furniture market in china 2012 - trends, mergers acquisitions

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Furniture Market China (Part III)FurnitureMarket China(PartIII)

April2012

ExecutiveSummary

Market Chinasfurnitureindustryhasexhibitedarapidgrowthanddevelopmentoverthepast20years FurnitureindustryisestimatedtobeworthUSD343bnby2015,growingataCAGRof22.8%during200915 Productionvolumehasgrownby8.1%CAGRbetween2010and2011Drivers: Challenges:

Drivers&Ch ll

HealthyEconomyandRisingIncome

RealEstateBoom

AcceleratingUrbanizationandChangingLifestyle

FurnitureExpositions

HugeImporterofRawMaterials

StringentHousingMeasures

IntenseCompetitionandRisingOperatingCosts

CredibilityCrisisChallenges StrongDistributionNetwork

ChangingDemographics

RiseinTourism

Government GovernmentStandards

Trends

RiseinLuxuryFurnitureDemand EmergenceofNewerVarietiesofFurniture Furniture Malls

Initiatives OldforNewFurnitureSubsidyProgramin2012

Competition

Trends FurnitureMalls IncreasingPresenceofForeignRetailers OnlinePortalsDedicatedtoFurnitureProducts

MajorPlayers

2FURNITUREMARKETINCHINA2012.PPT

CompetitionQuanyou Qumei RedApple Huari IKEA Royale

Introduction

MarketOverview Global

China

ExportImport

Drivers&Challenges

GovernmentInitiatives

Trends

Mergers&Acquisitions

Competition


KeyTakeaways

Trends Summary

RiseinLuxuryFurnitureDemand

E f NO li P t l D di t d t EmergenceofNewerVarietiesofFurniture

OnlinePortalsDedicatedtoFurnitureProducts

Key

Trends

IncreasingPresenceofForeignRetailers

FurnitureMalls


Marketiswitnessingariseindemandforluxuryandhighendfurniture

RiseinLuxuryFurnitureDemand

Highendfurniture brands

RisingincomeandwealthofChineseconsumersiscreatinganincreaseindemandforluxuryfurnitureinChina

furniturebrandsareenteringtotapthedemand

LuxurymarketinChinaincludingluxuryfurniturehasbeengrowingatarateofatleast30%annuallyoverthelastdecade

Luxuryfurnishingitemsareusuallyconsideredasasymbolofwealthandstatus HighendItalianfurniturearequitepopularamongtheaffluentChinesepopulace

Withtheintentiontotapthismarket,highendfurniturebrandsareopeningretailchains Aninternationalfurniturecenter,GOHO,whichhouses374globalluxurybrands,openedinEasyHome,atophomeandfurniturechaininBeijinginApr2010

ReputedluxurybrandssuchasGucci,LVandChanelhavealsoidentifiedthegrowingopportunityofferedbythe Chinese furniture markettheChinesefurnituremarket

HighendImportedFurniture KeyConsumerMarkets

Tier II Cities

TierICitiesBeijingandShanghai


TierIICitiesShenzhen,WenzhouandHangzhouetc.

Playersareintroducingdiverserangeoffurniturecateringtothedemands

EmergenceofNewerVarietiesofFurniture(1/2)

Playersareoffering various

Thefurnituremarketisgrowingandiswitnessingdemandforadiversifiedrangeoffurniturestyles

offeringvariouskindsoffurniture

Playersinthemarketarebecomingcustomerresponsiveandareaccordinglyintroducingnewerdesigns

GreenFurniture

Inordertoaddressthegrowingawarenessamong

Readytoassemble(RTA)andDoityourself(DIY)furniture

Withincreasingnumberofpeopleworkingfromhome,

peopleabouttheenvironmentissues,Chinesefurniture

manufacturesareintroducingdiversifiedproducts

includingtheusageoffabricsthatdonotgeneratetoxic

fumesintheproductionprocess,suchaspolypropylene

demandforthistypeoffurnitureisgrowingespecially

inNorthAmericaandEuropeancountries

TheexportorientedunitsexistingintheChinese

furnitureindustryareshiftingfocustothiscategory

Alsotocurbtheconsumptionofwood,some

alternativematerialsarebeingadopted

Somemanufacturersarealsomakingfurniturefrom

recycledproducts,suchasreclaimedwoodandoldteak

from wood buildings

Leatherandheavierdurablefabricispreferredinthis

categoryoffurniture


fromwoodbuildings

ofawidevarietyofcustomerswithspecificpreferences

EmergenceofNewerVarietiesofFurniture(2/2)Whilefurnituremakersareconsideringenvironmentfriendlydesignedfurniture,theyarealsooptimisticaboutcateringtothedemandsofconsumersforcompactandmultifunctionalityf itfurniture

Risingurbanpopulationandhigherlivingstandardsareleadingtoanincreaseddemandfornewvarietiesoffurniture

Multifunctionality

Chinesefurnituremarketiswitnessinghigherdemand

SimplicityandNeutralColors

Intermsofdesignsandcolors,simpledesignswillbe

formoreflexible,functionalandsmallerfurniture

Withincreasingpopulationandshortageofspace,the

marketforfurniturethatcanoptimallyusethespace

availableisgrowing.

morepreferredbyconsumers

Neutralcolors,includingearthtones,cream,blackand

whitetoorange(softenedtocoral,peachandcopper)

andredareamongstthefavoritecolorsofconsumers

Furnituresuchasraisedbedwithaboxbelowfor

storagepurposesorafoldingchairhungonawallcan

helpprovidestoragesolutionandfreespaceonthe

floor


FurnituremallsareincreasinglygainingpopularityfosteringthegrowthoffurnituresalesinChina

