THIS MATERIAL IS A MARKETING COMMUNICATION.
China’s Furniture Machinery Gains Market Share
As we highlighted in our previous article – Embracing automation in more manufacturing verticals, we see a great potential for China to raise the automation adoption in existing manufacturing supply chains. In this article, we provide a case study on the furniture supply chain and how China machinery companies are winning a spot in this space.
Higher Adoption of Automated Machinery
We see a growing share of panel type furniture in households, replacing traditional solid wood furniture, because the former is more environmentally friendly, has lighter weight and is more affordable. Panel type furniture production involves multiple processing steps such as sawing, edge banding, drilling and fitting, which is highly suitable for automated solutions and machining. These solutions can offer faster processing speed, reduce labour dependence and improve labour productivity. This also leads to better inventory and raw material management and improves product quality consistency.
Chinese Players Gain Global Market Share
The panel type furniture machinery industry used to be dominated by European suppliers, including Homag from Germany, as well as Biesse and SCM from Italy. In recent years, Chinese furniture machinery companies such as KDT Machinery and Nanxing Machinery are increasing their presence in the industry with cost competitive products. The COVID-19 pandemic has accelerated their expansion pace as the global supply chain of furniture production has been disrupted. China is becoming a more and more important furniture exporter which caters growing home improvement demand globally. As European competitors are suffering from supply chain disruption, furniture companies (e.g. Oppein and Suofeiya in China) are more open to rely on domestic machinery companies.
Cost Advantage and After-Sale Services
Though Chinese furniture machinery companies still face a five to six- year technology gap vs. global players, their equipment is already good enough to use, with superior pricing advantage and after-sales services. Cost of domestic machinery is less than half of European competitive products, while domestic machinery suppliers can offer tailor-made after-sales services in a more timely manner without meaningful surcharges. The shorter use life of domestic products might encourage a faster machinery upgrade and technology innovation. End customers’ repetitive orders and industry experts’ positive feedback so far bode well for domestic machinery companies’ growth momentum in the future.
Riding the Trend of Customization
We see rising interest in personalized furniture products in China as a key driver of higher adoption of automated solutions in existing production lines. More end-users are looking for consistency in colour and style patterns of their home furniture and special fittings to better utilize floor space, which creates a strong demand for automation in manufacturing supply chains. Leading furniture players in China are increasing their spending to build new production lines and retrofit their existing lines for the purpose of automation which will allow much faster responses and improve consistency in product quality.
November 23, 2021
Staying Ahead with Mirae Asset’s Latest Insights
Disclaimer & Information for Investors
No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.
The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.
Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.
Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.
The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature/ . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.
A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary/.
The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.
Hong Kong: This document is intended for Hong Kong investors. Before making any investment decision to invest in the Fund, Investors should read the Fund’s Prospectus and the information for Hong Kong investors (of applicable) of the Fund for details and the risk factors. The individual and Mirae Asset Global Investments (Hong Kong) Limited may hold the individual securities mentioned. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Copyright 2023. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.