PP Parawood has begun looking west to the European export market after its US sales were hurt by the strengthened baht. 

The president of PP Parawood, Pongpanich Wongdeethai, said the company's revenue was down 10 per cent as a result of the appreciation of the baht, from about Bt40 per US dollar to Bt36.70 yesterday.

"But selling to the EU is much tougher," said Pongpanich. "The Europeans have different tastes to the Americans, so we have to adapt not only in terms of design but culturally as well."

For instance, Pongpanich said Europeans preferred less flamboyant styles of decoration. Also, with generally less living space, furniture is expected to be smaller.

Regulation-wise, unlike the United States, the European Union demands that all paints and lacquers used are non-toxic and water-based.

Currently, PP Parawood exports about 90 per cent of its products to the US and the rest to Europe. However, within two to three years it hopes to be selling 50 per cent of its products to the US with the remainder equally divided between the EU and the local market.

Like many small to medium-sized exporters, the company has had to endure a series of minor setbacks as a result of certain government policies.

Also, the appreciating rubber price, which reached Bt99.66 per kilogram in June, has deterred growers from chopping down rubber trees and selling their timber to furniture factories. Despite the rubber price falling to Bt57.58 as of yesterday, growers are still reluctant to cut down their trees, resulting in increased raw material costs, said Pongpanich.

On top of this, timber dealers have also stressed PP Parawood's operations by preferring to export their stock rather than sell locally.

Because it manufactures high-quality wooden furniture, PP Parawood ships all of its products in fully assembled sets, as opposed to the space-saving flat packaging made famous by IKEA. This raises costs as it means fewer products can be fitted into a shipping container.

Locally, PP Parawood has developed two brands - McMichael and Tree - both of which cater to high-end customers. The company hopes to eventually operate about 100 retail outlets nation-wide.

Surprisingly, given PP Parawood is Thailand's only manufacturer of high-quality wooden furniture, Panichpong wants to see more local competition. He said two or three competitors would be ideal as this would result in more competitive supply prices and give more incentive for foreign buyers to visit Thailand.

Meanwhile, according to the recently released Trade & Service Sentiment Index, the overall confidence among SME owners has fallen to 41 for September from 41.3 in August, with the hardest-hit sectors being hotels and argriculture.

Ki Nan Tsui

The Nation