The furniture industry is likely to miss out on growth worth Bt6 billion in the global market this year after losing significant ground in two major markets - Japan and the United States - to Chinese and Vietnamese manufacturers.

Thai Furniture Industries Association president Wanthana Jaroennawarat said yesterday the industry had expected to grow 15 per cent from Bt50 billion last year.

But losing its edge in two huge markets to cheaper competitors will limit growth to only 3-5 per cent, he warned.

The economic slowdown and increased production costs mainly caused by rising oil prices will also hit growth.

Wanthana said China and Vietnam started to take over the Japanese and American markets last year. Furniture made in the two countries is 10-15 per cent cheaper than Thai products.

Japan and the US have always been Thailand's major mass markets. The Kingdom has been their major original equipment manufacturer (OEM) country, with products manufactured to customers' specifications.

Wanthana warned that Thailand's 3,000 manufacturers must focus on creating their own designs and selling their own brands to niche or high-end markets, instead of trying to compete with China and Vietnam.

The association realised the risk of losing the mass markets six years ago and tried to alert manufacturers that they should upgrade their products, but they ignored the attempts, he said.

He said their ignorance would cause the industry to miss its target of growing to Bt100 billion by 2051.

Although many had recognised the problem and were working on adjusting their manufacturing and working systems, it might take two years to see results.

Manufacturers are attending more seminars and activities arranged by the association, including production and design courses. The association is focusing more on training university students from design fields.

Wanthana said manufacturers did not have to focus on Thai designs only, as they might not be practical for many countries. International designs should also be used.

Currently, 90 per cent of Thai furniture-makers are OEM operations. Some 2,000 plants are big operations with 1,000-5,000 workers, and the rest are small or medium-size plants with 500-1,000 workers.

Apart from focusing on design and creating their own brands, they should also think of penetrating new markets, such as countries in the Middle East, India, United Arab Emirates and Russia, said Wanthana.

They should focus more on corporate customers, including hotels, spas and restaurants, rather than targeting only individual consumers.

The domestic furniture market is still doing well. Although the property industry has been slowing down for some time, initial orders still remain.

However, the local market might start to be affected early next year if the economic situation remains sluggish. The current value of the domestic market is almost the same as the international market.

The association will host the International Furniture and Design Objects 2006 from October 18-22 at Impact Arena in Muang Thong Thani.

The fair will have a "Spirit of Design"

concept and aims to attract both local and foreign customers, as well as Bt200 million in sales.

Nitida Asawanipont

The Nation