company Ekornes for 4 billion yuan, setting the record for the largest overseas acquisition in the Chinese furniture industry. That same year, Kuka acquired several companies, including the Italian home brand Natuzzi and the German brand Rolf Benz.
In the subsequent years, Sofia incorporated the French kitchen company Snaidero, Oppein Home purchased the Italian modern furniture brand FORMER for 4.6 million euros, and Seagull Living focused on Vietnam by acquiring the listed tile company Datongnai. Markor Home Home incorporated the high-end furniture manufacturer MUST.
Since 2024, Jsyard and JNBY have acquired the well-established American furniture brand Z Gallerie and the British avant-garde furniture design brand Established&Sons.
Beyond acquisitions, since 2019, Chinese home companies’ overseas investments and factory setups have accelerated.
In 2019, Kuka officially started production in its Malaysia factory and invested 449 million yuan in Vietnam to build a base capable of producing 450,000 standard sets of upholstered furniture annually. By January 2024, Kuka Home’s factory in Mexico was completed with a total investment of $150 million. Kuka operates 10 major manufacturing bases globally, with critical overseas facilities in Mexico, Vietnam, and Germany.
In January 2024, Golden Home announced a substantial investment plan of 700 million yuan to establish a production base in Rayong, Thailand. Man Wah, focusing on sofas, mattresses, and smart homes, has established manufacturing bases in Poland, Lithuania, Estonia, Ukraine, and Vietnam.
Mlily’s factories cover the Eastern and Western United States, with a reported daily production capacity of about 4,000 pieces per factory. Mlily has also set up factories in Thailand, Spain, and Serbia. Xilinmen has furniture manufacturing projects in Thailand and Vietnam.
Navigating Growth and Challenges
In international strategies, acquiring local brands is a common and practical approach, yet the impacts on the acquiring companies are complex and multifaceted.
From a positive perspective, several overseas acquisitions have led to significant revenue growth for Chinese home furnishing companies.
QuMei, which acquired the Norwegian furniture company Ekornes, has seen Ekornes become a central pillar of its revenue. In 2022, Ekornes contributed 3.45 billion yuan to tQuMei’s revenues. Notably, the Stressless series from Ekornes stood out, generating 1.084 billion yuan in revenue from January to June 2023, accounting for 56.55% of the total revenue. The acquisition of Ekornes also enabled QuMei to leverage Ekornes’s global supplier network, facilitating the globalization of its raw material procurement.
Mlily acquired the Spanish company MATRESSES and the American company MOR, stabilizing its revenue sources and expanding its sales network in overseas offline markets. According to the financial report, revenue in mid-2023 was 924 million yuan, accounting for 25.66% of the total revenue. Mlily also utilized MOR to successfully extend its MLILY brand into offline home retail channels on the United States West Coast.
However, overseas acquisitions carry certain risks, such as the potential for substantial debt.
In 2018, QuMei sought financing from significant shareholders, public fundraising, and bank loans to acquire Ekornes. By mid-2023, QuMei’s consolidated debt-to-asset ratio was still at 69.37%, compared to an industry average of 42.33% at the end of 2022.
Despite forming six major product lines and ten brands through acquisitions and holding multiple category advantages, Kuka has also encountered setbacks in its acquisitions. Due to the acquired company Xi Bao Home not meeting performance promises in December 2022, Kuka had to transfer 51% of its shares to Pingtan Hengxiang. The original investment of 424 million yuan was ultimately valued at only 161 million yuan. Kuka Home announced that the transaction would effectively recover 210 million yuan in cash, covering the amount that should be compensated according to the performance promises.
Expanding Channels
From early OEM and ODM manufacturing models to cross-border e-commerce, overseas factory setups, and brand acquisitions, home furnishing brands are now expanding offline stores abroad, simulating natural home environments to showcase their products. When purchasing home furnishing products, consumers can personally experience the items by sitting or lying down to feel the comfort of sofas, beds, chairs, and other furniture.
In addition to building factories and opening stores, developing a distributor network is also crucial. Sofia already has 27 overseas dealers, covering over twenty countries, including the United States, Canada, Australia, Singapore, Vietnam, Thailand, Kazakhstan, Cambodia, Madagascar, and Oman.
Golden Home, more professional in high-end cabinetry, has found North American consumers prefer do-it-yourself furniture assembly. Hence, it is expanding its Ready to Assemble (RTA) distributor network in North America. Australia adopts a subcontracting model to reduce costs. In Southeast Asia, it promotes the construction of overseas subsidiaries to strengthen its retail, home decor, and project channels. These meticulously planned international development strategies have led to overseas revenue of 200 million yuan in the first three quarters of 2023, a year-on-year increase of approximately 20%.
With the rise of cross-border e-commerce and emerging social media platforms like TikTok, some home furnishing companies have also seized new fashion opportunities.
Established in 1998, Henglin Holdings, initially engaged in traditional foreign trade and a leading domestic office chair manufacturer, ventured into cross-border e-commerce in 2019. It has since made significant achievements on third-party platforms like Amazon and TikTok. Its brand, NEUHAUS, offers an ergonomic chair priced at $369.99, which has received over 6,000 reviews on Amazon and consistently ranks high in the home furnishing category on TikTok.
The industry’s journey from local success to global prominence is a testament to China’s economic prowess and the adaptability of its home-furnishing enterprises. As they continue to break barriers and explore new markets, the future looks bright for China’s home furnishing industry on the global stage.