furniture industry of bangladesh

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Factors Influencing Growth of the Furniture IndustryFurniture industry is essentially an ever growing industry that requires employment of variegated raw materials in quite large proportions. The range of the materials includes wood, wood base panel, leather, glass, plastic, metals and textiles and many more. The furniture is manufactured in various types, size, shapes, colour combinations (such as sofas, chairs, wardrobes, mattresses, kitchens etc.) to serve different purposes like schools, institutional, offices and residential.

Bangladesh furniture is manufacturing and exporting high level of quality furniture in terms of design, fashion and technology. Bangladesh furniture has a strong image all across the world. However, a large segment of furniture is imported from various foreign countries as well. The Bangladesh furniture industry generates a turnover of Rs 3,500 crore annually. Eighty five per cent of the industry falls under unorganized sector and remaining fifteen percent is under formal sector, made up of manufacturers and exporters catering to the different segments of the industry. The market of wooden furniture solely owns the share of nearly Rs 60 crore. According to a recent study, the industry is expected to grow by 20 per cent in coming time.

Main FactorsThe concept of good living and better lifestyle is fast catching up middle class mentality of Bangladesh. Interior designing is no longer confined to rich and wealthy Bangladesh. Even middle class people do not mind paying an added buck in getting their homes decorated with modern and designer furniture. These factors have resulted to a boom in decor industry especially when it comes to furniture. It is no more a surprise that foreign manufacturers are making huge investments in the furniture industry of India along with Bangladesh furniture manufacturers and exporters. Globalization has impacted a lot and this leads to the growth in demand of furniture. Media also plays a vital role in making people learn about good living. In conclusion, below mentioned four categories are the factors for the rise in furniture industry; Architects Builders Interior Designers Participation in Furniture Trade Fairs for increased exposure

In addition to the major segments such as households, offices and schools, furniture is high in demand if we take other sub-categorized segments like Kitchen, Bathroom, Bedroom, etc. into consideration. According to a recent survey, there is an increase of 38 percent in home improvements and 37 percent increase is observed in leisure holidays, which shows two pursuits of Bangladesh consumers willing to put huge sum to fulfill furniture requirements. This has led many leading foreign brands to make their genuine inception in Bangladesh industry via domestic retail outlets. Some of the big players in the Bangladesh furniture industry are Otobi, Navana, Hatil, Akhtar, Partex, Brothers etc. to name a few.Furniture Industry of BangladeshTraditionally furniture industry in Bangladesh developed as cottage based industry. It is in 90s when the furniture industry in Bangladesh has transited from cottage based industry to mechanized mass production oriented industries. Following that the furniture businesses began to grow accommodating modern machineries, innovative designs and use of diverse materials. Furniture industry of Bangladesh is shifting its focuses from dependency on teak for raw materials to processed wood .

The main varieties of products are wood, processed wood & Medium Density Fibre board (MDF), and laminated board, particleboard, rattan/bamboo and wrought iron furniture. For a more personal domain as ones home, the preferred raw materials still remains solid wood, but combination of solid wood with other materials like cane, rattan, laminated boards, plywood and MDF are becoming very popular. But for offices furniture designs are usually focused on the more contemporary style and the preferred use of materials include plastic, MDF, laminated boards and wrought irons. Around 70% production of furniture sector of Bangladesh is home furniture and 30% is office furniture.

One of the key strengths of the local furniture industry is diversity in product portfolio . According to CSIL (Centre for Industrial Studies), Bangladesh has a strong potential in linking home dcor craft items with the furniture industry. The export of furniture products from Bangladesh started from 1995. It is estimated that, by 2015 Bangladesh has export potential of crafts furniture accessories worth of USD 10 million along with furniture worth USD 40 million. The potential can be materialized through exploiting low labour cost which is a vital factor in becoming competitive in the world market. In wood furniture manufacturing, labour accounts for up to 40% of the total costs. In Bangladesh labour costs account for 20% of the production. Here, the hourly wage rate in furniture is between $ 0.06- 0.40, less than in China ($0.50- 0.75) which is the largest furniture exporting country .