FurnitureMalls

Increasedsalesfrom onestop

Intherecentyears,largescalefurnituremallshavegainedimmensepopularityinChina

Someofthemajorfurnituremallplayersinclude,RedStarMacalline,Easyhome,HOBA,Beijing fromone stopfurniture

shoppingmalls

j p y , , y , , j g

JimeiFurnishingandAydHomeFurnishings

Furnituremallserveasaonestopshoppingplatformforawidevarietyofcustomersranging

fromhomedecoration,interiordesign,homeproductssalestoconstructionmaterialssales

FurnitureMallOperators No.ofFurnitureRetailOutlets Description

RedStarMacalline 66

ItisoneoftheleadingfurnituremalloperatorsinChina

Ithadplansofsettinguptwotothreestoreseveryearand200chainp g p y

storesthroughoutChinaby2020

Easyhome 37

Easyhomecaterstotheneedsofconsumersseekingforhighend

importedfurniture

Easyhome furniture malls include brands, such as Joop, Simmons, RocheEasyhomefurnituremallsincludebrands,suchasJoop,Simmons,Roche

Bobois,ChateauxdAx,Bindiyaandmore

HOBA 20

IthasstorelocationsinShenzhen,Zhuhai,Shanghai,ChangshaCity,

Fuzhou,Chengducity,Zhongshan,andZhejiang

Its brand portfolio includes HOBA Home Furnishing and METEN Living


ItsbrandportfolioincludesHOBAHomeFurnishingandMETENLiving

Design

Expansionofretailoutletsbyforeignretailerstocapitalizeonthegrowingopportunityinthedomesticfurnituresector

IncreasingPresenceofForeignRetailers

High Influx of

ForeignretailersareseekingtointroducetheirbrandedproductsinChinaowingtotheincreasingpurchasingpowerofChinesepopulation

HighInfluxofForeignBrands

RapidExpansionPlans

IKEAGroup,homefurnishinggiantbasedinSweden,haveplansofsettingup17stores

inChinaby2015

InApr2011,USbasedAshleyFurnitureInds.revealeditsplansofbuildingAshley

FurniturestoresinChina,whichwillbesellingtheproductsdevelopedinthethree

largeAshleyownedproductionfacilitiesinChinaandVietnam

M H F i hi b d i N th C li l t l h 100 tMagnussenHomeFurnishings,basedinNorthCarolina,planstolaunch100newstores

inChinaduring201113,targetingmediumtohighearningChineseconsumers

InSep2011,SpanishbrandZARAHOMEhadopeneditssecondstoreinBeijingat

Solana Lifestyle Shopping Park and plans to continue with its expansion spree in Beijing


SolanaLifestyleShoppingParkandplanstocontinuewithitsexpansionspreeinBeijing

Playersofferproductsviaonlineportalsasonlinesaleschannelattainhighpopularityamongbuyers

OnlinePortalsDedicatedtoFurnitureProducts

Increasing ChinasleadingB2ConlineshoppingplatformTaobaomallrunsacompletelydedicatedonlineportal(jia.tmall.com) forhomefurnishingproducts

popularityofonlineportals

Tmalldisplayfurnitureproducts,suchasbed,sofa,mattress,tablesandchairs,cabinet,frameclassandmanyothertypes,whicharemadebyvariousfurnituremanufacturers

Furniturecompanies,suchasQumeiandX.M.B.havetheirownflagshipstoreinTmall,offeringexclusiveproductlineforonlinesales

Consumerscanbrowsethroughalltheavailablehomefurnishingitemsandpurchasetheproductwhichisbestsuitedtotheirrequirement

In May 2011 Taobao opened a furnishing showroomShareofTransactionsinTaobao.com(12th Dec2011)

InMay2011,TaobaoopenedafurnishingshowroominBeijinginordertoallowthecustomerstoexaminetheproductsbeforeplacingordersonline

TheBeijingmallcoversafloorareaof25,000sqmtanddisplays22,000itemsfromabout300suppliers

0 100 200 300 400 500 600 700

Others

Digitalproducts

Homefurnishings

Womensapparel

p y , pp

On12th Dec2011,Taobaohadachievedthehighesttransactioneverforasingledayonitswebsite

Homefurnishingwasthesecondhighestcontributingcategorywithsalesof~USD78.5mn,representing11.6%

USDmn

67554.0%11.2%

11.6%23.3%


Note:B2CreferstoBusinesstoConsumerandsqmtreferstosquaremeters

g y f , p gofthetotalsalesgenerated

Introduction

MarketOverview Global

China

ExportImport

Drivers&Challenges

GovernmentInitiatives

Trends

Mergers&Acquisitions

Competition


KeyTakeaways

Mergers&Acquisitions(M&A)

AnnouncedDate

ClosedDate Target Buyer/Investors SellersSize

(USDmn)

Nov232010 Nov232010MarkorInternationalFurnitureCo.,Ltd.

MarkorInvestmentGroup Co Ltd

174.45(SHSE:600337)

GroupCo,Ltd.

Sep172010 Sep302010LangFangTianFengHomeCo.,Ltd.

FAVAInternationalHoldingsLimited(SEHK:8108)

0.83

Sep152010 Sep152010RoyaleFurnitureHoldingsLimited(SEHK:1198)

AjiaPartnersAssetManagement(HK)Limited

0.59

Beijing Yu Fa Jia Ju CoRoyaleFurniture

Jan42010 Feb102010BeijingYuFaJiaJuCo.,Ltd.

yHoldingsLimited(SEHK:1198)

10.64

Dec172009 Nov162010MarkorHomeFurnishings Co Ltd

MarkorInternationalFurnitureCo.,Ltd.

MarkorInvestmentGroup Co Ltd

64.94FurnishingsCo.Ltd.

(SHSE:600337)GroupCo,Ltd.


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