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Furniture Imports

In recent years furniture manufacturing has change significantly with 80% of production occurring overseas being sent to the US.**  The typical method of fabrication involves hot glue, gang saws and less than a $100 a month per worker.  This has resulted in a flood of cheap furniture imports causing the price to the wholesaler to plummet and furniture quality along with it; leaving the consumer with little more than a few pieces of plastic and laminated particleboard.  

Besides the issue of value and durability there are safety factors to consider as well. (Learn More)   

Below is a  transcript from a Nightly Business Report explaining this shift in more detail.

** 05/10/04 : U.S. Furniture Makers Have Designs On Defeating China Furniture Exports
Courtesy of Nightly Business Report

SUSIE GHARIB: China`s manufacturers are making great inroads into world markets these days. Now while consumers like that because of low prices, thousands of workers are unhappy because they`re losing their jobs. So U.S. furniture makers are now mounting a huge anti-dumping case against competitors in China, seeking tariffs of up to 440 percent. Nick Mackey reports.

NICK MACKEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: A five kilometer stretch of furniture showrooms, factories and warehouses. This is Lecong, one of the Pearl River delta`s furniture centers, home to over 3000 distributors representing many of the region`s 6000 furniture manufacturers. Over the past eight years, China`s furniture exports have grown around 30 percent annually, totaling $7.3 billion in 2003. And more than half of this volume was manufactured here in the south, in Guangdong province. China`s big advantage in the global market is the plentiful supply of cheap labor: migrants from the countryside or laid-off workers from bankrupt state owned firms. They usually live in dormitories at the back of the factory. Wages here are under $100 per month.

ZHANG WEI FENG, GENERAL MANAGER, JIASHI (THROUGH TRANSLATOR): The main reasons why our furniture is so cheap are, on one hand, the laid off workers have comparatively low incomes, on the other hand, the government has preferential policies to support private enterprises.

MACKEY: The local government offers investors cheap land for their factories. Today`s price is only $20 per square meter. Companies also enjoy two tax free years of profits, then pay only half of the usual 24 percent company tax during the following three years. These incentives have also attracted foreign-owned furniture makers. In the city of Dongguan, there are 500 Taiwanese-owned companies exporting 80 percent of their furniture to the U.S., some acting for U.S. manufacturers who outsource their production to cheap China. Low wages and government incentives all keep costs down for consumers, but make life tough for U.S. competitors. China`s furniture trade with the U.S. is $1 billion annually and rising. And since 2001, over 34,000 American furniture-making jobs have been lost, around one-third of the workforce. Washington blames China`s policy of keeping its currency weak as one factor, while U.S. producers accuse the Chinese furniture manufacturers of dumping, selling at below fair market prices.  U.S. furniture makers are now seeking tariffs of up to 440 percent on selected Chinese imports like bedroom furniture. So companies here are bracing themselves for a fight. Some Taiwanese investors have already bought land in Vietnam with a view to shifting production there if the tariffs hit hard. But tariffs will also hit China`s suppliers in other Asian countries and even the U.S. Taiwanese companies in Guangdong import $350 million worth of wood every year from the United States. Furniture makers here believe that as their U.S. rivals can`t compete on price, they`ve turned to politics.

FRED CHEN, TAIWAN FURNITURE, MANUFACTURERS` ASSN. (THROUGH TRANSLATOR): Why did they choose this time to raise the issue, because they are in a presidential election year. There are political reasons behind it, for if they raise the issue at this time, it`s easier for the government to take it on board as it`s after the votes.

MACKEY: The U.S. anti- dumping investigation into China-based furniture manufacturers is expected to conclude on June 5. Nick Mackey, NIGHTLY BUSINESS REPORT, Guangdong province, China .

Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2004 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use  

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