At present two relevant associations i.e., Bangladesh Furniture Export Association and Bangladesh Furniture Industries Owners Association (BFIOA) are actively working on materializing the potential of this sector. Bangladesh Furniture Export Association has 19 members.

Profiles of Furniture Industry In BangladeshGovernment of Bangladesh has declared the furniture industry as a Thrust Sector . The sectors contribution to GDP (gross domestic product) is 0.29 percent on average, while the industry is comprised of around 41,560 enterprises and employs nearly two lakh skilled and semi-skilled people .According the officials of Bangladesh Furniture Industries Owners Association (BFIOA)There are 28,000 furniture factories in Bangladesh (including all SMEs) among them 1,952 companies are registered member of furniture owners association. However, according to the baseline survey of furniture industry in Bangladesh by Dr. Ali Nesar Khan (2011), there are a total of 9,913 wooden and 2,628 non wooden furniture manufacturers in Bangladesh employing around 1,19,810 workers. Also there are around 74,926 carpentry households employing another 1,54,285 workers. Adding to this, there are 1,20,000 craftsmen producing soft furniture and 200,000 suppliers supplying raw and semi-processed materials. Out of this huge employment, almost 1,00,000 workers are women . Among the employees working in furniture sectors, 20% are working in large industries and 80% are working in SMEs . There are a number of furniture clusters in Dhaka which are located at Badda, Sutrapur, Mirpur area of Dhaka. A number of large companies have their factory in Savar and Gazipur area. Number of large companies is few compare to the total number of furniture industry in Bangladesh. There are 15 large Furniture companies are doing their business in the country which includes Otobi, Navana, Hatil, Akhtar, Partex, Brothers etc .Table 1: Average sales and profit among different classes of furniture manufacturer.Firm sizeNumbers of EnterpriseAverage Annual Sales (BDT)Gross Profit (%)Net Profit (%)

Micro7,9611,877,40021.69.87

Small1,6765,118,33325.7412.41

MSM 22768,571,42929.6714.67

MSM 14019,350,00032.1015.1

Large35104,100,00035.8015.8

In both local and international market, the growth of Bangladesh furniture market is evident. The booming real estate sector in Bangladesh and the rising demand of furniture product in world market, lead the expansion of furniture sectors in Bangladesh. In fact, the demand is so elevated that the demand supply gap is evident in Bangladesh. While the industry is growing at a rate of 9.55%, the demand for furniture is increasing by 20%. Local production for furniture of USD 958 million along with USD 16.84 million imports. Bangladesh earned $19.26 million from exports of wooden furniture in fiscal 2009-10 . Local manufacturers export to the US, Canada, Australia, UK, Middle East, Gulf countries, and other Asian countries, like India, Japan, Taiwan, Singapore, Thailand and Vietnam .

An analysis of EPB data since FY2006-2007 indicating 53.55% decrease in the export of soft furniture over a period of last four years and this decrease is due to the lack of design and technology research, lack of initiatives to promote this industry and keep abreast with other parts of the world . Nonetheless, according to Bangladesh Furniture Industries Owners Association (BFIOA), real export is much higher than (20% higher) than the official figure.

About 60% of raw materials of furniture sector are imported from different countries. Around 65% of wood comes through import. Most of the tic, gamar and hard wood come from Africa; oke wood and barmatic wood come from Myanmar. Around 100% of Wood coating and lock, 60% of ply board, 20% of particle board, 50% of adhesive is imported .

Table 2: Trend of export and import in furniture sector (soft furniture) of Bangladesh (Unit: US$ million)FY2006-20072007-20082008-20092009-2010

Import

Export8.165.494.443.79

Source: Export data has been compiled from http://bfidexpo.com/furniture_association.php (accessed on 15 May 2012),

According to Bangladesh Furniture Industries Owners Association (BFIOA) one of the difficulties that the association (and government) currently faces is that maximum companies do not declare their real amount of sell; and that is why the figure of real trade volume is not available to the association or government for effective policy formulation. In addition to such problem, industries of this sector are also facing shortage of land. In the past, Furniture industry association demanded to have enough land so that an industrial cluster can be established where at least fifty companies can be accommodated. Though specific land was allocated in Kachpur area of Narayangonj district, the amount